In the lithium industry, the increase in demand due to the manufacturing of electric cars has been a determining factor. This growth is expected to continue; however, the uncertainty lies in which extraction companies will survive the price fluctuations. It is anticipated that in the coming years, the price of lithium carbonate could reach US$16,000 per ton and rise to US$18,000 by 2030.
In Chile, the drop in lithium prices has negatively impacted the finances of companies operating in the Salar de Atacama and the country in general. In Argentina, expectations regarding the development of new projects have taken a hard hit. Developing projects have faced financial difficulties and have had to adjust their plans due to the price drop. Companies such as Argosy Minerals, Galan Lithium, Lake Resources, and Arcadium have had to review their strategies.
For example, the mining company Arcadium canceled international credits totaling US$180 million due to the price drop. Despite the challenges, Rio Tinto acquired Arcadium, which may indicate a long-term vision for the industry by the company.
Regarding geopolitical considerations, the United States, Europe, and China have shown interest in securing the supply of lithium for the manufacturing of electric vehicles. The competition for this critical resource reflects the rivalry among major economies. In Australia, the drop in lithium prices has led to the suspension of some mining operations, while other companies like Pilbara Minerals continue to expand.
In Latin America, Chile and Argentina are affected by the drop in lithium prices. In Chile, the firms SQM and Albemarle operate in the Salar de Atacama, generating fiscal revenues for the country through taxes and royalties. The decline in fiscal revenues due to the price drop has impacted both nations.
Although the short-term outlook may be challenging, lithium is considered to remain a strategic mineral in the long-term energy transition, despite the current oversupply that keeps the market under pressure. Price cycles are common in the mining industry, so the industry is expected to adapt to these changes over time.
