6 ms·

Lithium producers hit by first big downturn of electric vehicle era

67 points by howard941 7y ago

jandrese 7y ago
Just last year[1] there was hand-wringing that the world was using up the entire production capacity for lithium and batteries were going to skyrocket in price. [1] https://www.engineering.com/AdvancedManufacturing/ArticleID/17068/Lithium-Shortage-Expected-Due-to-Lack-of-Mines.aspx https://www.engineering.com/AdvancedManufacturing/ArticleID/...
- albalus 7y ago
  Lots of mining sites have created a supply glut, this isn't a downturn just a market correction. Not a negative for consumers.
- marcosdumay 7y ago
  Markets with long time between investment and realization have some funny dynamics. The article claims a 5% difference between production and sales. That small difference means entire players will fail, and every one will suffer. A 5% difference on the other direction means incredibly large profits, but electrical automobiles priced outside of the capacity of most people to pay. With time it will stabilize, but you can expect many more of those headlines.
- Tuna-Fish 7y ago
  Lithium supply can be grown without meaningful limit, if someone is willing to invest the capital for it. The problem is that the supply follows the capital investment with a ~5 year lag, and 5 years ago a little too much was invested, so now there is a glut. As the actual extraction costs are relatively small compared to the initial capital outlay, and everyone needs to pay their investors, no-one can really cut production and everyone needs to sell at whatever price they can until someone goes bankrupt and capacity is reduced again. This is how relatively small mismatches in capacity can lead to major price fluctuations.
  - ksec 7y ago
    >and everyone needs to pay their investors, no-one can really cut production and everyone needs to sell at whatever price they can until someone goes bankrupt and capacity is reduced again. So it has nothing to do with market supply and demand problem but companies cashflow problems? So theoretically the banks which funded these extraction can also hedge against it with the rise and fall of lithium price?
JaRail 7y ago
The headline makes no sense when they follow it up by saying > Battery-grade lithium is used primarily in EV batteries, and many automakers have high purity standards. Much of the industry’s capacity to produce high-quality, battery-grade lithium is locked up until 2024 They're just putting two unrelated things in a headline to imply they're related. It's clickbait/FUD. If they're selling all the battery-grade lithium, why don't they tell us about why demand is down for low-grade lithium?
- dmix 7y ago
  This is very much standard accounting practices, especially in mining and other limited resources.
- flat_white 7y ago
  If you read the article properly, you will see that quote is attributed to a commodity analyst. The article is adding nuance to the story and canvassing a range of views. It's not clickbait. The downturn in lithium prices recently has been significant and publicly traded companies have been sold off strongly (even high grade producers).
  - happosai 7y ago
    Downturn in low-quality lithium price. We don't know what the real price of high quality battery quality lithium is, as all battery quality supply is locked in long term confidential offtake agreements. What we know, is lithium companies latest round of results was not great. Stock prices are spiralling. EV makers will find out without paying more to lithium suppliers, they won't get as much batteries as they wish.
cwkoss 7y ago
I've seen a lot of people online suggest that the Bolivian coup was CIA-backed to take control of their lithium production.
- deleted 7y ago
  [deleted]
- chrisjc 7y ago
  First time I've heard this, although I've heard similar things about Afghanistan. If this is true, what have been the beneficial lithium-based financial outcomes of the intervention Afghanistan?
- aalleavitch 7y ago
  I've seen this too, and I don't think it's ridiculous at all. But I don't even think the CIA needs to have been involved. Private companies are now entirely capable of running their own disinformation campaigns and meddling in electoral processes. I actually think that it's less likely for companies to be going after the lithium than it is that they're going after the natural gas. BP has every incentive in the world to want to overthrow Morales.
  - cwkoss 7y ago
    Bolivia has 9 million tons of unexploited lithium reserves in their salt flats. "The region has 50% to 70% of the world's lithium reserves in the Salar de Uyuni salt flats." https://www.commondreams.org/news/2019/11/11/bolivian-coup-comes-less-week-after-morales-stopped-multinational-firms-lithium-deal https://www.commondreams.org/news/2019/11/11/bolivian-coup-c...
    - aalleavitch 7y ago
      Between that and the natural gas, Bolivia will be a key natural resource in the eventual solar-dominated energy economy.
    - emmp 7y ago
      That doesn't seem to track with the latest USGS numbers here. https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium/production/atoms/files/mcs-2019-lithi.pdf https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium... Bolivia doesn't even chart for reserves (i.e., extractable right now). Have they brought significant capacity online in the last year since this report was collected? For resources (extractable in principle) there are 62 million tons of identified resources worldwide, of which Bolivia has 9 million tons. That is a lot, about 15%, but certainly no where near 50-70%. Notably Argentina has 14.8 million tons. I guess I'm just curious if there are better sources or if I'm misunderstanding the USGS report.
woodandsteel 7y ago
This is just a temporary blip. Long-term demand for lithium is going to explode, and so of course will production. That is because demand for both ev's and storage is going up rapidly over the long term. The smart investors with deep pockets are going to get very rich. And let us not forget that commodity mineral prices often fluctuate. As for the current drop in ev sales in China, from what I understand that is because there are at present 486 ev producers there (no, I'm not kidding) and the government cut subsidies to weed out the vast majority that will never be competitive. Once that happens the government will no doubt go back to promoting sales.

67 points by howard941 7y ago

Just last year[1] there was hand-wringing that the world was using up the entire production capacity for lithium and batteries were going to skyrocket in price. [1] https://www.engineering.com/AdvancedManufacturing/ArticleID/17068/Lithium-Shortage-Expected-Due-to-Lack-of-Mines.aspx https://www.engineering.com/AdvancedManufacturing/ArticleID/...

albalus 7y ago
Lots of mining sites have created a supply glut, this isn't a downturn just a market correction. Not a negative for consumers.
marcosdumay 7y ago
Markets with long time between investment and realization have some funny dynamics. The article claims a 5% difference between production and sales. That small difference means entire players will fail, and every one will suffer. A 5% difference on the other direction means incredibly large profits, but electrical automobiles priced outside of the capacity of most people to pay. With time it will stabilize, but you can expect many more of those headlines.
Tuna-Fish 7y ago
Lithium supply can be grown without meaningful limit, if someone is willing to invest the capital for it. The problem is that the supply follows the capital investment with a ~5 year lag, and 5 years ago a little too much was invested, so now there is a glut. As the actual extraction costs are relatively small compared to the initial capital outlay, and everyone needs to pay their investors, no-one can really cut production and everyone needs to sell at whatever price they can until someone goes bankrupt and capacity is reduced again. This is how relatively small mismatches in capacity can lead to major price fluctuations.
- ksec 7y ago
  >and everyone needs to pay their investors, no-one can really cut production and everyone needs to sell at whatever price they can until someone goes bankrupt and capacity is reduced again. So it has nothing to do with market supply and demand problem but companies cashflow problems? So theoretically the banks which funded these extraction can also hedge against it with the rise and fall of lithium price?

JaRail 7y ago

The headline makes no sense when they follow it up by saying > Battery-grade lithium is used primarily in EV batteries, and many automakers have high purity standards. Much of the industry’s capacity to produce high-quality, battery-grade lithium is locked up until 2024 They're just putting two unrelated things in a headline to imply they're related. It's clickbait/FUD. If they're selling all the battery-grade lithium, why don't they tell us about why demand is down for low-grade lithium?

dmix 7y ago
This is very much standard accounting practices, especially in mining and other limited resources.
flat_white 7y ago
If you read the article properly, you will see that quote is attributed to a commodity analyst. The article is adding nuance to the story and canvassing a range of views. It's not clickbait. The downturn in lithium prices recently has been significant and publicly traded companies have been sold off strongly (even high grade producers).
- happosai 7y ago
  Downturn in low-quality lithium price. We don't know what the real price of high quality battery quality lithium is, as all battery quality supply is locked in long term confidential offtake agreements. What we know, is lithium companies latest round of results was not great. Stock prices are spiralling. EV makers will find out without paying more to lithium suppliers, they won't get as much batteries as they wish.

cwkoss 7y ago

I've seen a lot of people online suggest that the Bolivian coup was CIA-backed to take control of their lithium production.

deleted 7y ago
[deleted]
chrisjc 7y ago
First time I've heard this, although I've heard similar things about Afghanistan. If this is true, what have been the beneficial lithium-based financial outcomes of the intervention Afghanistan?
aalleavitch 7y ago
I've seen this too, and I don't think it's ridiculous at all. But I don't even think the CIA needs to have been involved. Private companies are now entirely capable of running their own disinformation campaigns and meddling in electoral processes. I actually think that it's less likely for companies to be going after the lithium than it is that they're going after the natural gas. BP has every incentive in the world to want to overthrow Morales.
- cwkoss 7y ago
  Bolivia has 9 million tons of unexploited lithium reserves in their salt flats. "The region has 50% to 70% of the world's lithium reserves in the Salar de Uyuni salt flats." https://www.commondreams.org/news/2019/11/11/bolivian-coup-comes-less-week-after-morales-stopped-multinational-firms-lithium-deal https://www.commondreams.org/news/2019/11/11/bolivian-coup-c...
  - aalleavitch 7y ago
    Between that and the natural gas, Bolivia will be a key natural resource in the eventual solar-dominated energy economy.
  - emmp 7y ago
    That doesn't seem to track with the latest USGS numbers here. https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium/production/atoms/files/mcs-2019-lithi.pdf https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium... Bolivia doesn't even chart for reserves (i.e., extractable right now). Have they brought significant capacity online in the last year since this report was collected? For resources (extractable in principle) there are 62 million tons of identified resources worldwide, of which Bolivia has 9 million tons. That is a lot, about 15%, but certainly no where near 50-70%. Notably Argentina has 14.8 million tons. I guess I'm just curious if there are better sources or if I'm misunderstanding the USGS report.

woodandsteel 7y ago

This is just a temporary blip. Long-term demand for lithium is going to explode, and so of course will production. That is because demand for both ev's and storage is going up rapidly over the long term. The smart investors with deep pockets are going to get very rich. And let us not forget that commodity mineral prices often fluctuate. As for the current drop in ev sales in China, from what I understand that is because there are at present 486 ev producers there (no, I'm not kidding) and the government cut subsidies to weed out the vast majority that will never be competitive. Once that happens the government will no doubt go back to promoting sales.