Lithium prices will fall 25% in 2023 – Chinese investor says

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Lithium is going to get less expensive in 2023, according to a Chinese supplier of the battery metal.

Prices have already softened after a spectacular two-year rally labelled “insane” by Elon Musk and “unreasonable” by China’s electric vehicle maker BYD.

The cool-off is poised to continue as more supply emerges to trim abnormally high margins for lithium producers, says Wang Pingwei, chairman of Sinomine Resource Group, which this year bought Bikita Minerals in Zimbabwe.

“We believe the gradual, downward trend for lithium will continue next year,” Wang said, predicting a fall of around a quarter from current levels that will still leave the company with “good” profits. Prices would not fall off a cliff as the market remains tight, said Wang.

Wang said he saw lithium carbonate prices drifting to about US$57 000 a tonne in 2023. That compares with US$75 000 at present and a record of nearly US$86 000 in mid-November, according to data from Asian Metal. The lower level would still offer good margins for Sinomine, he said.

Sinomine wants to expand output worldwide, just as geopolitical tensions are growing with the US, Canada and others who are moving to restrict China’s role in the EV supply chain.

Wang’s firm was one of three Chinese companies ordered by Canada to divest stakes in Canadian-listed firms under tougher rules for foreign investment. It still owns the Tanco mine in Canada, as well as the Bikita lithium site in Zimbabwe.

“Our confidence to invest in more mines in North America is relatively low at present,”  Wang said.

The company was in talks for potential projects in South America, and would keep seeking opportunities in Africa, where developing mines was easier than other jurisdictions, he said. Central Asia was another prospect, including Afghanistan once the security situation improved there.

Sinomine has 25 000 tonnes of annual production capacity for battery-grade lithium hydroxide and carbonate. It expected that to increase to 60 000 tons next year, and targetted 100 000 tons capacity by 2025, Wang said.

In 2022, Sinomine bought Bikita Minerals, currently Africa’s sole lithium exporter, for US$180 million from African Metals Management Services and German investor Wilfried Pabst’s Southern African Metals and Minerals.

Sinomine is investing US$200 million to build a new plant at Bikita to process spodumene concentrates for the export market.- NewZWire