Lithium – a battery mineral essential to the clean energy transition – experienced a price plummet of 80% in 2023, with slow EV sales contributing to the drop.

Mining companies are reducing production following the decline, and Australian mining is taking a particularly significant hit. The decline is translating into job losses, tighter budgets and the pausing of operations for several major companies, as they look to protect balance sheets.

“In response to lower than anticipated EV demand, lithium producers are curtailing production levels,” explained GlobalData analyst Isabel Al-Dhahir. “The slowdown in lithium mining is particularly evident in Australia, the world’s largest lithium producer.

“The decision by the likes of Albemarle, Core Lithium and Liontown to cut back on production and, in some locations, pause operations altogether, will have adverse consequences. Investment into Australia’s mining sector is likely to take a hit and mining companies may struggle as production levels fall below a profitable threshold.”

The impact of lithium prices on Australian mining

In its quarterly report, Core Lithium said it would cut “a number of roles” while Albemarle reported that it would reduce project spending and costs. Meanwhile, Pilbara Minerals stated in its quarterly report that the company would reduce its annual exploration spend by up to A$100m ($66m) and was unlikely to pay a dividend for the half-year ending December 31.

The difficulties faced by the sector prompted a recent recommendation from the International Association for Measurement and Evaluation of Communication (AMEC) that the government defer all royalties, reform the environmental approval process, and provide funding for shared infrastructure.

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