EV/Lithium, page-994

Many lithium market watchers speculated that as lithium prices fell higher cost, lower quality producers like China’s lepidolite miners, and higher cost African miners, would be forced out of the market. Also, major producers in Australia and Chile would be forced to trim production or curtail planned ramp-ups.

The hope was this would provide a natural balance to what has been a massive supply response to the lofty lithium minerals prices of 2022. Macquarie notes that this has so far largely not occurred, as lepidolite miners, African producers, and newly commissioned brine producers in South America have chosen to cut production costs instead of cutting production.

The broker notes that cost reductions in the order of magnitude of greater than 10% had been achieved at some so called “marginal cost producers”, and some of them had also reiterated their full year production guidance along with assurances of further cost cutting measures to come.

...like I had mentioned here before, putting mines into C&M is not an option for many of these smaller non-listed producers in the emerging economies. Because their operations costs are much lower than that in Australia, they can persist with marginal returns under much lower prices. Shutting down or suspending operations is not an option, because they would lose their employees, contracts of supply and still incur lease payments and capital borrowing costs.
With listed lithium developers without a secured contract to supply, they could go into C&M to preserve their cash and avoid making CR and share dilution. Companies with contract to deliver like LTR would have to produce even at a loss.
It is almost certain now that the suboptimal under $1000 SC6 price would likely persist through into 2025 with a global economic slowdown and that LTR would be in an unenviable position to be producing at a loss or marginal profits, that the market has yet to acknowledge and understand.

....more lithium supply, lower demand equates to low moribund prices for lithium in extended winter hibernation. A fact I had warned that few wanted to listen and accept.