US lithium prices need more transparency to help secure domestic supply: Surge Battery Metals chairman

“We need more pricing transparency. In some contracts… what you see is some foreign account of pricing with no context of sizing.” Harris said. “We do hear that some of the contracts between domestic suppliers and battery/car companies are much higher than what you see published in the day to day lithium pricing.”

“Transactional pricing is out there but it would be great if we had more transparency in the markets,” Harris added. “[Lithium] is not listed on [the London Metal Exchange] for example, we don’t have a future market.”

Fastmarkets’ latest price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $10.00-11.20 per kg on Tuesday August 20, down by 0.93% from $10.00-11.40 from Monday August 19.

Meanwhile, Fastmarkets assessed the price for spodumene min 6% Li2O, spot price, cif China at $750-790 per tonne on August 20, stable from August 19.

Chinese lithium prices have been on a general downtrend in 2024, pressured by weak demand and oversupply. Several Chinese lithium producers are considering production cuts or complete suspension to mitigate losses from high costs amid the ongoing price declines and muted demand.

“In North America, demand is growing, [electric vehicle] penetration is slower than people thought but it’s still growing around 25% per year. We know that the market needs domestic supply but almost nobody’s doing anything about it, car companies or battery companies,” Harris said. 

The chairman believes that, although the lithium market has been characterized by low prices and oversupply, there will be an inflection point between 2024 and 2030, when people are going to need to secure domestic supply.

“In the long term, people want green energy, the government wants to support green energy and businesses are looking to provide green energy. EVs are a natural solution,” Harris said.

Surge Battery Metals owns the Nevada North Lithium Project, which has 4.7 million tonnes of lithium carbonate equivalent with a grade of 2,839 part per million of lithium and an overall composite grade of 4,939 ppm in the Granite Range southeast of Jackpot, Nevada. 

“Our grade is 3-4 times the conventional clay deposits that people have been working on in North America and it is considered the highest clay lithium resource in America,” Harris noted. 

New projects in North America are facing challenges from Chinese investments in Africa, which offer a cost advantage, according to Harris.

“They may have a competitive cost advantage, but, with the Inflation Reduction Act (IRA), they are not going to allow those batteries to be rebate eligible in North America,” Harris said.

The chairman also said that investing in non-US trading partner countries is not a solution due to the IRA. 

“We are not getting involved in a project in Argentina, for example, because if they ship raw lithium products to China to be upgraded and incorporated into batteries, those batteries will not qualify in the US under the current IRA,” Harris said, adding that it was better to focus on domestic supply.

Supply side for lithium

In the short term, Harris said the oversupply in the market won’t last because market dynamics will adjust.

“As long as prices stay low, some companies will cut production, some will delay expansion and some of the feasibility stage companies will not get funded, Harris said, but added, “The cure to low prices is low prices.”

“Since it takes a long time for supply to come on stream, it is inevitable that there will be another supply crunch. EV demand is still growing at 25%,” he said. 

Fastmarkets research team forecasts that available production for lithium in 2025 will reach 1,439,400 tonnes of lithium carbonate equivalent (LCE), while demand will reach 1,390,370 tonnes. 

According to ANZ analysts Daniel Hynes and Soni Kumari, slowing growth in EV sales and an oversupply in China’s battery capacity are likely to weigh on demand for battery metals. 

“Lithium, cobalt and nickel are likely to remain oversupplied in the short term, but the response from producers in cutting output amid the low prices should limit the downside. We see a strong long-term outlook. Supply still needs to increase by a factor of 1.5-3.5 over the next five years, which is a difficult goal,” they said in a report published on Sunday August 18.

The Nevada North Lithium Project

Surge Battery Metals produced its initial assessment of the Nevada North Lithium Project in February 2024. According to the estimate, the project contains an inferred mineral resource of 4.67 million tonnes of LCE with a grade of 2,839 ppm of lithium at a 1,250 ppm cut-off.

“We are in the preliminary economic and development phase. Based on additional drilling in 2024, we will release an updated [estimate] in September. We  are aiming to deliver a Preliminary Economic Assessment (PEA) in December this year,” Harris said.

“We don’t have a specific date to start producing, but based on similar project timelines, we estimate 2030 as a target start date,” Harris added.

The process to extract lithium will utilize the same flow sheet used at the sedimentary-clay deposit at Thacker Pass, which is the largest-known measured and indicated lithium resource in North America, according to owner Lithium Americas. 

The Thacker Pass project will use a newly-developed process to extract lithium from the clay deposit, similar to mining techniques for coal deposits. Usually, lithium is mined by either hard rock mining or brine mining. 

According to Lithium Americas, the production process is designed to use conventional and commonly available equipment, arranged to take advantage of the distinctive qualities of the high-grade ore. The process comprises a series of steps to concentrate, separate and produce battery-quality lithium chemicals.

“One of the key advantages of clay, unlike spodumene where you sell a concentrate and you get a discounted price, is that we can actually produce carbonate and/or hydroxide directly, ” Harris said.

“We can extract a premium price from the clays as we are producing a premium end product, ” Harris adding, noted that spodumene is typically shipped to China to be upgraded into battery-grade lithium, which would disqualify it under the IRA.

Harris said, however, that producing lithium from clay requires more capital expenditure (capex) compared with spodumene.

“[There is less capex] in spodumene but you are getting a much lower price for your product. With clay, and our Nevada North project containing such high-grade lithium, we are hopeful that the [operational expenditure] will be more in line with traditional lower-cost brine projects,” Harris said.

In addition, Surge Battery Metals will try to secure funding from the Department of Energy.

“We will certainly be applying for [funding] because, for mining companies, when we are looking at traditional construction debt financing, it’s expensive. And… the IRA  that would greatly enhance the economics of the projects,” the chairman aid.

The IRA, which was signed into law on August 16, 2022, prohibits using critical minerals and battery components from a “foreign entity of concern,” which includes companies based in China, Russia, North Korea and Iran.

Data from the US International Trade Commission’s Interactive Trade DataWeb shows that the US imported nearly 154,000 lithium cells and batteries (excluding spent products) from China in 2022, up from nearly 109,000 units in 2021 and more than double the approximately 71,000 units imported in 2019. Indonesia, Japan and Singapore were the other major suppliers in 2022. 

From January through May of this year, however, US imports of lithium cells and batteries from China, Indonesia, Japan and Singapore fell significantly versus the same five-month period last year.

However, the global lithium market is still seeking more clarity on what lithium supply will qualify for the financial incentives offered by the policy. The definitions of IRA-compliant lithium have yet to be clarified and opinions on whether there would be any IRA premium for lithium are divided.

The post US lithium prices need more transparency to help secure domestic supply: Surge Battery Metals chairman appeared first on Fastmarkets.