EVs Are on a Lithium Roller Coaster – by Stephen Wilmot (Wall Street Journal – October 17, 2023)


Prices of the key battery metal have fallen by roughly 70% this year, easing battery-cost worries but casting doubt on longer-term supply

High oil prices deter people from buying gas guzzlers: What is good for Exxon Mobil XOM 1.18%increase; green up pointing triangle is bad for Ford. But 100 years ago, both companies were growing rapidly: More cars meant more fuel.

Both dynamics are at play in the relationship between electric vehicles and lithium, the key ingredient of electric-vehicle batteries. More EVs will require more lithium, but only at the right price. This makes it a tough market to time for investors—and indeed for lithium producers such as Albemarle.

The company on Sunday walked away from a deal to buy Australian lithium miner Liontown Resources for roughly $4.2 billion. Australia’s richest person, Gina Rinehart, last week disclosed a 19.9% stake in Liontown through her own mining company, Hancock Prospecting, raising the possibility that Albemarle would have had to contend with a minority partner in the project.

But that probably isn’t the only reason Albemarle got cold feet. It submitted its first of many bids for Liontown in October 2022, when lithium fetched about $66,000 a metric ton, according to a weighted average of the key chemical compounds by Benchmark Mineral Intelligence. That metric had fallen to about $27,000 by early October this year. Albemarle’s share price has slipped in tandem, down almost a half since its peak last November.

For the rest of this article: https://www.wsj.com/finance/commodities-futures/evs-are-on-a-lithium-roller-coaster-e8914bc5