By Lagos Metropolitan News Desk
The global lithium market has experienced significant turbulence over the past two years, with prices plummeting due to an oversupply and weaker-than-expected demand for electric vehicle (EV) batteries. This downturn is exemplified by the dramatic fall in the CME contract for lithium hydroxide from a 2022 high of $85,000 per metric ton to $11,930, and a similar decline in the CME carbonate contract from above $40,000 to $12,850 since it began trading in July 2023.
Amid this volatility, a notable development has been the surge in artisanal mining (ASM) in Africa, particularly in Nigeria and Zimbabwe. According to Andy Home, a commodities commentator for Reuters, research house CRU estimates that artisanal miners contributed almost two-thirds of Africa’s lithium supply in 2023, nearly matching the global market surplus for the same period. This influx of artisanal production has been a key factor in the current glut affecting the market.
Nigeria’s involvement in artisanal mining has significantly influenced the lithium trade, with African shipments accounting for a quarter of China’s total lithium imports in early 2024. Chinese entities have been instrumental in formalizing these artisanal supplies, especially in regions previously known for tin and tantalum mining.
However, the economic viability of artisanal mining is highly sensitive to price fluctuations. The recent dramatic drop in the price of spodumene ore, from above $6,000 per ton at the beginning of 2023 to around $1,000, poses a substantial challenge. This price sensitivity may force many artisanal operations to halt production, thereby reducing supply and potentially stabilizing prices.
Despite the current surplus and price collapse, the long-term prospects for lithium remain positive. Governments worldwide are pushing for a transition to electric vehicles, which will eventually drive demand higher. However, analysts at BMI, a Fitch Solutions company, caution that a return to the price peaks of 2022 is unlikely within the next decade.
As the market adjusts to the current low-price environment, the seeds for the next upswing are being sown. The focus will likely shift towards more sustainable and economically viable lithium production practices. While the future may not hold another spectacular boom, the inherent volatility in the lithium market suggests that significant price movements are still on the horizon.
For now, the artisanal mining sector in Nigeria plays a pivotal role in the global lithium supply chain, but its future will heavily depend on market dynamics and the broader adoption of electric vehicles. The path forward for the lithium trade will be shaped by balancing supply from diverse sources and meeting the evolving demands of the energy transition.
Source: Andy Home, “After another boom and bust, where next for lithium?” Reuters, July 13, 2024.
