The lowest lithium prices in over two years are hampering a handful of miners that want to challenge China’s dominance in the market.
China controls most of the processing that makes the mineral usable in rechargeable batteries, leaving American vehicle makers vulnerable to supply disruptions if trade tensions escalate. With automakers from Tesla Inc. to General Motors Co. aiming to manufacture more electric cars at home, small companies are seeking to build the first U.S. lithium mines in decades as a step toward forming a local supply chain.
However, financing mines is proving a challenge after a rush of Australian supply dragged down prices by a third from a record in mid-2018. Companies also face stricter environmental rules and regulatory hurdles in the U.S., which currently accounts for just 1.2% of global lithium production.
“It’s a difficult environment,” said Keith Phillips, chief executive officer at Piedmont Lithium Ltd., which is going through the permitting process to build a lithium operation in North Carolina. “Those looking to raise capital now might be able to do it, but the terms won’t be as good as they might have been at some other point.”
While prices are now weak, lithium use will significantly jump by 2023 and the market could move into deficit around that year, according to Benchmark Mineral Intelligence estimates. All the supply from the globe’s major lithium miners Albemarle Corp., Soc. Quimica y Minera de Chile SA, Tianqi Lithium Corp. and Ganfeng Lithium Co. — companies that mine mainly in Australia, Chile and China — probably won’t be enough to meet demand.
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