Lithium prices experienced a sharp correction in the December quarter of 2023, retracting from peak levels observed in the previous year.
The year marked a shift in the lithium market dynamics. Supply-side constraints eased slightly as new lithium production facilities came online, alleviating concerns over material shortages.
Yet, this influx of supply coincided with a moderation in demand growth, attributed in part to market saturation and economic uncertainties.
Long-term prospects remain robust
Despite this correction, long-term prospects for lithium remain robust.
The global net zero for 2050 commitment will see continued demand for critical minerals tied to the energy transition, including lithium. The adoption of lithium-ion batteries to power the transition to cleaner energy, in particular, is expected to underpin demand.
According to Statista, the global demand for lithium will surpass 2.4 million metric tons of lithium carbonate in 2030, doubling the demand forecast for 2025. Increases in battery demand for electric vehicles are expected to drive the demand, which is forecast to reach 3.8 million tonnes by 2035.
Respondents to a poll conducted by GlobalData, a leading data and analytics company, in January 2024 expected lithium prices to show the greatest improvement across a selection of commodities over this year.
Of the 446 poll respondents, 35% expect the price of lithium to have the greatest growth of those commodities listed, followed by both gold and copper with shares of 23% each.
Small caps making moves in December quarter
Lithium Australia
During the December quarter (Q2 FY24), the Envirostream battery recycling subsidiary of Lithium Australia Ltd collected a total of 338 tonnes of batteries for recycling, representing a 19% increase on Q2 FY23.
Recycling collection volumes (tonnes).
There has been significant growth in large-format LIB (lithium-ion battery) collections, driven by the strong partnerships the company has developed with tier-1 electric vehicle (EV) and energy storage system (ESS) manufacturers.
As a result, large-format LIB collections totalled 89 tonnes during the quarter, representing a 179% increase relative to Q2 FY23.
Large-format LIBs represent the most efficient battery type for recycling primarily due to the simpler logistics, and provide MMD (mixed metal dust), which generates downstream sales revenue.
Lithium Australia CEO and managing director Simon Linge said: “We are excited to see volumes of large-format LIBs grow during the quarter as we continue to execute our strategy to target this battery type via partnerships with EV and ESS manufacturers. Volume growth and process improvements in MMD yield are key to our goal of achieving cash flow breakeven within the recycling business.”
