Despite starting the year at a peak, lithium prices experienced a dramatic plunge in 2023, dropping by 82% from their highest point. This fall was unexpected, given the industry’s initial belief that the decline would be temporary and moderate. However, the price of this crucial metal in electric vehicle (EV) battery production fell to less than $14,000 per tonne by mid-December.
The price drop can be attributed to unexpected increases in lithium production in various regions. “Major investments have been made in areas where they were not expected to be at this level,” explains Martin Jackson, CRU’s chief lithium analyst. Notably, China experienced a surge in lepidolite-based production, an unconventional source for lithium. Zimbabwe also saw a significant boost in its lithium supply. Other countries like Canada, Brazil, and Australia also ramped up extraction efforts.
Demand and Supply Dynamics
Despite the economic downturn in China, the largest market for EVs, the demand for lithium increased by 24% in 2023, reaching 960,000 tonnes of LCE. However, with supply outpacing demand by 39%, market forces pushed prices down.
The allure of lithium, now ranked as the world’s third most sought-after commodity, has not waned. Mining companies worldwide continue to invest in exploration and extraction projects, with every country vying for the title of the new lithium Eldorado. In France, projects like the Imerys mine in the Allier region and Eramet’s plant in Argentina highlight this trend. Start-ups like Lithium de France are also making significant strides in lithium extraction.
This global race for lithium extraction has sparked environmental concerns and opposition, particularly in regions like Portugal, where two major mining projects are under scrutiny due to a corruption scandal. The challenges of balancing the demand for lithium with environmental and ethical considerations are becoming increasingly prominent.
While the lithium market has seen a significant price drop in 2023, the metal remains a key focus in the global shift towards clean energy and electric vehicles. The ongoing investments and explorations in various parts of the world underscore lithium’s critical role in the future of sustainable energy and transportation. 
