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Lithium prices, investments flounder

Metal Tech News - July 10, 2024

BASF withdraws investment plans for Chile amid global slowdown of EV sales.

A worldwide slowdown in electric vehicle sales has left lithium prices languishing at pre-2020 levels, quashing investments in bringing new supplies of the battery metal to market.

The oversupply of lithium, in particular, is stifling new investment in the Lithium Triangle, a region of the Andes spanning parts of Argentina, Bolivia, and Chile. The triangle's lithium is concentrated in arid salt pans along the Atacama Desert and surrounding areas, with some of the highest lithium concentrations in the world.

German chemical producer BASF SE has withdrawn from plans to invest in lithium mining assets in Chile being explored by Wealth Minerals Ltd., sending the Vancouver, British Columbia-based junior's share values plummeting 31% last Wednesday, the largest intraday drop in three years.

BASF SE is a global supplier of products, solutions and services for the automotive, agriculture, chemical, construction, electrical, electronics, furniture, oil, plastics and paper industries. The investment in Wealth was meant to expand beyond BASF's broad suite of plastics and chemical products and would have considered the possibility of building a plant in Chile to produce lithium products for EV batteries.

"No collaboration between BASF and Wealth Materials materialized in the end," BASF wrote in an email to Bloomberg. This came on the heels of another withdrawal announcement, this time from negotiations with Eramet SA for a $2.6 billion nickel-cobalt refinery in Indonesia.

A dip in EV sales growth has depressed prices of key feedstocks, specifically putting lithium at three-year lows after its record highs at the end of 2022.

BASF is still backing plans for a new battery recycling plant in Germany to support a more circular raw-materials supply for European operations. The plant will recover lithium, nickel, cobalt, manganese and copper from end-of-life lithium-ion batteries and battery production scrap and is due to start operations later this year.

The global transition to electrified transportation has been hit and miss, with battery metals miners opening and closing facilities, automakers promising and walking back ambitious plans, and prompting battery makers like Northvolt AB to pump the brakes on multi-billion projects – leading to disruptions up and down the supply chain.

While BASF's involvement in Chile was still in its early stages, it still comes as a blow to Europe's push to develop sustainable, secure battery metals that are not as reliant on Asia's cheap but problematic supply.

Despite the investment setback, Wealth continues to advance exploration at its projects in Chile, with plans to open new areas to lithium extraction, but progress is slow going. One of the company's projects is in an area deemed of strategic importance, meaning it will have a state-owned company as a majority partner.

Wealth CEO Henk van Alphen said implementation of the government's lithium strategy has been slow, but progress is being made. Next week, Chilean authorities are scheduled to announce details related to firms that are interested in new contracts in nonstrategic salt flats.

 

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