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EV-a2z > News > US EV push could encounters major delay due to price drop of critical minerals
News

US EV push could encounters major delay due to price drop of critical minerals

Resource Rift: Plunging Prices of Battery Metals Threaten US EV Ambitions

EV-a2zm
Last updated: 2023/11/22 at 9:53 PM
EV-a2zm Published November 22, 2023 5 Min Read
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5 Min Read
Lithium, Mining - Natural Resources, Lithium-Ion Battery, Material, Rock - Object
Lithium, Mining - Natural Resources, Lithium-Ion Battery, Material, Rock - Object
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Highlights
  • Sharp price drops in lithium and other battery metals could stall mining projects, threatening the US EV supply chain.
  • Mining companies are hesitant to start new projects, citing market volatility and environmental challenges.
  • The current supply-demand balance may tip, leading to potential shortages by 2030 amid soaring EV demand.
  • US initiatives, like the $3.5 billion funding, aim to bolster domestic production, but industry hesitance persists amidst price uncertainty.

The US Government may soon suffer from intensified battery metal shortage for electric vehicles due to the major price drop of lithium, nickel cobalt, etc., The Wall Street Journal reported.

Contents
Plunge in EV battery materials pricesDelayed mining projectsPotential impacts

The plunge in critical battery mineral prices may continuously prompt mining companies from postponing their announced projects that are supposedly Biden’s key in establishing a domestic and reliable supply chain.

Biden's Electric-Vehicle Push Hits a Speed Bumphttps://t.co/DRQfUiYDJJ

— Due Dilligence Discovery (@DueDiscovery) November 21, 2023

Plunge in EV battery materials prices

Prices of battery-grade lithium have dropped over 60% so far this year, Benchmark Mineral Intelligence reported. Meanwhile, nickel, graphite, and cobalt prices declined by approximately 30%.

These price plunges are unsurprising, considering China’s slower-than-anticipated recovery from COVID-19 lockdowns. Moreover, waning demand for EVs also contributed to the sudden drop in battery metal prices.

According to Mining, the price decline is specifically more serious in China. Lithium is apparently trading at a huge discount than in the US.

“This situation is a bit dangerous because the mines aren’t going to get built. We should be building those mines now and we’re not.”

Nickel 28 CEO Anthony Milewski

Delayed mining projects

Notably, mines usually take years from metal discovery to reaching production. Despite knowing this, numerous mining companies decided to delay and suspend their previously announced mine-related project development and expansion.

Apart from the plunging prices in critical minerals, mining firms have also struggled with environmental concerns, local opposition, red tape, waning demand, and other issues.

World’s leading lithium firm Albemarle warned that battery mineral supplies will fall short compared to demand toward 2030. It explained that mining firms lack the incentives to launch the planned projects. According to AFR, the company withdrew its $6.6 billion bid for Liontown Resources in October. 

Moreover, Philadelphia-based lithium firm Livent announced plans to postpone its Argentine project expansion due to declining prices worldwide. It also caused the company to report low quarterly earnings.

“We continue to see production-expansion delays globally.”

Livent Chief Executive Paul Graves 

AFR also reported Rio Tinto’s warning that the three-year lithium price boom may end due to the price declines. 

American automaker Ford also scaled down its battery factory development in Michigan due to waning EV demand and increasing labor costs. The plant’s annual production capacity is now expected at 20 gigawatt-hours, down from the original 35 gigawatt-hours of EV batteries. It indicates a 42.8% cut, the NY Times noted.

Potential impacts

The White House has set a target of having electric vehicles account for at least 50% of the US new vehicle sales by 2030. In order to achieve that, it continuously launched major programs and incentives to promote the shift to electric vehicles and establish a domestic supply chain.

However, the disruption brought on by the battery metals price drop implies that the US will face major challenges before hitting its ambitious targets.

The sudden disruption may trigger battery mineral shortages in the future. Benchmark’s calculations suggest that the lithium supply-demand remains balanced for now. However, demand will likely surge to more than threefold to 3.1 million metric tons by the end of the decade. In contrast, the supply will only have almost 400,000 tons. Likewise, nickel and cobalt are also projected to face supply shortages by 2030.

In response, the White House continues to work on potential solutions to alleviate pressures. As EV-a2z recently reported, it opened a $3.5 billion funding under the 2021 infrastructure law to accelerate battery and minerals production in the country. It effectively urged some companies to pursue their battery-related projects despite the disruptions.

Lithium Americas is reportedly negotiating a low-rate loan from the Department of Energy. Exxon Mobil also commenced drilling for lithium in Arkansas last week, aiming to kick off battery-grade lithium production as early as 2027.

EV battery prices are predicted to fall faster than forecast, as prices for lithium and other metals for batteries decline, according to Goldman Sachs Research. The price drop is expected to increase consumer demand for EVs. https://t.co/ngSBqZfqEe pic.twitter.com/iiC1hKWYKA

— Goldman Sachs (@GoldmanSachs) November 3, 2023

The projected shortage in battery minerals due to their declining prices will undoubtedly pose a major challenge in the widespread adoption of EVs. If we look at it differently, declining battery mineral prices can also make EVs more affordable and encourage customers to buy. However, it would be problematic if there would not be sufficient supply to meet the demand.

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TAGGED: Battery, Cobalt, Electric Vehicle, EV, Lithion, Lithium, Nickel, USA
EV-a2zm November 22, 2023 November 22, 2023
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