Despite ongoing record sales of battery-powered vehicles in China, the US, and Europe, lithium prices continue to slide globally due to falling prices and excess supply in China.
Lithium carbonate prices slumped to approximately $22,900 per tonne late last week in China, just before the Golden Week/National Day holidays shut down the country this week. This marked a sharp decline from the June peak in 2023, which was around $44,000 per tonne and nearly a quarter of the all-time peak 11 months ago, which reached approximately $83,000 per tonne.
This slide in prices has occurred as supplies of both ore (spodumene) and battery-grade metal, including hydroxide and carbonate, have surged alongside falling prices. As a result, major lithium stocks worldwide have experienced significant declines, particularly in China, the US, Chile, and Australia.
In China, Ganfeng Lithium and Tianqi Lithium have seen their shares plummet by 37% and 32%, respectively, since January. Meanwhile, the world's largest producer, US-based Albemarle, has lost 26% of its value so far this year. Chile's SQM, the second-largest producer globally, has fallen by 28%.
In Australia, the situation has been further complicated by the emerging battle for control of Liontown. Albemarle has made a $3 non-binding offer, and Gina Rinehart's Hancock Prospecting has aggressively bought shares to build a 14% plus stake in Liontown, seemingly to block the US approach.
Despite these situations, the sell-off in Australia has been noteworthy. Shares in Mineral Resources are down 15% year-to-date, Core Lithium shares have declined by 61%, and IGO shares are down by more than 8% (partly due to problems in its nickel business after a near $1 billion write-off in 2022-23). Shares in Sayona Mining are down by 51%, while shares in Allkem (down 1.3%) and Livent of the US (down 8.5%) have fared better due to their impending merger, which will connect lithium businesses in Australia, Argentina, and the US.
However, one Australian stock has defied the trend—shares in Pilbara Minerals are up nearly 12% year-to-date. This outperformance is particularly striking given the broader ASX market's decline of just under 1% year-to-date, especially following the recent significant market falls.
Investors' interest in Pilbara Minerals has grown, with many considering it as the next potential takeover target after Albemarle's approach to Liontown. However, such a bid would be expensive, exceeding $A12 billion. Despite the challenging market conditions, Pilbara Minerals remains very profitable (having paid a full year of dividends in 2022-23 for the first time) and has generated considerable interest in its upcoming trial of the lithium phosphate process in the Pilbara. This process could offer a cheaper and more sustainable method of upgrading spodumene compared to the current preferred route of lithium hydroxide.
