Lithium producers bullish on long-term demand despite recent price drop

Lake Resources NL

28/06/2024 24:54

By Ernest Scheyder
       LAS VEGAS, June 27 (Reuters) - The world's largest
lithium producers told a major industry conference this week
they remain bullish on long-term demand for the electric vehicle
battery metal despite the recent price plunge that has forced
layoffs and curtailed expansions.
    Once a niche metal used primarily in ceramics and
pharmaceuticals, lithium demand has grown rapidly over the past
decade. But oversupply from China and a softening of aggressive
EV adoption rates has dragged lithium prices down more than 80%
in the last year.
    The mood at the Fastmarkets Lithium Supply and Battery Raw
Materials Conference in Las Vegas, the world's largest,
reflected a cautious hope among attendees that the industry can
meet an expected demand jump later this decade as EVs and
battery storage technologies grow more popular.
    The conference had roughly 1,100 attendees, in line with
last year and nearly triple 2019 levels, organizers said.
    "We're really focused on the fundamentals of the underlying
business," said Patrick Howarth, head of Exxon's lithium
division, which announced at the conference it would expand its
lithium production plans in Arkansas. "We're not scared off by
low prices, and we're not drawn in by high prices."
    Fastmarkets data show, for example, that U.S. demand for
lithium will increase 29% each year through 2030, with jumps
also expected throughout the rest of the world.
    "Critical minerals are the oil and gas of our energy
future," Ashley Zumwalt-Forbes, the U.S. Energy Department's
deputy director for batteries and critical materials, told the
conference. 
    Zumwalt-Forbes oversees a U.S. government grant program for
the critical minerals supply chain and said she was eager to
have more lithium companies apply for funding. 
    The demand projections helped offset the somber mood that
has permeated the industry in recent months after layoffs from
Lake Resources  LKE.AX , Albemarle  ALB.N  and others. 
    "For those of us that are worried about the market
sentiments at this moment in time, keep your eye on the
long-term trajectory," said Dale Henderson, CEO of Australian
lithium miner Pilbara Minerals  PLS.AX . 
    Global lithium mine supply was more than 1 million metric
tons last year, a figure expected to more than double by 2026
largely due to expansions in Africa, China and Australia,
according to Fastmarkets data. Yet producers warned that unless
prices rise, that supply is unlikely to be available.
    "We're going to be measured and judged in how we react to
prices and supply the market," said Sarah Maryssael, chief
strategy officer for Arcadium Lithium  ALTM.N , which has
development projects across the globe.
    Albemarle, the world's largest lithium producer, started the
conference with a stark warning about "concerning" lithium
prices, but then mapped out a plan to auction off supplies of
its metals to the highest bidder and struck a hopeful tone on
demand later this decade.
    "I'm not worried about demand," said Eric Norris, head of
Albemarle's energy storage business. "Ideally it'd be in the
U.S. But if it's not in the U.S., no doubt there'll be demand
elsewhere."

 (Reporting by Ernest Scheyder; Editing by Jamie Freed)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))