Factors affecting lithium carbonate supply in 2024

Since the beginning of 2024, frequent events have disrupted lithium carbonate supply, driving prices to rebound in mid-to-late February beyond the threshold of RMB 100,000/MT. The following paragraphs list some factors that may impact lithium carbonate supply in 2024.
 

Price

Lithium carbonate prices remain the most decisive factor on the supply front. With lithium carbonate prices fluctuating around RMB 100,000/MT, lepidolite projects in Jiangxi, almost at the break-even point, will be the first to suffer. Specifically, new projects added in 2023 in Jianxiawo and Shuinanduan will likely face delays or shutdowns due to lower grades and higher production costs (with a total cost of about RMB 130,000/MT). The estimated production volume of these two major projects in 2024 will be roughly 50,000 MT LCE.


Source: Open data compiled by InfoLink

The sustained low lithium carbonate prices have prompted mining companies to cut production. So far, three Australian companies have announced production cuts, affecting the supply in 2024 by approximately 26,500 MT LCE.


 

Environmental issues

Environmental issues always come as a side effect of lithium extraction, particularly lepidolite projects in China and brine pools in Chile. 

Since the start of lepidolite mining in China, central and local authorities have issued multiple orders of production suspension out of environmental concerns. Rumors suggest that inspectors of the Central Supervision Office of Ecological and Environmental Protection will revisit Jiangxi in March 2024. Given this, all regions in Jiangxi have begun environmental rectification, and the lepidolite mining hub, Yichun, is no exception. Rectifications will affect lepidolite mining for one to two months, an insignificant impact on production of no more than 5,000 MT LCE in 2024. 

Located in the desert, the Atacama Salt Flats in Chile boasts the world's largest lithium reserves with desirable mining conditions and lower costs. Global lithium giants ALB and SQM have conducted large-scale extraction operations there. However, mining requires a large amount of water resources, leading to a decline in the water table and faster desertification, triggering protests from indigenous communities. In January 2024, SQM signed the Memorandum of Understanding with Codelco, extending SQM's mining deadline at the Atacama Salt Flats from 2030 to 2060. Seeing the environmental damage prolonged for another 30 years, indigenous communities took the street. The episodes did not last long and had little impact on the global lithium supply.
 

Politics

Political factors affect lithium carbonate supply chain as the attitudes of non-China lithium-producing countries, especially the Americas, toward Chinese companies can impact the progress of the latter’s investments in these countries, thereby affecting global supply. Recent examples include the Canadian government's request for Chinese companies to divest their investments in Canadian lithium mining companies and the Mexican government's cancellation of the mining concession for Ganfeng Lithium's Sonora project. Argentina, where China-owned brine projects cluster, could be a hidden concern for Chinese companies in 2024, as the country's newly elected president, Javier Milei, has demonstrated a pro-American stance since his campaign. With influence of the U.S. deepens, Milei may take measures not in favor of Chinese enterprises, thereby affecting the progress of lithium mining in Argentina.
 

Lithium carbonate prices in 2024

Statistics of InfoLink show the world experiencing over 100,000 MT throughout 2024 and sustain estimation of average lithium carbonate prices in 2024 at RMB 78,000/MT (excluding value-added tax).