
Lithium producers hit by first big downturn of electric vehicle era - howard941
https://www.reuters.com/article/us-lithium-conference-producers-idUSKBN1XN0HV
======
JaRail
The headline makes no sense when they follow it up by saying

> Battery-grade lithium is used primarily in EV batteries, and many automakers
> have high purity standards. Much of the industry’s capacity to produce high-
> quality, battery-grade lithium is locked up until 2024

They're just putting two unrelated things in a headline to imply they're
related. It's clickbait/FUD. If they're selling all the battery-grade lithium,
why don't they tell us about why demand is down for low-grade lithium?

~~~
flat_white
If you read the article properly, you will see that quote is attributed to a
commodity analyst. The article is adding nuance to the story and canvassing a
range of views.

It's not clickbait. The downturn in lithium prices recently has been
significant and publicly traded companies have been sold off strongly (even
high grade producers).

~~~
happosai
Downturn in low-quality lithium price. We don't know what the real price of
high quality battery quality lithium is, as all battery quality supply is
locked in long term confidential offtake agreements.

What we know, is lithium companies latest round of results was not great.
Stock prices are spiralling. EV makers will find out without paying more to
lithium suppliers, they won't get as much batteries as they wish.

------
jandrese
Just last year[1] there was hand-wringing that the world was using up the
entire production capacity for lithium and batteries were going to skyrocket
in price.

[1]
[https://www.engineering.com/AdvancedManufacturing/ArticleID/...](https://www.engineering.com/AdvancedManufacturing/ArticleID/17068/Lithium-
Shortage-Expected-Due-to-Lack-of-Mines.aspx)

~~~
Tuna-Fish
Lithium supply can be grown without meaningful limit, if someone is willing to
invest the capital for it. The problem is that the supply follows the capital
investment with a ~5 year lag, and 5 years ago a little too much was invested,
so now there is a glut.

As the actual extraction costs are relatively small compared to the initial
capital outlay, and everyone needs to pay their investors, no-one can really
cut production and everyone needs to sell at whatever price they can until
someone goes bankrupt and capacity is reduced again. This is how relatively
small mismatches in capacity can lead to major price fluctuations.

~~~
ksec
>and everyone needs to pay their investors, no-one can really cut production
and everyone needs to sell at whatever price they can until someone goes
bankrupt and capacity is reduced again.

So it has nothing to do with market supply and demand problem but companies
cashflow problems? So theoretically the banks which funded these extraction
can also hedge against it with the rise and fall of lithium price?

------
woodandsteel
This is just a temporary blip. Long-term demand for lithium is going to
explode, and so of course will production. That is because demand for both
ev's and storage is going up rapidly over the long term. The smart investors
with deep pockets are going to get very rich. And let us not forget that
commodity mineral prices often fluctuate.

As for the current drop in ev sales in China, from what I understand that is
because there are at present 486 ev producers there (no, I'm not kidding) and
the government cut subsidies to weed out the vast majority that will never be
competitive. Once that happens the government will no doubt go back to
promoting sales.

------
cwkoss
I've seen a lot of people online suggest that the Bolivian coup was CIA-backed
to take control of their lithium production.

~~~
aalleavitch
I've seen this too, and I don't think it's ridiculous at all. But I don't even
think the CIA needs to have been involved. Private companies are now entirely
capable of running their own disinformation campaigns and meddling in
electoral processes.

I actually think that it's less likely for companies to be going after the
lithium than it is that they're going after the natural gas. BP has every
incentive in the world to want to overthrow Morales.

~~~
cwkoss
Bolivia has 9 million tons of unexploited lithium reserves in their salt
flats. "The region has 50% to 70% of the world's lithium reserves in the Salar
de Uyuni salt flats."

[https://www.commondreams.org/news/2019/11/11/bolivian-
coup-c...](https://www.commondreams.org/news/2019/11/11/bolivian-coup-comes-
less-week-after-morales-stopped-multinational-firms-lithium-deal)

~~~
emmp
That doesn't seem to track with the latest USGS numbers here. [https://prd-
wret.s3-us-west-2.amazonaws.com/assets/palladium...](https://prd-wret.s3-us-
west-2.amazonaws.com/assets/palladium/production/atoms/files/mcs-2019-lithi.pdf)

Bolivia doesn't even chart for reserves (i.e., extractable right now). Have
they brought significant capacity online in the last year since this report
was collected?

For resources (extractable in principle) there are 62 million tons of
identified resources worldwide, of which Bolivia has 9 million tons. That is a
lot, about 15%, but certainly no where near 50-70%. Notably Argentina has 14.8
million tons.

I guess I'm just curious if there are better sources or if I'm
misunderstanding the USGS report.

