Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Australia’s Pilbara Minerals Ltd has agreed to sell a cargo of spodumene concentrate to a chemical converter using a pricing strategy linked to lithium hydroxide, a move that will help defend it against falling lithium prices.
Australia’s largest independent lithium developer said on Monday it will sell 15,000 tonnes of spodumene in the March quarter to a chemical converter it did not name.
Earlier this month its chief executive told reporters the developer had around 200,000 tonnes of spodumene to sell.
The sale allows Pilbara Minerals to win higher prices for its lithium ore by receiving a larger slice of the price differential between the raw material and lithium hydroxide.
In the so-called tolling arrangement, Pilbara Minerals will receive the lithium hydroxide price for the product sold less an agreed amount for conversion and other costs, it said.
The agreement comes as prices for battery chemicals and the underlying lithium ore have begun to turn down, after China ended a more than decade-long national subsidy for electric vehicle purchases at the beginning of this year.
Prices of lithium carbonate hit the weakest in a year while those for spodumene have touched the lowest since October.
Reuters reported that China’s CATL, the world’s largest battery maker, has offered discounts to some Chinese automakers it supplies, weighing on prices of Australian lithium miners on Monday.
Shares in Pilbara Minerals fell as much as 7.7% to A$4.10 before trimming losses to $4.18, still down 5.9%.
Australian critical minerals producers are seeking to move up the electric vehicle battery value chain by refining their minerals and in some cases converting them into products more easily used by battery chemicals makers.
(By Melanie Burton; Editing by Stephen Coates and Sonali Paul)
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