Lithium Price Collapsed 70 Percent Amid Talk of Glut

The spot price of lithium carbonate (99.5% battery grade), trading in Shanghai and serving as a key benchmark, spiked by almost 600% in 16 months and then collapsed spectacularly in a matter of 4 months. During the last week, however, it seems to have found a bottom.

The price hike started approximately in July 2021. At the time, it had been trading at 87,000 CNY (yuan) per ton. On November 11, 2022, it hit 600,000 CNY, representing a jaw-dropping gain of 590%. Then it faltered, while speculations created the critical mass, and the price plunged 72% precipitously, before ticking up for the first time. What caused this sharp turnaround?

According to FT, Direct Lithium Extraction (DLE) has the potential to significantly reduce the growing lithium shortfall, with implementation on the extraction of lithium brines potentially revolutionary to production and capacity, timing, and environmental impacts/permitting. So what we are facing is essentially the emerging industry of “shale lithium”.

DLE has the potential to significantly increase the supply of lithium from brine projects, nearly doubling lithium production/yield (taking recoveries from 40-60% to 70-90%+) and improving project ROIs, while also widening (rather than steepening) the lithium cost curve.

A number of proven DLE technologies are emerging and being tested at scale, with a handful of projects already in commercial scale construction (some China projects in production). Though the application of technologies used in DLE processes may be fairly new to the lithium industry, many are already utilised across other commodities. While there may still be key challenges around scalability, water consumption, and brine reinjection, with the ongoing efforts, DLE could be implemented between 2025-2030 in both Chile and Argentina.