Core Lithium (ASX: CXO) of Australia has ceased operations at its Finniss operations and announced a significant write-down on the value of its assets as the impact of low battery material prices begins to be felt by producers.
The company, the sole lithium miner in Australia’s Northern Territory, had suspended early work on its proposed second mine, BP33, due to “tough” market conditions and announced a review of its operations in December.
As a consequence of the review, Core Lithium announced on Friday that it would resume processing stockpiled ore and halt operations at its open pit mine, Grants, which is a part of the multi-mine Finniss hard-rock lithium complex.
run until mid-2024.
The only lithium mine outside of Western Australia is the Grants mine, which is also the country’s newest. It first opened its doors in October 2022, and in February 2023 it started producing and selling spodumene concentrate.
Last year, lithium prices crashed, exceeding even the most pessimistic predictions. Spodumene concentrate is currently trading at $950 per tonne, up from about $8000 per tonne a year ago, according to analysts at Fastmarkets.
According to experts, prices for lithium carbonate in China, the world’s largest producer and consumer, could drop by more than 30% this year compared to December 2023 levels because rising supply from all major producers is expected to outpace rising demand from battery users.
Analysts predicted that the global leaders in lithium mining will be the first to feel the effects of the price collapse, starting with expensive lithium producers.
Global Lithium Price Collapse Predictions
According to UBS, the supply of lithium will increase 40% globally in 2024 to reach more than 1.4 million tonnes of lithium carbonate comparable. According to UBS, output will increase by 22% and 29% in top producers, Australia and Latin America, respectively.
Projects in Zimbabwe are expect to propel a doubling of production in Africa, According to the bank.
According to UBS, a significant CATL project in southern Jiangxi province will be the main driver of China’s 40% increase in production over the next two years.
The bank issued a warning, stating that a possible halving of ASX lithium company profits in FY2025 is likely due to lower prices for lithium minerals.