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Mid-Nickel",103.5,99.73,3.78,13.78,6.78,[518,519,520,522,524,526,528,530,532,534,536,538],{"date":213,"value":512},{"date":216,"value":513},{"date":219,"value":521},99.19,{"date":222,"value":523},96.02,{"date":225,"value":525},98.23,{"date":467,"value":527},99.24,{"date":329,"value":529},101.29,{"date":339,"value":531},87.61,{"date":341,"value":533},92.44,{"date":344,"value":535},90.96,{"date":347,"value":537},92.24,{"date":350,"value":539},95.09,{"id":541,"uuid":542,"name":543,"slug":544,"full_slug":545,"content":546,"relatedArticles":739,"relatedVideos":740},112470119483084,"1848f509-8436-4033-9b1b-0d71deae9095","Falling lithium prices challenge new project economics","falling-lithium-prices-challenge-new-project-economics","article/falling-lithium-prices-challenge-new-project-economics",{"_uid":547,"date":548,"tags":549,"editor":550,"content":560,"excerpt":723,"featured":51,"reporter":724,"_editable":728,"component":729,"seo_title":543,"categories":730,"visibility":732,"author_company":49,"featured_image":733,"seo_description":723,"author_full_name":49,"author_job_title":49,"formattedDate":737,"formattedArticleDate":738},"89d498eb-1b07-47ef-8115-8b5451a2a17d","2024-01-29 00:00",[],[551],{"slug":552,"name":553,"content":554},"didi-bostock","Didi Bostock",{"job_title":555,"image":556,"bio":558,"linkedin":559},"Editor - Energy Transition & Economics",{"filename":557},"https://a.storyblok.com/f/287943243085208/512x512/2c5ca5c1a3/didi-bostock.jpeg","Didi is the Energy Transition & Economics Editor at Benchmark, covering a broad range of markets across the energy transition. His remit spans from downstream sectors such as BESS and EVs, through to midstream such as new technologies and battery production, to upstream critical minerals mining. He also leads on financial analysis across these supply chains, alongside in-depth policy analysis.\n","https://www.linkedin.com/in/didi-bostock-656342198/",{"type":561,"content":562},"doc",[563,580,585,590,595,608,613,618,627,634,639,644,649,654,659,664,669,674,681,686,698,703,708,713,718],{"type":564,"attrs":565,"content":566},"paragraph",{"textAlign":49},[567,570,578],{"text":568,"type":569},"The continuing price rout in ","text",{"text":571,"type":569,"marks":572},"lithium",[573],{"type":574,"attrs":575},"link",{"href":576,"uuid":49,"anchor":49,"target":49,"linktype":577},"https://www.benchmarkminerals.com/price-assessments/lithium/portal/","url",{"text":579,"type":569}," is causing an increasing number of companies to cut production or delay projects, raising questions about future incentive price levels and the sustainability of the current market.  ",{"type":564,"attrs":581,"content":582},{"textAlign":49},[583],{"text":584,"type":569},"This month Australia’s Liontown Resources said it would review its planned expansion and ramp-up of its Kathleen Valley project to “preserve capital and reduce the near-term funding requirements of the project.” ",{"type":564,"attrs":586,"content":587},{"textAlign":49},[588],{"text":589,"type":569},"Australian miner Sayona Mining also said it would conduct an “operational review” of its North American Lithium operation, to improve costs. ",{"type":564,"attrs":591,"content":592},{"textAlign":49},[593],{"text":594,"type":569},"Prices for spodumene concentrate as assessed by Benchmark decreased notably throughout the assessment period 10 January – 24 January 2024. Prices experienced a fall of 11.0% to an average of $850/tonne (FOB Australia).",{"type":564,"attrs":596,"content":597},{"textAlign":49},[598,600,606],{"text":599,"type":569},"That’s well below Benchmark’s l",{"text":601,"type":569,"marks":602},"ong-run incentive price",[603],{"type":574,"attrs":604},{"href":605,"uuid":49,"anchor":49,"target":49,"linktype":577},"https://www.benchmarkminerals.com/forecasts/lithium/",{"text":607,"type":569}," of $1,850 per tonne for spodumene concentrate (6% Li2O), raising the question of when prices will find a floor, and what a prolonged period of low prices will do to the prospects of new producers.",{"type":564,"attrs":609,"content":610},{"textAlign":49},[611],{"text":612,"type":569},"“There’s a lot of new projects out there that will struggle to get financing at these levels, the economics don’t stack up,” Cameron Perks, a consultant at Benchmark, said. “This will slow down a lot of project development we saw coming online for 2024 and 2025 and that will exacerbate the price cycle on the upside.” ",{"type":564,"attrs":614,"content":615},{"textAlign":49},[616],{"text":617,"type":569},"Prices for lithium carbonate have slipped below long run incentive levels, and while average carbonate prices remain higher than the start of the price cycle, serious concerns remain around whether prices below $20,000 per tonne will actually facilitate the capital deployment required to meet to demand requirements of the end of the decade.",{"type":564,"attrs":619,"content":620},{"textAlign":49},[621],{"type":622,"attrs":623},"image",{"id":49,"alt":624,"src":625,"title":49,"source":49,"copyright":49,"meta_data":626},"","https://a.storyblok.com/f/287943243085208/33895d6897/bm-new-lithium-projects-are-needed-cam-perks.png",{},{"type":628,"attrs":629,"content":631},"heading",{"level":630,"textAlign":49},4,[632],{"text":633,"type":569},"A sustainable lithium price?",{"type":564,"attrs":635,"content":636},{"textAlign":49},[637],{"text":638,"type":569},"While some higher cost Australian mines are shutting down, there are question marks around supply of lithium from lepidolite mines in China. ",{"type":564,"attrs":640,"content":641},{"textAlign":49},[642],{"text":643,"type":569},"While their costs range from between $16,000 to $27,000 a tonne, many can keep going longer than expected as they are integrated with large battery cell producers, or are becoming consolidated. ",{"type":564,"attrs":645,"content":646},{"textAlign":49},[647],{"text":648,"type":569},"Perks likens the situation to the iron ore market boom of the last decade, when prices when Chinese production costs were assumed to be a “floor,” when in reality prices spent extended periods below this. ",{"type":564,"attrs":650,"content":651},{"textAlign":49},[652],{"text":653,"type":569},"“However, there is not necessarily bottomless endurance, particularly when producers start to re-prioritise conserving local resources for high-price cycles,” he said. ",{"type":564,"attrs":655,"content":656},{"textAlign":49},[657],{"text":658,"type":569},"In addition, in the current price rout, some of the largest and lowest cost Australia producers are still expanding production, with Pilbara Minerals saying this month that its expansion plans were on track. ",{"type":564,"attrs":660,"content":661},{"textAlign":49},[662],{"text":663,"type":569},"“With a low unit-cost structure and strong balance sheet position, Pilbara Minerals is uniquely placed relative to many of its competitors in the lithium sector to withstand and capitalise on a period of lower prices that could rationalise the market,” the company said. “With increasing production capacity, the group is also uniquely positioned to take advantage of an improvement in market conditions when the pricing cycle turns.”",{"type":564,"attrs":665,"content":666},{"textAlign":49},[667],{"text":668,"type":569},"In theory a price of around $20,000 a tonne would be sustainable, Perks said, as it means that Chinese lepidolite production and high cost spodumene producers will be making money.",{"type":564,"attrs":670,"content":671},{"textAlign":49},[672],{"text":673,"type":569},"“An extended period of prices below these levels means price will likely rebound faster and harder than in previous cycles,” he said.  ",{"type":564,"attrs":675,"content":676},{"textAlign":49},[677],{"type":622,"attrs":678},{"id":49,"alt":624,"src":679,"title":49,"source":49,"copyright":49,"meta_data":680},"https://a.storyblok.com/f/287943243085208/37f5733d4a/bm-lithium-2024-cam-perks.png",{},{"type":628,"attrs":682,"content":683},{"level":630,"textAlign":49},[684],{"text":685,"type":569},"Demand expectations vs reality",{"type":564,"attrs":687,"content":688},{"textAlign":49},[689,691,696],{"text":690,"type":569},"There will be an ongoing requirement for new greenfield capacity to meet future demand. Benchmark’s ",{"text":692,"type":569,"marks":693},"long-term incentive price",[694],{"type":574,"attrs":695},{"href":605,"uuid":49,"anchor":49,"target":49,"linktype":577},{"text":697,"type":569}," is used in the assessment of project economics and reflects the fact that there will be a need for the development of higher capex projects over time.",{"type":564,"attrs":699,"content":700},{"textAlign":49},[701],{"text":702,"type":569},"An Internal Rate of Return (IRR) analysis for a ‘typical’ integrated greenfield project suggests that to achieve 30% IRR, a price level of $28,980/t is required, while a spodumene concentrate price of $1,850/t would be required to achieve an IRR of 15%.",{"type":564,"attrs":704,"content":705},{"textAlign":49},[706],{"text":707,"type":569},"That lithium price, however, depends on demand, which has been increasingly uncertain, due to a slowdown in growth in China. ",{"type":564,"attrs":709,"content":710},{"textAlign":49},[711],{"text":712,"type":569},"Global electric vehicle sales grew by 31% growth in 2023, down from a 60% growth rate in 2022.  ",{"type":564,"attrs":714,"content":715},{"textAlign":49},[716],{"text":717,"type":569},"Much of this decline is driven by China, where the NEV market is slowing naturally due to high sales volumes already achieved (8.3mn domestic NEV sales in 2023) tying in with a government phase out of EV subsidies. ",{"type":564,"attrs":719,"content":720},{"textAlign":49},[721],{"text":722,"type":569},"Still, growth of global electric vehicle sales continues to be strong and at a global level, EV adoption will rise from 16% in 2023 to 78% by 2040, representing the largest demand opportunity for the battery supply chain out of the segments tracked by Benchmark.","The continuing price rout in lithium is causing an increasing number of companies to cut production or delay projects, raising questions about future incentive price levels and the sustainability of the current market. This month Australia’s Liontown Resources said it would review its planned expansion and ramp-up of its Kathleen Valley project to “preserve capital […]",[725],{"slug":552,"name":553,"content":726},{"job_title":555,"image":727,"bio":558,"linkedin":559},{"filename":557},"\u003C!--#storyblok#{\"name\": \"article\", \"space\": \"\", \"uid\": \"89d498eb-1b07-47ef-8115-8b5451a2a17d\", \"id\": \"\"}-->","article",[731],{"slug":571,"name":8},"private",{"id":49,"alt":624,"name":624,"focus":624,"title":624,"source":624,"filename":734,"copyright":624,"fieldtype":735,"meta_data":736,"is_external_url":51},"https://a.storyblok.com/f/287943243085208/04ebe2dddc/bm-australia-lithium-mine.jpg","asset",{"alt":624,"title":624,"source":624,"copyright":624},"Jan 29, 2024","29th January 2024",[],[],1780500955219]