“What we haven’t seen is the corresponding tariffs. So we’ve only been developing a race against China’s [subsidies]. And that’s a race that the US as well as any free-market economy is destined to lose,” Fannon told delegates.

He explained the current strategy using President Reagan’s principle: “If you want more of something, subsidize it… if you want less of it, tax it.” 

During Trump’s first term, the introduction of a 25% tariff on Chinese gallium imports in 2019 led to initial stockpiling, which ultimately helped buffer later supply shocks when China implemented export controls.

Chinese content rules shake-up 

A second Trump administration would likely tighten restrictions on Chinese content in products receiving US government incentives, particularly in the electric vehicle supply chain, Fannon said in the fireside chat titled “What comes next? Insights into future US mining policy under a Second Trump Administration.”

“In the context of electric vehicle credits… if it comes from China, then it should not benefit from US taxpayer subsides,” he said, adding that the Biden administration’s allowance of “up to 25% Chinese content” would likely be scrapped as it “sends a mixed signal to the investment community.”

In September 2024, under President Biden, the US Trade Representative announced its final determination on Section 301 tariffs for Chinese critical minerals imports. The changes include a 25% tariff on indium, tantalum and chromium imports effective September 27, 2024, with additional tariff increases on other materials to be implemented in stages through 2026.

Fastmarkets assessed indium 99.99%, in-whs Rotterdam at $340-380 per kg on Wednesday December 4, unchanged since November 20, following a slight downward trend since October 23 but remaining largely stable.

The potential policy shift comes amid fresh concerns about Chinese control of critical mineral supply chains, highlighted by China’s expanded export controls on gallium and germanium implemented August 1, 2023, followed by restrictions on antimony exports from September 15, 2024, with new measures announced December 3 requiring stricter licensing and end-user reviews for exports to US entities.

Investment climate shift

The emphasis under a second Trump administration would shift from international forums to tangible development outcomes, according to Fannon.

“More convenience and more conferences don’t move tons… there’s going to be a very clear [key performance indicator]… Moving the tons of and the investment is the outcome,” he said.

The private sector’s role would be central to this approach.

“In our system, the government can establish parameters for action, but it doesn’t actually do anything… it’s the private sector that actually is the instrument,” Fannon said.

However, he warned that frequent policy changes between administrations create challenges for investors: “The pendulum swings we’re seeing [are] unhelpful for capital formation and creating a confidence to actually invest in certain jurisdictions, including the United States.”

Permitting reform potential

While permitting reform was initiated during Trump’s first term, the effort was disrupted by Covid-19, Fannon said. He indicated this would be revisited, as “you need to be able to build stuff.”

“How that’s tackled… I think that’s a bipartisan issue… How does one tackle it, how do we address it? What does reform look like, and how it can be for years is a very short point of time to address these long-term challenges,” he said.

Fannon pointed to state-level differences, citing Tesla’s move from California to Texas as an example: “Texas represented a place where you can build things. Capital is welcome.” 

He noted that most of America’s “battery belt” is in Republican-led states, despite federal funding being available nationwide.

“Permitting takes 10-15 years to [start up] a mine, with timelines of 20 years. That’s the biggest bottleneck to the business cases,” Rolf Kuby, director general of Euromines, told Fastmarkets in an exclusive interview at Resourcing Tomorrow.

International cooperation restructure

While existing international frameworks like the Minerals Security Partnership may continue, they would likely be restructured to focus more on concrete outcomes under a second Trump presidency, Fannon said. 

The Minerals Security Partnership (MSP) is a collaboration of 14 countries and the EU to catalyze public and private investment in responsible critical minerals supply chains. MSP partners include Australia, Canada, Estonia, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, the UK the US and the EU.

“It’s very difficult to create multi-national fora and agreements… it is painstaking work and takes far too long,” Fannon said, drawing from his own government experience. While acknowledging these forums create an important foundation, he emphasized that “having the meeting is not the outcome.”

Instead, future cooperation would likely prioritize capital deployment.

“You’re going to see a bit of a different approach… which will have the convenience of government… But there’s going to be a focus on action and deployment of capital,” he said.

The shift back to security as the “north star” of US policy would necessitate continued international investment.

Fannon said: “There’s a clear recognition… that the US – even though we have an amazing minerals endowment – it’s the time horizon that’s necessary to develop them… and that means investment overseas and partnerships overseas.”

The post Security to replace climate as ‘north star’ of US minerals policy under Trump 2.0 appeared first on Fastmarkets.

For others though, the bearish sentiment, slowing EV demand growth and low lithium prices represents an opportunity for Europe to rationalize its approach to batteries and EVs.

By revisiting subsidy and incentive programmes that support scaling of the entire value chain, and by leveraging technology/skills transfer and industrial partnerships with leading nations, Europe can refine its strategies to create a robust battery supply chain, according to Fastmarkets’ head of battery raw materials analytics, Paul Lusty.

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Building the supply chain in Europe

With rising demand for electric vehicles (EVs) and renewable energy storage, Europe has made efforts to build its own supply chain for battery production, but the continent has long been dependent on global suppliers – particularly those in Asia – for key battery components.

To counter this reliance and establish a robust, self-sufficient battery supply chain, the EU has rolled out a series of strategic legislative and investment initiatives aimed at stimulating domestic growth and innovation.

Central to this effort was the European Green Deal, which underscores the critical role of batteries in achieving climate neutrality by 2050. And the EU has introduced the Battery Regulation – a legal framework focusing on sustainability, recycling, and ethical sourcing of raw materials.

Recognizing the need for upstream investments, the EU has classified batteries as a Strategic Value Chain under its Important Projects of Common European Interest (IPCEI) program.

This designation allows member states to channel public funds into research, development, and industrial projects without breaching EU state aid rules.

Additionally, the EU has created the European Battery Alliance (EBA), a public-private partnership designed to stimulate collaboration between governments, industry leaders and research institutions.

The EU is also imposing new emissions regulations that increase the price of internal combustion engine (ICE) vehicles in 2025 to further incentivise EV demand.

Through these measures, Europe has laid the groundwork for a supply chain that spans raw materials extraction, refining, cell manufacturing and recycling.

However, the path to independence has been fraught with challenges, including securing the raw materials, scaling up production capacity and competing with established businesses from around the world.

And the slowdown in EV demand growth, coupled with a prolonged period of low lithium salts prices, has led to a series of bearish announcements from companies within the supply chain – from carmakers cutting staff and closing factories to battery producers filing for bankruptcy.

Reactions to the slowdown in EV demand

While the market has been gloomy about EV demand growth, Fastmarkets researchers expect year-on-year growth in 2024 to be around 29%. But while growth has been relatively strong, it has still been lower than expected, which contributed to the revision of operations by a number of automakers and battery supply chain companies in Europe.

Northvolt, for instance, which makes battery cells for EV batteries, filed for Chapter 11 bankruptcy protection last week related to the expansion of its.Northvolt Ett gigafactory at Skellefteå in northeast Sweden. The company said operations there would continue during the process, including “fulfilling obligations to critical vendors and payment of wages to employees.”

The company said it aims to complete a restructuring process during the first quarter of 2025.

And Portuguese energy company Galp said it will not proceed with the construction of its Aurora lithium project in Portugal, following the news of Northvolt filing for Chapter 11. Northvolt decided to stop investing in Aurora in early 2024, Galp said.

Aurora, an equal joint venture between the two companies, was set up to develop Europe’s largest lithium conversion plant, with an annual production capacity of up to 35,000 tonnes of battery grade lithium hydroxide. It was hailed by Northvolt as a stepping-stone for developing an integrated lithium-battery value chain when the partnership was announced in 2021.

Car manufacturing giant Volkswagen has said it is aiming to close at least three factories in Germany, cut tens of thousands of jobs and downsize all remaining plants, according to the company’s works council. The company reported deliveries of EVs were down by 4.7% year on year in January-September, which it attributed to “industry-wide buyer reluctance” to buy EVs.

“The biggest hurdle that we face in terms of EV demand growth in Europe – taking Germany as an example, after the government there axed EV subsidies – is affordability,” one market participant told Fastmarkets.

Germany’s government ended subsidies for EVs in December 2023 after revising its budget.

And leading US auto manufacturer, the Ford Motor Co, said in late November that it will reduce its European workforce by 4,000 positions by the end of 2027 – primarily in Germany and the UK.

“The global auto industry continues to be in a period of disruption, especially in Europe, where the industry faces unprecedented competitive, regulatory, and economic headwinds,” Ford said.

Falling battery raw material (BRM) prices

Lithium prices have been in steep decline throughout most of 2024, which has cut producer and refiner profit margins significantly and slowed the uptake of new projects in Europe.

Prices for battery-grade lithium hydroxide recently fell to their lowest level – on a midpoint basis – since Fastmarkets began assessing the market in 2017.

Fastmarkets’ price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $8-9 per kg on November 12, but has since rallied to $8.50-10.00 per kg on Monday December 3.

The lithium hydroxide price has fallen by more than 40% since the beginning of 2024 when it stood at $14.50-16.50 per kg.

Cobalt prices have also dipped, but not as rapidly as lithium, falling by around 18% since the start of the year.

And Fastmarkets’ price assessment for cobalt standard grade, in-whs Rotterdam, was $10.10-12.00 per lb on Tuesday December 3, down from $12.80-14.18 per lb at the beginning of the year.

Europe’s faltering supply chain

Reactions to automaker cutbacks and Northvolt filing for bankruptcy, as well as slowing EV demand growth amid falling BRM prices mainly point towards the view that Europe can still achieve its goal of an independent supply chain, but not without changes to its approach.

“I think it’s quite clear that we’re in a down-cycle across the batteries sector in the West,” one consumer told Fastmarkets. “The period of rapid initial growth dictated decision making around start-up strategies, investments, etc, and I think this is a correction of that.

“While there will be struggles ahead, I see this as a time to rationalize Europe’s approach to batteries and EVs. We see political pushback from the public and OEMs alike, although I don’t believe this will stop the train. A European battery sector can and will work with more refined strategies. If politicians want less dependence on China, then they will need to better facilitate this to get past the early adoption point on the curve,” the consumer added.

One producer said Northvolt filing for Chapter 11 protection was “more bad news that puts additional pressure on lithium hydroxide prices, because there is another player or customer in that market for battery-grade products that might completely disappear.

“But on the supply chain side, it’s a disaster for Europe that there is apparently not enough downstream demand from battery production to allow [cathode active material] (CAM) producers in Europe to be successful. [The question is,] how long will it take for that demand to pick up?” 

“From what we’ve seen on the demand side for batteries in Europe, it’s a consequence that those companies cannot survive here. We will probably need either demand to pick up or regulation that states we need European production for European cars. As long as that’s not the case [it will] always be more competitive to source those materials – up to and including batteries – from Asia,” the producer added.

Some sources criticized the EU for its lack of incentivisation.

“[Northvolt] shows cobalt has less of a future than we all thought for batteries – it’s proof of poor demand,” a trader said.

“The EU has too much bureaucracy and regulation and, as always, was busy encouraging the supply chain with one hand while cutting its legs off with the other,” the trader added.

And a consumer told Fastmarkets: “A lot of lessons have been learned and reality checks have been handed out. But infrastructure for day-to-day EV use is improving and costs are falling, so adoption will grow and the need for a domestic industry will be there.

“Pragmatic growth, with political willpower, will provide a future for European industry,” the consumer added.

Challenging growth landscape

Fastmarkets researchers forecast that European lithium carbonate equivalent (LCE) production will grow at a compound annual growth rate (CAGR) of 51% between 2024 and 2034, but the landscape for growth is challenging.

“We remain concerned that, in the current price environment, companies developing projects in Europe will struggle to access financing and advance project development,” Lusty said.

“Project development costs in Europe are relatively high, so it will struggle to compete on a cost basis with established centers of lithium production and opposition to mining projects is an ongoing challenge for the region,” he added.

Opportunities for Europe – collaboration

“Europe needs a local or regional supply chain because relying on one that is controlled by China is too big a risk, given the potential for escalation in geopolitical tensions,” according to Fastmarkets’ head of base metals and battery research, Will Adams.

“But it’s proving very hard to build, for numerous reasons – technical know-how, high capital expenditure and operating expenditure costs, low BRM prices and insufficient government support.

“One way or another, Europe’s lithium-ion battery chain will need significant government support or partnerships with those who already have the know-how and those who can bring in the finance,” Adams added.

Muthu Krishna, Fastmarkets battery manufacturing cost modeller said a collaborative approach would provide a viable route to a European supply chain.

“Yes, there is risk of relying on imports from China, but [focusing on] collaboration over competition, which allows for knowledge transfer to European partners while giving access to the European markets for the big Asian players, would be a win-win scenario,” Krishna said.

“As material supplies slip into deficit, which we forecast will occur during 2025, prices will rise. But these rises must now stabilize at a level that allows downstream OEM profitability (such as, not making battery packs too expensive) while at the same time enabling upstream players to make a profit and expand supply to meet demand,” Krishna added.

And Lusty said: “Europe has been focused on improving its supply chain resilience and the security of supplies of raw materials for years, but this appears to have done little to shelter it from the structural vulnerabilities of global supply chains and the complexity of energy transition markets or to improve its cost competitiveness.

“Policy levers will only it take it so far. A rapid pivoting of strategy is required, involving coordinated and sustained subsidy and incentive programmes that synchronously support the scaling of the entire value chain, plus technology/skills transfer and industrial partnerships with leading nations,” he added.

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The price of lithium is falling, but some Western companies have recently announced more investments in the Lithium Triangle – a region of South America comprising parts of Argentina, Chile and Bolivia.

Overall, brine demonstrates the cost advantage in producing lithium carbonate while, with the exception of the Greenbushes mine in Western Australia, integrated spodumene suppliers have higher costs.

At current spot lithium salt and spodumene prices, the industry is moving fairly deeply into the cost curve. It is not only the weak price, but also the weaker demand outlook, that is causing a broad-based review, with some entities along the supply chain scaling-back their production, or rethinking investment schedules and plans.

Rio Tinto has signed a definitive agreement to acquire Arcadium Lithium. The agreement, valued at about $6.7 billion, has been unanimously approved by both companies’ boards of directors, and is expected to close in mid-2025 subject to an Arcadium shareholders’ vote.

Arcadium Lithium was formed from a merger of Allkem and Livent in January 2024 and has capacity for 75,000 tonnes per year of lithium carbonate equivalent (LCE) across all of its products.

Meanwhile, Rio Tinto, until now, has been a relatively small participant in the lithium sector, with a number of assets in the pipeline. These assets include the Rincon project in Argentina, which will use direct lithium extraction (DLE) technology to produce 3,000 tpy of lithium, set to begin production this year.

The merger of the two companies creates an environment in which Rio Tinto can leverage Arcadium’s lithium expertise. This is particularly in the field of DLE, where Arcadium has been a long-standing participant through its Salar del Hombre Muerto project, one of the highest grade lithium projects in Argentina.

“It’s good to see that Western companies are investing and interested in Argentina. We need Western companies here to balance China’s influence and show that Western companies are growing in lithium production,” a source told Fastmarkets.

“A deal like this, with a counterparty of Rio Tinto’s stature, shows that the lithium market is reaching a key level of maturity in its evolution,” a consumer said to Fastmarkets.

Separately, Paris-based minerals firm Eramet announced the buy-back of Tsingshan Holding Group’s 49.9% stake in Eramine Sudamerica, effectively regaining full ownership of the Centenario lithium project in Argentina.

The plant will begin production in the coming weeks, the company said.

The purchase of Tsingshan’s stake in the Centenario project is interesting in several ways, Fastmarkets’ head of base metals and battery research, William Adams, said.

“The decision to regain full ownership of this project shows that a Western miner is still confident in the project despite the current weak prices, and why wouldn’t it be?” Adams said. “The oversupply and price weakness are temporary, the world is going down the green transition route, and as more things are electrified or more renewable power generation is added, demand for energy storage is only going one way.

“The bigger the whole industry becomes, the harder it will be for producers to keep up with demand,” he added. “Western companies need to compete with Chinese companies to ensure sovereignty. This deal increases Western sovereignty as well as giving Eramet full control over how the operation expands.”

Trump effect

Participants in China’s electric vehicle (EV) and battery industries expect more uncertainty under a second Donald Trump presidency of the US, because of the president-elect’s stated intention to scale back the country’s Inflation Reduction Act (IRA) and to pursue expanded protectionist trade policies.

Trump’s election victory over incumbent Vice President Kamala Harris on November 6 potentially means a different approach to EVs compared with that taken by current President Joe Biden, complicating the process of electrification, industry sources said.

Throughout his campaign, Trump made it clear that he is not a fan of battery-electric vehicles, instead vowing to boost fossil fuels and internal combustion engine (ICE) vehicles.

Fastmarkets’ research team forecasts that EV sales in the US will reach 9.55 million units by 2034 under a Trump presidency, 5% lower than forecast for a Harris-victory scenario during the same period.

For more information on our long-term price analysis of the global lithium market, see Fastmarkets’ lithium 10-year long-term forecast.

“Trump’s policies will focus more on traditional energy sources, such as oil, coal and gas,” one producer said. “Trump is not a fan of renewable resources, so we think the result is bearish for the markets.”

Albemarle believes that it is still too early to discuss what the second Donald Trump administration may do to the lithium industry, Kent Masters, the lithium producer’s chairman and chief executive officer, said during the company’s earnings call on November 7.

“The energy transition is kind of a global phenomenon that is happening,” he said. “It’s really driven first by China. Europe is probably the second-largest market in that, and then North America. And I don’t want to speculate on what a Trump administration might do.”

Masters also said that “our strategy had been to pivot to the West. We’ve kind of backed off, given that prices have been so low and [because of the] economics of building-out that supply chain in the West. We still hope to do that, but we have to wait and see what the Trump administration wants to do.”

US investment in the region

According to Fastmarkets’ research team, there are more than 110 lithium mines in Argentina and Chile. Only two are owned by US companies, while the others have mainly Canadian, Chinese and Australian ownership. The same applies to lithium concentrators.

“The future presence of US companies is really challenging in Argentina and Chile,” Fastmarkets battery raw material analyst Atanas Atanasov said. “Maybe they have to focus on lithium concentrators because building is faster, and because acquiring an advanced-stage lithium mine is quite expensive. And in general, of 100 lithium advanced-stage mines, only 4-5 have been acquired by other companies.”

Meanwhile, in the context of the Inflation Reduction Act, our analysts believe that, over time, the US will forge other special trade agreements with non-free trade agreement (FTA) countries, such as Argentina, because there is a growth in mine and processing supply from countries that are not FTA partners, but which are also not foreign entities of concern (FEOC) as defined by the Act.

“With Chile as an FTA-partner country, we see huge opportunities for Chile to increase its sales to the US market,” Adams and Amy Bennett, principal consultant of BRM Research, said.

“On the other hand, China is continuing to expand its footprint in developing lithium provinces, including Argentina and Bolivia, as well as its mid- and down-stream processing and manufacturing industries,” they added.

“Chinese involvement in lithium projects in Argentina leaves lithium from the country on a more questionable status, because Argentina currently is not a US FTA-partner nation. On the other hand, we believe that, as long as joint ventures between China and non-FTA countries ensure that the Chinese equity is below 25%, then that material might be IRA-compliant,” they said.

But the definitions of IRA-compliant lithium have yet to be clarified. Market participants are not sure what is required for lithium to be IRA-compliant.

Besides, Trump has said that he plans to repeal the IRA, at least partially, and rescind its unspent funds.

He has not specified which programs he plans to target, but it is safe to say that with Trump elected the 47th President of the US, the centerpiece of incumbent Joe Biden’s economic achievements is set to undergo some changes.

“With the election of Trump,” Bennett said, “we would expect that any IRA money that has already been spent is safe, but any undelegated funds are likely to be rescinded.”

Current lithium pricing

Fastmarkets assessed the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price, cif China, Japan & Korea, at $8.50-10.00 per kg on Thursday November 21, up by 5.71% from $8.00-9.50 per kg the previous day.

Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, stable on Thursday at $10.80-11.40 per kg, unchanged since Tuesday.

This article is part of a special report on the Lithium Triangle. You can read the other two parts here and here.

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The Lithium Triangle, a region of South America comprising Argentina, Chile and Bolivia, has proven potential in lithium production, but each country faces its own specific challenges.

These include poor infrastructure, remoteness, impurities in output, and government intervention. These must all be overcome for the projects to succeed in the near future, industry specialists have told Fastmarkets.

The region is expected to gain more importance in lithium production in the coming years, because it has vast resources and offers low-cost operations.

Fastmarkets’ research team notes that, in 2023, 94% of global lithium supply came from just four countries: Australia, Chile, Argentina and China.

But supply is diversifying, so in 2034, the forecast is that Eastern Asia (China) will be the largest single producer globally, accounting for 30% of supply, followed by South America with 28% and Australia and New Zealand with 25%.

By 2034, Fastmarkets expects 61% of processing to be in China, 21% in South America, 5% in North America, 6% in Europe, 3% in Australia and 3% in other parts of the world. Ex-China processed production will increase at a compound annual growth rate (CAGR) of 13% to 1.02 million tonnes of lithium carbonate equivalent (LCE) in 2034, compared with 298,000 tonnes of LCE in 2023.

For more information on our long-term price analysis of the global lithium market, see Fastmarkets’ lithium 10-year long-term forecast.

But on the way to reaching this level of importance in mine and processed supply, South America still must find solutions for its problems.

Eduargo Gigante, a lithium and battery market consultant for the region, told Fastmarkets that the lithium resources in the triangle are very specific and require different approaches in each country.

“Bolivia is the worst, with a very long history of problems, and it will not be a main participant in the market,” he said. “The approach, the government and the poor framework of resources in Bolivia are really bad. The state controls the entire value chain. Bolivia will not have a great future in the near term. We can hope for better prospects in perhaps 5-10 years’ time.”

“Chile is better than Bolivia, but it also has a problem with the framework,” Gigante added. “With the new lithium national strategy and the new state management… we are not sure what will happen.”

“On the other hand, Argentina is better positioned,” he said. “Its lithium production will grow very strongly in the next 2-3 years. The country has a better approach to the legal framework, it’s very open to investment, and the new government is very attached to the mining sector. And we have RIGI.”

Argentina recently introduced its new RIGI incentive regime for large investments, which provides financial leverage for various sectors – including mining – as well as tax, customs, Forex and regulatory stability for 30 years.

The RIGI scheme offers several tax benefits, such as a reduced income tax rate of 25%, faster amortization periods, and the ability to carry forward losses without restrictions.

Projects with investments worth $200 million or more can benefit from the RIGI scheme, but companies are required to spend 20% of their investment locally, ensuring that the benefits of mining are felt within the country.

The fact that Argentina is better positioned, while Bolívia and Chile have bigger challenges to overcome, dominated the sideline conversations at the Litio en Sudamérica conference held in Jujuy, Argentina, in October. More than 1,500 participants across the value chain discussed the future of production in the region.

Jason Luo, chief executive officer and president of Ganfeng Argentina, told delegates in his presentation that RIGI is creating a new scenario that adds value to the industry.

“It is crucial to have long-term solutions,” Luo said. “We only undertake projects that we consider necessary to strengthen the industry. This means increasing production and creating more jobs through close collaboration with our suppliers.”

Ganfeng is pursuing activities in Argentina, specifically in the provinces of Salta and Jujuy, where it is running five lithium projects. These are the Mariana Project; Pozuelos-Pastos Grandes; the Cauchari-Olaroz Project; the Incahuasi Project; and the Sal de la Puna project.

Many market participants told Fastmarkets on the conference sidelines that RIGI favors and provides legal security for lithium projects, bringing more investment to Argentina.

“Argentina is the best positioned country in South America, with low costs and good government policies, such as RIGI. Bolivia, on the other hand, is a disaster. There are no rules. All the plants are government-owned and the government wants to take over everything. In Chile, there are also many restrictions because of the government,” a source that is developing a project in the Lithium Triangle said.

“Argentina is the best positioned in South America,” a second producer source said. “Bolivia produces little and its lithium is of low quality, because it has a lot of impurities. Chile also has government involvement.”

And according to a third producer source, the market must understand that the triangle is a hybrid region, so some projects have better competitive advantages than others.

Also, salt flats differ in their levels of lithium concentration. “The market will become more demanding and will select the best, low-cost projects, and this could be an advantage for Argentina. There are many projects that will not go ahead in South America, but some have a competitive advantage in Argentina,” the third producer source said.

“I don’t know how quickly Bolivia can adjust to a new scenario,” a fourth source said. “It’s not market-driven market, it’s institutionalized. They have the material, but politics is a problem there.”

Chile challenges and DLE

Another market participant told Fastmarkets that they saw great investment opportunities in Chile, which is the longest standing lithium-producing country in the world, but was disappointed by the level of government intervention.

In April 2023, the Chilean government announced that it intended to nationalize its lithium resources under the “National Strategy for Lithium.”

The goal would be to establish a state-owned company, National Lithium, to oversee the entire production cycle of the critical mineral.

According to the UN Trade and Development (UNCTAD) website, the country’s existing state-owned copper companies, Codelco and ENAMI, will play leading roles in this endeavor. The state will retain a majority stake in projects deemed strategic for the country.

Some market participants saw this nationalization plan as having the potential to impede further foreign investment into production in the region.

Lithium-ion battery supply chain consultant Jose Hofer told Fastmarkets that Chile has wonderful resources of lithium, but faces a lack of human capital and government intelligence.

“Chile has significant production, but the future capacity will take 8-10 years to expand,” Hofer said. “This is not what we see in Argentina, for example, where production will quintuple in 10 years. The current Chilean government is radical left-wing, and is pushing for the state to have control.”

One of the main points of the new national strategy is that companies that want to invest in the country must now adopt direct lithium extraction (DLE)-based processes to partner with the Chilean government, because the country is focusing on the adoption of new lithium extraction technologies that minimize their environmental consequences.

Gigante believes that the Chilean government’s decision regarding mandatory DLE is a big mistake.

“I don’t know any company in the world that is working on an industrial scale for DLE,” he said. “Traditional evaporation is a better option, not expensive, very productive, and friendly to the environment. In Chile, there are no new projects, and if you start a project, you’ll need maybe 7-10 years to develop a DLE project.”

For Hofer, it was important to note that DLE uses more fresh water and interferes in the chemical balance of what is below the salt flat. “Besides,” he added, “many of these technologies have not been proven to be commercially feasible.”

According to Fastmarkets’ research team, unconventional resources are necessary to offset the supply/demand deficit forecast for the future, while also promising higher recovery rates and better environmental-social-governance (ESG) credentials, although the technology is costly compared with conventional recovery methods.

There are five DLE technologies, which are not new, according to Fastmarkets’ research team.

“Livent has been using absorbent DLE technology for 26 years,” they said, “but all the absorbent technologies are at pre-commercial stages, so it’s possible to see potential delays to projects using DLE. The commonality across all five is the promise to increase recovery, cut costs, reduce production times and improve the ESG footprint of lithium production, compared with traditional methods.

“Whether these technologies will scale-up has yet to be proven,” they added. “If successful, DLE has the potential to unlock 25 million tonnes of LCE in unconventional resources, while simultaneously lowering the environmental footprint of traditional salar brine resources.”

Argentina, not a paradise

Argentina stands out for many reasons and for receiving a lot of private capital, with a high percentage of salt flats in foreign hands. But despite being considered to be in a better position, market participants noted that the country must face its challenges and many projects will be delayed.

“Ramp-ups in Argentina are very underestimated. Although we have the plants, ramping up and achieving full capacity will take more time,” a producer source said, adding the low prices are affecting the development of projects in the country.

According to Gigante, the biggest problem in Argentina is infrastructure. The mines are in very isolated locations, and the roads to get there are poor.

“We don’t have very good ports, and they are far away from the Triangle,” he said. “Catamarca, Salta and Jujuy are the poorest areas and are where the lithium is concentrated in Argentina. We don’t have trains in Argentina – all the production is going on trucks. This is a problem, because the logistics cost is high. I don’t know if the roads are ready to respond to this lithium growth in Argentina. It might be a problem.”

Luo also said in his speech at the Litio en Sudamérica event that Argentina faces problems with logistics, value chain and infrastructure. The Mariana project, he said, “is very ambitious and is located in a remote location, without access to natural gas or electricity. Therefore, we are building one of the largest off-grid solar plants, designed to supply our entire chemical plant.”

Hofer said that logistics were a problem in the Lithium Triangle, mainly in Argentina, where output must cross the Andes region to get to Chilean ports. “The country with the greatest advantage in this regard is Chile, because it has the main important ports in its territory,” he said.

The main Chilean ports are Antofagasta, Angamos and Mejillones.

Current lithium pricing

Fastmarkets assessed the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price, cif China, Japan & Korea, at $8.50-10.00 per kg on Thursday November 21, up by 5.71% from $8.00-9.50 per kg the previous day.

Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, stable on Thursday at $10.80-11.40 per kg, unchanged since Tuesday.

This article is part of a special report on the Lithium Triangle. You can read the other two parts here and here.

If you’re interested in learning more about Argentina’s mining sector, fill out the form here to access our recent webinar replay. This comprehensive session provides in-depth insights and expert opinions, offering valuable information for anyone looking to explore this burgeoning market. 

The post The Lithium Triangle: A potential giant but with challenges to overcome appeared first on Fastmarkets.

The countries that comprise the Lithium Triangle currently control more than 50% of global lithium resources, with production concentrated in the salt flats regions of Argentina, Chile and Bolivia, where there are lithium brine deposits.

Mineral Commodity Summaries by the US Geological Survey in January 2024 showed that the world’s lithium resources have increased substantially and now total 105 million tonnes.

You can see how/where the Lithium Triangle is located in the image below:

Currently, according to Fastmarkets’ research team, Argentina has 85 lithium projects at different stages of exploration and construction. These are mainly in the most arid areas of the country – Catamarca, Jujuy and Salta – with seven operations working.

Chile, on the other hand, has 19 projects between exploration and construction, with two operations working and one expected to begin production in 2025.

Bolívia has no active lithium projects at the moment.

The tables below show the operational and advanced projects that are filtered and used to create Fastmarkets’ long-term forecasts.

For more information on our long-term price analysis of the global lithium market, see Fastmarkets’ lithium 10-year long-term forecast.

Production forecast

Fastmarkets’ updated 10-year production forecast for the three countries that form the Lithium Triangle are as follows:

Argentina
Argentinian production was expected to increase at a compound annual growth rate (CAGR) of 15% between 2024 and 2034, to reach 355,200 tonnes per year.

Although brine production was a relatively low cost procedure, new projects and further expansion in the country were likely to be delayed or halted in the current price environment.

Despite the near-term challenges, Fastmarkets expects Argentina to become an increasingly significant participant in the global lithium market. But many projects are focusing on direct lithium extraction (DLE) as opposed to traditional processing routes, so there is additional risk to the downside.

Chile
Chilean production is forecast to increase at a CAGR of 3.6% between 2024 and 2034, to reach more than 371,000 tpy.

Given the scale of the lithium resources in Chile and the cost-competitiveness of the industry, Fastmarkets expects more Chilean projects to be established over the next decade.

SQM plans to expand its production capacity in the Salar de Atacama to 300,000 tpy from about 200,000 tpy. Chile’s National Mining Company, ENAMI, intends to start construction on its first lithium project in the country as early as 2027.

The country is also turning its attention to increasing lithium hydroxide production, which is set to grow to 50,160 tonnes of LCE in 2034 from 22,000 tonnes of LCE in 2023 – a 128% increase.

Bolivia
Bolivia has awarded the rights to develop projects in the Uyuni and Oruro salt flats.

State-owned producer Yacimientos de Litio Bolivianos will play a central role in the project that intends to create two lithium plants, each producing as much as 25,000 tpy of battery-grade lithium carbonate. The operation intends to produce 100,000 tonnes by 2028 using DLE.

Bolivia has also entered into an agreement with Russian state-owned company Uranium One Group to build a DLE pilot plant that is expected to commence operations in 2025, producing 1,000 tonnes of battery-grade lithium carbonate in its first year.

The Bolivian government is clearly much more amenable than in the past to international partnerships, which bring significant investment and development expertise. But given that much of the planned production is based on DLE, there is significant technical risk to achieving the announced production targets.

Current lithium pricing

Fastmarkets assessed the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price, cif China, Japan & Korea, at $8.50-10.00 per kg on Thursday November 21, up by 5.71% from $8.00-9.50 per kg the previous day.

Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, stable on Thursday at $10.80-11.40 per kg, unchanged since Tuesday.

This article is part of a special report on the Lithium Triangle. You can read the other two parts here and here.

If you’re interested in learning more about Argentina’s mining sector, fill out the form here to access our recent webinar replay. This comprehensive session provides in-depth insights and expert opinions, offering valuable information for anyone looking to explore this burgeoning market. 

The post The Lithium Triangle: Three countries control more than 50% of global resources appeared first on Fastmarkets.

In the first three quarters of 2024, Mexico imported 353,416 units of fully manufactured vehicles from China, a volume only exceeded by Russia. The country was also the second-largest importer of Chinese vehicles last year.

Total automotive imports from China into Mexico reached 415,000 units in 2023, a figure that has been increasing for five years, according to the China Association of Automobile Manufacturers (CAAM).

Sales by carmakers BYD, JAC Group, Geely and other Chinese brands in Mexico totalled 129,329,000 units in 2023, up by 63% year on year, according to Mexican institutes INEGI and AMDA.

“China became Mexico’s largest auto importer in 2023. Vehicles from China account for 30% of Mexico’s total auto imports, and Chinese auto brands take nearly 20% of Mexico’s market share,” an industry analyst said.

SAIC Motor, Chery and JAC Group were the three best-performing Chinese automakers in Mexico. SAIC’s MG brand entered the top 10 sales list in Mexico last year, with sales exceeding 60,000 units, according to MG.

Both SAIC Motor and BYD also revealed plans to build manufacturing plants in Mexico this year.

BYD will invest $600 million into building a new energy vehicle (NEV) production plant in Mexico with capacity for 150,000 units per year, it said. The company said recently that it expected sales of electric vehicles in Mexico to reach 50,000 units in 2024.

Volvo, which is majority-owned by Chinese company Geely, announced in October that it will build a $700 million truck manufacturing plant in Mexico’s northeastern city of Monterrey.

JAC Group started localized manufacturing in Mexico as early as 2017, in cooperation with Mexico’s Giant Motors.

Risks and opportunities

“Since Trump announced increased tariffs [to be applied to] imports from China, many Chinese producers have been exporting materials and components to Mexico to be assembled into fully manufactured products, which will show Mexico as the place of origin if they are exported into the US,” an industry analyst said.

Mexico’s free trade agreements make it a desirable destination for foreign capital to set up localized manufacturing capabilities.

Mexico received $36 billion of foreign direct investment in 2023, a 27% increase over the previous year. Such investment totalled $31 billion from January to August this year, a record high, according to Mexico’s Ministry of Economy.

About 80% of cars manufactured in Mexico go to export, with the US being the principal destination, trade sources told Fastmarkets.

In 2023, Mexico overtook China as the biggest importer of goods into the US for the first time since 2002. The value of Mexican imports into the US totaled $475.6 billion in 2023, up by $20 billion, 5%, from the figure in 2022. Imports from China to the US were worth $427.2 billion, falling by more than $110 billion, 20%, according to data from the US Department of Commerce.

But market sources said that, with Trump threatening to impose a 100% tariff on vehicle imports from Mexico, it was difficult to see whether Mexico would remain an ideal channel for Chinese producers seeking to enter the US market.

Elon Musk, chief executive officer of electric car-maker Tesla, announced a pause in operations at Tesla’s factory in Monterrey, Mexico, and said that instead the company would increase production at its existing plants in California and Texas.

Despite the expected challenges, trade sources told Fastmarkets that the South American market still had huge potential.

Brazil, alongside Belgium, has been the top destinations for China’s NEV exports.

The Brazilian NEV market boomed in 2024 and has huge potential for future growth, in terms of sales and manufacturing, Sun Xiaohong of CCCME (China Chamber of Commerce for Import and Export of Machinery and Electronic Products) said at an industry conference this month.

Major Chinese automakers such as BYD, Great Wall Motor and Chery Automobile have all announced production plans in Brazil.

BYD said that it was building manufacturing assets in the eastern state of Bahia with capacity for 150,000 units per year, expected to go into production in late 2024 or early 2025. And according to a company statement, the plants will also process lithium and iron phosphate for the global electric vehicle market.

Discover how the 2024 US election is impacting and could impact US and global commodity markets with Fastmarkets. Head to our US election hub.

The post China’s auto exports to Mexico still rising; but face challenges in US from Trump presidency appeared first on Fastmarkets.

The largest source of cobalt – the copper-cobalt mines in the Democratic Republic of the Congo (DRC) – which accounted for 76% of global cobalt production in 2023, and that number forecast to have remained unchanged through 2024 and 2025, according to Fastmarkets researchers.

Cobalt is usually extracted from copper ore at a ratio of 10:1 copper to cobalt, which means that increases in copper production costs can have a direct impact on cobalt costs and supplies. And through 2024, high copper prices and tight concentrate supplies incentivized significant expansions in copper mining capacity. 

China Molybdenum Co (CMOC), a major copper-cobalt producer, posted a 78% year-on-year increase in copper production in the first nine months of 2024 – resulting in a 127% (47,399 tonnes) surge in cobalt output to 84,722 tonnes of cobalt during the same period. 

But with cobalt demand remaining decidedly sluggish, copper’s upward trajectory will continue to fuel cobalt oversupply and, combined with the fact that copper production is poised to expand further, this will keep cobalt prices under pressure.

According to Fastmarkets researchers, copper prices are expected to remain strong through the remainder of 2024 and throughout 2025, supported by growing demand for renewable energy and electric vehicles (EVs). 

“In the short term, higher copper prices will continue to incentivize mined supply growth in the DRC,” Fastmarkets research analyst Robert Searle said. 

And a trader said cobalt’s secondary role mean that its oversupply will continue to grow. 

“Producers in the DRC will continue to mine copper to capitalize on its higher profitability. And even if the cobalt by-product is left unsold, the producers will still make great profits solely on copper,” the trader said. 

Fastmarkets researchers forecast a 1.1% growth in refined copper supply for 2025. 

Indonesia nickel production to have growing impact on cobalt

Nickel production has increasingly shaped the cobalt market, particularly through Indonesia’s rapid expansion of its mixed hydroxide precipitate (MHP) output. 

Indonesia became the world’s the second-largest supplier of cobalt and, in 2024 alone, is forecast to have supplied 10% of the world’s cobalt – up from 7% in 2023.

Indonesia’s refined nickel industry, supported by Chinese investment, has become a cornerstone of China’s nickel supplies and Chinese producers dominate in Indonesia’s MHP projects, ensuring a steady feedstock supply for China’s downstream battery industry. 

Despite short-term weakness in nickel prices and a bearish market, Chinese investments in projects to extract cobalt from nickel laterite ore using the high-pressure acid leach (HPAL) process, highlight a long-term strategy to secure critical resources for battery production, with the use of nickel in batteries expected to grow significantly, according Fastmarkets research analyst Olivier Masson. 

These HPAL projects have guaranteed sustained growth in Indonesia’s cobalt output and cobalt production from MHP is expected to grow by 17%,from 29,000 tonnes in 2024 to 34,000 tonnes in 2025. 

While producers used to derive cobalt sulfate from MHP, recent trends have shifted to cobalt metal production because of its higher profitability and easier storage, according to sources. 

“Cobalt metal is a by-product in our HPAL projects, and [can be produced] with almost no additional cost. We are exploring different export options for these metals,” a major nickel and cobalt producer said.

Indonesia’s cobalt metal could potentially enter the US market tariff-free, unlike Chinese cobalt, which faces a 25% import tariff. That possibility could raise concerns about shifting global supply dynamics and increase the pressure on cobalt prices, sources said.

Oversupply amid uncertainty

With increased copper and nickel production, the cobalt market faces continued oversupply heading into 2025. 

The global cobalt market is forecast to see an oversupply of 25,000 tonnes in 2024 and 21,000 tonnes in 2025, according to Fastmarkets researchers.

Uncertainty remains, however. 

For copper, despite the expected rise, the market remains sensitive to macro-economic conditions and geopolitical events. A strong US dollar and weaker industrial demand in Western economies could disrupt prices, for instance. And there could be a slowdown in refined supply growth in 2025 due to a reduction in primary production, according to Fastmarkets researchers.

For nickel, the growth in Indonesia has caused supply rationalisation and shutdowns in other countries, with most cobalt deposits outside of the DRC being nickel-cobalt mines.  

“The oversupply and weak pricing in the nickel market is challenging the economics of current ex-Indonesian producers as well as the future viability of projects in countries like Australia and Canada,” Searle said. 

“Australia nickel-cobalt operations have higher mining and processing costs and the glut of nickel that has arrived in the market over the past three years has meant many of these are no longer economical,” he added. 

Geopolitical tensions add another layer of uncertainty. While Indonesian cobalt metal theoretically enjoys tariff-free access to the US, geopolitical barriers and trade policies could limit outflows.

“With most producers in Indonesia jointly owned by Chinese companies, it’s still challenging for Indonesian cobalt to enter the US. The election [of Donald Trump in the US] could also add more barriers for these cobalt metals,” a second trader said.

So, while 2025 promises growth in both copper and nickel production, the interplay between macro-economic conditions, trade dynamics and technological advancements could have a big influence on cobalt’s trajectory.

If you’re looking for clarity on how the cobalt market will evolve over the next decade, Fastmarkets’ cobalt long-term forecast will give you the insights, price data and expert economic modelling you need. To get a sample of a recent cobalt long-term forecast, click here to fill in the form.

The post How global copper, nickel markets will drive the outlook for cobalt in 2025 appeared first on Fastmarkets.

The agreement with Stellantis is significant not only in its size but also because it is on the original equipment manufacturer (OEM) level, according to Burns.

“OEMs are recognizing the significance of graphite in their supply chain and the desire to localize it and not be fully reliant on Chinese supply. And they are reaching past their cell manufacturing partners upstream,” the CEO said.

OEMs have been aiming to diversify their supply chains and secure volumes they will need because domestic production of graphite is expected to be limited, he added.

“You will certainly see continued focus on [securing North American supply] from the OEMs because they understand [the need] and can take a very long-term view,” Burns said.

This move to secure and diversify supply chains was spurred by OEMs’ own decarbonization goals and their forecast demand for their vehicle sales, he added.

Novonix’s deal with Stellantis follows a similar binding offtake supply agreement with Panasonic in February, under which Novonix will supply the EV battery producer with at least 10,000 tonnes of anode material from its Riverside facility from 2025 to 2028.

Other battery raw materials producers have recently made deals with OEMs. In October, Lithium Americas entered into a $625-million investment agreement with US automaker General Motors (GM) for North America-sourced lithium supply.

Uphill battle in securing US supply chains

In November 2023, Novonix announced it finalized its $100 million grant award from the Department of Energy (DOE) to expand its domestic production of synthetic graphite anode materials at its Riverside facility.

This April, the company was also elected by the DOE to receive $103 million in tax credit refunds under the Qualifying Advanced Energy Project Credit (48C).

Novonix has experienced great benefits from these stimuli through the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) as well as indirectly, as these have supported the whole industry, from the vehicle and consumer level to the cell manufacturer level, according to Burns.

“All of those [incentives] have helped push the industry to its tipping point, where it is ready to take off and build some amount of internally reliant domestic supply,” he told Fastmarkets.

The US graphite industry is fighting two uphill battles, Burns said:

• It is competing against an established supply chain from China that is years ahead, while the US industry still carries the inefficiencies of a nascent industry
• Competition with China, the biggest producer of synthetic graphite, is on an unlevel playing field as the Chinese government continues to support its industry with state subsidies and operates on lower cost because it does not heed the Western environmental, social and governance (ESG) practices

The US needs to overcome these two challenges as it builds its industry, and this can be achieved through government policies, whether through injecting capital into the domestic industry, adjusting the price of imported material through tariffs, or, as it has been until now, a mix of them, Burns said.

“Although government policies may shift within the energy sector, we are confident that supporting energy independence and domestic manufacturing will remain a priority,” the CEO said.

“Support for domestic critical minerals production remains a bipartisan priority, and although the mechanisms of support may change — tariffs rather than direct investments, for instance — the goal remains unchanged: building a domestic supply chain, decoupling from China, and strengthening US energy independence,” he added.

Resilience in graphite market

The development of different battery chemistries – such as silicon-based and solid-state batteries, neither of which use graphite – will augment the growth and need for new materials, but they will not take away the market opportunity for graphite sales, according to Burns.

“[The graphite market] is going to continue to grow,” he said.

To limit global warming to 1.5 degrees Celsius, the International Energy Agency (IEA) estimates that demand for graphite will increase by four times by 2040, “propelled by the substantial increase in battery deployment for EVs and grid storage.”

Novonix is on track to achieving the first commissioning of its Riverdale facility in the first half of 2025; delivery to Panasonic is targeted to begin in late 2025 and to Stellantis on January 1, 2026, with total output set to reach 20,000 tonnes per year.

The company will build a new greenfield site with an initial capacity of 30,000 tonnes and the ability to expand into 75,000 tonnes and continue to work with existing customers as well as develop new ones.

Want to find out more about our critical minerals price data, forecasts and market insights? Our expert editorial team, analysts and price reporters working across metals, battery raw materials and rare earths bring you the latest price trends, market insights and forecasts for the critical minerals market. Read more here.

The post US EV makers increasingly partner with upstream producers to secure battery supply: Novonix CEO appeared first on Fastmarkets.

Lithium carbonate prices were 15,700 yuan per tonne higher than lithium hydroxide as of Thursday, November 14 – a calculation based on Fastmarkets’ latest weekly price assessments for battery-grade lithium salts.

Since June 2023, lithium carbonate prices have consistently maintained a premium over hydroxide, reversing a prolonged period of discounts. And the widening price gap has accelerated the conversion of significant quantities of lithium hydroxide into carbonate by major producers.

At least six major lithium salt producers have shifted part of their hydroxide production to carbonate, according to a trader source, who did not disclose the extent of the reduction in hydroxide output.

And two Sichuan-based lithium producers told Fastmarkets they had switched some of their production lines from producing hydroxide to producing carbonate.

In addition to switching production to carbonate, several Chinese lithium producers told Fastmarkets they had converted existing hydroxide products into carbonate.

“For a lithium converter, the cost to convert one tonne of hydroxide into one tonne of carbonate is a couple of thousand yuan. Now the gap between carbonate and hydroxide prices is wide enough to make the conversion economically viable,” a Chinese lithium producer source said.

And a Chinese lithium trader told Fastmarkets: “For those who don’t have their own conversion capacity, the cost to convert one tonne of hydroxide into one tonne of carbonate is just slightly above 10,000 yuan per tonne.”

But the reduction in available hydroxide supplies is making it difficult for anyone to buy spot hydroxide and then convert it to carbonate, especially as lithium producers are doing so themselves because of the improved margins, market participants said.

“We are converting our own hydroxide to carbonate for better margins, rather than selling our hydroxide to others so they can make margins from the conversion,” the Chinese lithium producer source said.

Tighter supplies, higher costs push up hydroxide prices

In addition to tighter supplies, the elevated cost of production is therefore another major contributor to the increase in lithium hydroxide prices, Fastmarkets understands.

“Based on the current [lithium] hydroxide prices, spodumene prices need to be no more than $730 per tonne for producers to break even,” a second Chinese lithium trader said.

But because of the current high spodumene prices, Chinese lithium producers sources told Fastmarkets they lose money on every tonne of lithium hydroxide they deliver.

Fastmarkets’ price assessment for spodumene min 6% Li2O, spot price, cif China fell to $840-870 per tonne on Friday November 15, down from $850-880 per tonne on November 14.

One major NCM cathode manufacturer source told Fastmarkets it had received a notice from a hydroxide supplier canceling its December contract deliveries.

“I believe their real goal [of canceling December deliveries] is to raise prices,” the source said, adding that new hydroxide offers from the supplier, and others, have exceeded 70,000 yuan per tonne.

“They have all revoked the 7% discount previously offered for long-term deliveries,” according to the trader source.

Weak demand for NCM batteries in China had weighed on lithium hydroxide consumption over the past two years – while the rapid growth in the energy storage sector partially offset the slowdown in demand for electric vehicles (EVs) and supported demand for LFP batteries and lithium carbonate.

Fastmarkets’ weekly price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price range exw domestic China, rose to 68,000-70,000 yuan ($9,390-9,665) per tonne on November 14, up by 2,000-3,000 yuan per tonne from 65,000-68,000 yuan per tonne a week earlier.

The price rise is the increase after three weeks of stability

Fastmarkets’ weekly assessment for lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 83,400-86,000 yuan per tonne on November 14, up 9,400-10,000 yuan per tonne from 74,000-76,000 yuan per tonne a week earlier.

The post Widening lithium hydroxide-carbonate spread tightens supplies of hydroxide, pushing up prices appeared first on Fastmarkets.

Fastmarkets’ research team forecasts that EV sales in the US will reach 9.55 million units by 2034 under a Trump presidency, 5% lower than forecast for a Harris-victory scenario during the same period.

“I would argue that the EV industry is poised for a setback under the Trump administration,” Fastmarkets energy storage system analyst Phoebe O’Hara said. “Trump is not known for his support of the green transition, and there is a significant likelihood that the Environmental Protection Agency’s (EPA) 2027 emissions rules, which currently push strongly toward EV adoption, are likely to be revised. This could result in the United States failing to meet its expected targets for EV adoption of 50% by 2030.”

Market participants in China are cautious about how the new presidency will affect the EV and battery industry, given that the policy details remain unknown and that Elon Musk, Tesla’s chief executive officer and major Trump supporter, might play a role in the future government.

“We are cautious about Trump’s presidency and not sure about a potential impact on the EV market. Trump’s re-election will very likely slow down the EV market growth in the US,” a South Korea-based battery producer said. “But I think it will have a very limited impact on the lithium market, given that that US EV market is very small in the world.”

Fastmarkets has heard that Trump’s re-election also created uncertainty over the IRA, which is a key driver for new energy supply chain development under the Biden administration, mobilizing $400 billion to support clean energy and address climate change through tax credits, grants and loans.

While it is unlikely that Trump could reverse the IRA in its entirety, considering Republicans’ vested interests in the IRA mechanism, it is likely that he could change its terms to make it more difficult for companies to qualify for subsidies, according to Fastmarkets’ battery raw materials demand analyst Connor Watts.

An anode producer in China said, “There are two issues to be addressed by the Trump presidency. One is his attitude toward new battery-related projects in the US on top of the huge money distributed into the EV industry under Biden’s term, and the other is how Musk’s addition will change the picture.”

Delays in battery project expansions

Potential policy shifts in the US are leading to more conservative expansion plans for major battery raw materials along the supply chain, according to sources.

“Our operation in Germany is facing obstacles after a Trump win,” a battery raw material producer said. “Trump’s policies, although they haven’t been officially outlined, will probably get rid of IRA incentives and focus less on EVs. At that point, our Germany operations will have no advantages, especially compared with those in China and Indonesia.”

A second battery raw material producer said, “It is also risky for operations in other North American countries. We announced a delay of one project in the region [on Wednesday] just after the election result. Trump’s protectionist trade policy means that it is not enough for investors to set up just the battery plant or the cathode plant. It means the whole supply chain [must be] within the US, which means increasing capital expenditure for producers seeking to construct the supply chain locally.”

Even for existing Chinese battery projects in the US, whether through equity or licensing agreements, there is a high probability that these projects may encounter difficulties and not proceed as smoothly as anticipated, Fastmarkets heard.

Tariffs on EVs, battery raw materials

Trump is expected to pursue protectionist policies to shift manufacturing within the country, Fastmarkets heard.

Lithium-ion cells for EVs already face a 25% tariff, and EVs a 100% tariff, under the Biden administration, and from 2026, the 25% tariff will also apply to energy-storage cells.

Market participants mostly downplayed the effect of any potential tariff increase on EVs exported to the US from China, given that the country only accounts for a small share of China’s EV exports.

But the risk persists because Trump has strongly opposed the presence of Chinese companies establishing operations in Mexico, a battery maker source in China said, adding that he could place tariffs on Mexico-based Chinese companies or Chinese companies based in any other country and looking to sell in the US.

“Trump had proposed to put a 200% tariff on cars produced in Mexico if they target the US market,” the battery maker source said.

The president-elect has also proposed a 60% tariff on all Chinese imports and a 10-20% tariff on imports from other countries under his presidency.

For battery raw materials, potentially higher tariffs add risk to cobalt metal producers in China and Indonesia, according to sources.

Currently, the US imposes a 25% tariff on Chinese cobalt metal imports, yet US imports from China remain substantial.

From January to September, US imports of Chinese cobalt metal ranked second in total Chinese cobalt export destinations, amounting to 480 tonnes, or 8% of the total 5,992 tonnes, according to data from China’s General Administration of Customs (GACC).

A 60% tariff could drastically reduce and potentially eliminate these imports to the US, sources said.

“In addition, fluorspar, a raw material for battery electrolytes, is affected by a potential high tax raise negatively impacting China’s EV export and, therefore, the lithium battery materials industry. This might result in a halt on the uptrend in China’s fluorspar prices in recent years if demand for battery materials slows,” a Chinese fluorspar producer said.

Near-term headwinds to battery raw materials

A few market participants expect a short-term increase in demand, given that buyers might restock before the end of the Biden administration, but most tend to be less positive about the battery raw materials market in the near term.

“In the short term, it is a headwind for the lithium market, given [Trump’s] unsupportive stance over the EV industry, and it’s reflected in the lithium carbonate price on the Guangzhou Futures Exchange (GFEX) [on Wednesday]. But in the medium-to-long term, it’s still dependent on what specific policies he will adopt,” an industry source said.

The most-active January GFEX lithium carbonate futures contract closed at 75,900 yuan ($10,578) per tonne on Wednesday after bottoming at 74,750 yuan per tonne earlier in the day; the contract had opened at 77,500 yuan per tonne.

Until policy details are clear, demand weakness and oversupply will continue to pressure the market, a cobalt metal trader said. EV growth in Europe has been negative from January to September, and Trump’s unfavorable stance toward EVs is sending additional bearish signals, the trader added.

In the coming months, the market will realize if there will be more stimulus policies from China as Beijing ends the Standing Committee of the National People’s Congress on Friday November 8 and the Trump administration details its policies clarifying its approach to the US’ energy transition landscape, Fastmarkets heard.

Discover how the 2024 US election is impacting and could impact US and global commodity markets with Fastmarkets. Head to our US election hub.

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