Business Maverick

Business Maverick

Lithium rally has more room to run, thanks to US climate bill

Lithium rally has more room to run, thanks to US climate bill
Ore falls from a conveyor onto a stockpile at the Bald Hill lithium mine site, co-owned by Tawana and Alliance Mineral Assets Ltd., outside of Widgiemooltha, Australia, on Monday, Aug. 6, 2018. Australia’s newest lithium exporter Tawana is in talks with potential customers over expansion of its Bald Hill mine and sees no risk of an oversupply that would send prices lower.

Lithium prices have already been on a monumental tear. But if there’s one thing that the industry’s top executives agree on it’s that there’s room to go even higher. 

That’s partly thanks to President Joe Biden’s signature climate and tax bill known as the Inflation Reduction Act (IRA). A key piece of the legislation is focused on bolstering production and processing for critical battery metals like lithium within the US and with countries that have free-trade agreements with Washington. 

Demand for lithium is “now being regionalised, and there’s more and more regional competition for that”, said Eric Norris, lithium president of Albemarle, the world’s largest producer of the silvery white metal.

“Pricing is going to remain strong,” Norris said in an interview on the sidelines of Deutsche Bank’s 7th annual lithium and battery supply chain conference in New York. “Everybody needs lithium.” 

In batteries for electric vehicles, there’s no substitute for lithium. As consumer demand surges for EVs, prices of lithium have skyrocketed to records. Production of the metal is barely keeping up with consumption after a 2018-20 market slump that undercut investment in new projects.   

The IRA’s economic incentives are likely to spur domestic investment in lithium output, according to Patrick Brindle, chief operating officer of Piedmont Lithium Inc. The company received $141.7-million in US grants for projects aimed at boosting the country’s electric vehicle battery supply chain. 

“We see policy changes in the form of legislation, both words and policies finally starting to take shape,” said Brindle, who also expects lithium prices to keep rising.

Read more: Democrats Supercharged EV Investment While They Had the Chance

More than $13-billion of investment in battery raw material production and battery and EV manufacturing has been announced in the less than three months since Biden signed the IRA into law in mid-August, according to Bloomberg calculations. Northvolt said last week it’s considering postponing plans to build a battery factory in Germany and will decide next year between building the factory in Europe’s largest economy or expanding first in North America. 

For Albemarle, “what the IRA’s done is probably to reignite our M&A,” said Norris. The company is looking at targets in jurisdictions like Canada and Australia, which have free-trade agreements with the US, he said. BM/DM

Gallery

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Become a Maverick Insider

This could have been a paywall

On another site this would have been a paywall. Maverick Insider keeps our content free for all.

Become an Insider

Every seed of hope will one day sprout.

South African citizens throughout the country are standing up for our human rights. Stay informed, connected and inspired by our weekly FREE Maverick Citizen newsletter.