Australia’s lithium mining boom hit by sagging prices

Often referred to as “white gold” due to its crucial role in rechargeable batteries, lithium is so light it floats on water, but its price has plummeted over the past year. A global oversupply of lithium ore, combined with a drop in electric vehicle (EV) sales, has caused the price of the metal’s main compound to fall by more than 75% since June 2023.

The downturn has significantly impacted Australia, the world’s largest lithium producer, responsible for 52% of global output last year. With the second-largest reserves, primarily in Western Australia, the country is feeling the strain as mine closures and job losses mount.

Adelaide-based Core Lithium suspended mining at its Finniss site in January due to weak market conditions, leading to 150 job losses. In August, U.S. firm Albemarle also reduced production at its Kemerton processing plant in Western Australia, with 300 redundancies expected. More recently, Arcadium Lithium announced the mothballing of its Mt Cattlin mine, citing low prices.

However, some companies remain optimistic about the long-term outlook for lithium. Perth-based Pilbara Minerals plans to increase its production by 50% over the next year. Managing Director Dale Henderson remains confident, stating that lithium pricing is historically volatile but has a strong long-term future. This optimism is echoed by Kingsley Jones, founder and chief investment officer at Jevons Global, who believes lithium will remain central to the energy transition, particularly for battery storage needed for solar and wind energy.

Yet, some analysts warn that the market may face continued pressure from oversupply until at least 2028.

Meanwhile, Australia continues to push forward with new lithium projects. Liontown Resources, another Perth-based company, began production at its Kathleen Valley mine in July, using 60% solar energy to power operations. Australia’s Climate Change and Energy Minister, Chris Bowen, praised the site’s sustainability efforts, and the government has invested A$230 million into the facility. Energy efficiency is particularly crucial for Australian lithium producers, as extracting lithium from spodumene rock—used in Australia—requires significantly more energy than the brine extraction methods employed in Chile and Argentina. This makes production costlier and more emission-intensive.