https://www.mining.com/web/china-is-oversupplying-lithium-to-eliminate-rivals-us-official-says/

China is oversupplying lithium to eliminaterivals, US official says

Reuters| October 8, 2024 | 4:51 am

Chinese lithium producers are flooding the global market with thecritical metal and causing a “predatory” price drop as they seekto eliminate competing projects, a senior US official said on a visitto Portugal that has ample lithium reserves.

Jose Fernandez, under secretary for economic growth, energy andthe environment at the US Department of State, told a briefing lateon Monday that China was producing much more lithium “than theworld needs today, by far”.

“That is an intentional response by the People’s Republic ofChina to what we are trying to do” with the Inflation Reduction Act– the largest climate and energy investment package in US historyvalued at over $400 billion, Fernandez said, adding:

“They engage in predatory pricing… (they) lower the priceuntil competition disappears. That is what is happening.”

China accounts for about two-thirds of the world’s lithiumchemical output, which is mainly used in battery technologiesincluding for electric cars. Prices of lithium have fallen more than80% in the past year largely due to overproduction from China and adrop in demand for electric vehicles.

However, the price collapse is also affecting China as it hasforced Chinese companies like battery giant CATL to suspendproduction at certain mines.

Job cuts

Europe aims to reduce its dependence on imports from China andother countries of lithium and other materials essential to the greentransition.

Fernandez said the low price “constrains our ability todiversify our supply chains on a broad, global scale” and alsohurts countries such as Portugal that need investment to developthese industries.

Falling prices have forced many global lithium producers to scaleback production and cut jobs.

Portugal, with some 60,000 tons of known reserves, is alreadyEurope’s biggest producer of lithium, traditionally mined forceramics.

Along with neighbouring Spain, the country wants to take advantageof local lithium deposits, aiming to cover the entire value chainfrom mining and refining to cell and battery manufacturing to batteryrecycling.

Several mining companies in Portugal have been looking forfinancing, customers and suppliers to crank up projects.

“We want to help them, and we think we can… lithium miningcompanies, everywhere, have to survive this difficult phase that wascreated by predatory pricing,” Fernandez said.

China’s Premier Li Qiang in June used his address at a WorldEconomic Forum meeting in Dalian to hit back at accusations from theUnited States and EU that Chinese firms benefit from unfair subsidiesand are poised to flood their markets with cheap green technologies.

Trade tensions intensified last Friday when the European Unionsaid it would press ahead with hefty tariffs on China-made electricvehicles to counter what it sees as unfair Chinese subsidies, after ayear-long anti-subsidy investigation. China on Tuesday imposedtemporary anti-dumping measures on imports of brandy from the EU.

(By Sergio Goncalves; Editing by Andrei Khalip and SusanFenton)