BHP bets billions on Chile mines to face global copper crunch
BHP detailed to investors this week plans to spend $10.7 billion to $14.7 billion within about 10 years.
Despite great expectations for demand from electric vehicles where lithium-ion batteries dominate, prices for the raw material have been in relentless decline for the better part of two years.
Free-on board prices of lithium carbonate from South American brine ponds are down 22% year to date to average $10,500 a tonne in July, according to battery supply chain authority Benchmark Mineral Intelligence data. Ex-works prices in China have collapsed from a peak of $24,750 in March last year to below South America export prices.
Lithium hydroxide prices followed carbonate down, but declines have been milder and hydroxide continues to trade at a premium at $13,875 free on board North America.
Map of major producing mines and mine development projects of minerals used in Lithium Ion Batteries. Commodities include Lithium, Graphite and Cobalt. Map includes locations of 240+ producing mines, 45 development projects, 110+ projects in economic assessment, and 40 suspended mines.
Last year, output at Australia’s hard rock mines for the first time exceeded lithium carbonate equivalent from brine producers after six new mines went into production within the space of just three years.
With a few advanced projects and at least four chemical conversion plants in the pipeline, the country is set to dominate primary lithium supply for the foreseeable future, but the expansion drive has resulted in a collapse in prices.
Producers in Australia now sell spodumene concentrate (6% lithium used as feedstock for lithium hydroxide) for $550–$620 a tonne, down by a third in 2019 and “trending towards the lower end of this range throughout the month” according to UK-based Benchmark:
There are concerns that average prices could fall below the $550/tonne level during Q3, which would put pressure on new operations that are still operating above target production costs.
Nevertheless, scale and processing improvements did see these costs fall in Q2 and this will likely continue over the coming months, providing scope for further decreases.
Despite long-term interest growing, short-term sentiment in the market remains negative and is likely to see lower sales volumes over the coming weeks.
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