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For a long time, lithium watchers didn’t have much to be happy about, given the battery metal’s price plunge by 86% in the last two years, following its peak at 5750,000 Chinese yuan per tonne (CNY/t) towards the end of 2022. (It is now 77,850 CNT/t.)
As a result, many miners and explorers decided to let their lithium assets fade into the background, concentrating on other projects while the market remained in a slump.
But analysts are now suggesting a turnaround might be in the works, given growing demand for electric vehicles – particularly in China, where they, and plug-in hybrids, now account for 52.8% of overall sales.
This demand is set to soak up the oversupply of lithium which caused the price fall in the first place, with the latter expected to stabilise in 2025, presenting those working in the sector with decisions to make.
Chinese government push for EVs embrace pays off
China is the world’s largest auto market, and it is undeniable that a key trend in recent years has been the public’s move into buying electric vehicles.
This has largely been shaped by Beijing policy, with the government calling for half of all vehicles on Chinese roads to be clean cars by 2025.
To bolster this, they have offered consumers subsidies to buy EVs. In July 2024, the subsidies were doubled, and this led to sales of five million EVs by December.
Overall, China saw its domestic sales in this space leap 31% year-on-year in the first 9 months of 2024.
Within this context, experts are predicting a fall in the world’s supply of lithium carbonate (LCE) from 150,000 tonnes in 2024 to 80,000 tonnes this year, as Chinese demand ‘soaks’ this up.
Will Trump dump lithium?
Of course, since November there has been another key factor to watch: The incoming presidency of Donald Trump, and the question of how he’ll approach the question of renewable energy.
On the campaign trail, he suggested tariffs of up to 60% may be applied against goods from China – including EVs – but recently, he scaled this back to 10%.
However, he has also revoked Joe Biden’s 2021 executive order which called for EVs to make up half of all vehicles sold in the United States by the end of 2030 – an order which had been expected to push up demand.
In November, Trump said his transition team would scupper a US$7,500 consumer tax credit for EV purchases – itself part of larger tax reforms rolled out by the former Biden administration.
The overarching question is whether Chinese and other demand will be enough to keep lithium on track in terms of supply and price stabilisation.
At this stage, analysts predict it will be.
Chariot ‘triples down’ on its US lithium investments
In the midst of this is Chariot Corporation Ltd (ASX:CC9) – a company that has the largest lithium landholding in the U.S., and which has, even during the downturn in prices, remained true to the critical mineral.
Managing director Shanthar Pathmanathan said the board’s decision to sit tight and increase its portfolio – which is mainly built around seven hard rock lithium exploration projects in the state of Wyoming, as well as claystone lithium play Resurgent in Nevada and Oregon – would pay off in the end.
“I see a great recovery happening in lithium: The sector’s been through two tough years since 2022,” the Chariot managing director said.
“We have tripled down during this downturn, we have grown our portfolio.”
Mr Pathmanathan said he sees there still being demand in the American domestic market, with the lithium mine sector set to produce lithium batteries for the first time.
This would only bolster the international trend, he says − “We see a resurgence in global EV demand: In China, 50% of cars are electric vehicles, in the U.K., 24% are electric vehicles, so we think we’re at the tipping point of electric vehicle adoption all around the world, we’re very well-placed globally for the lithium industry.”
Looking ahead, Mr Pathmanathan said the incoming government would also be a gamechanger.
“There are great opportunities here,” he said.
“I think short term they’re going to be resistant to electric vehicles. The new government’s mandate is to bring jobs back to the U.S. – manufacturing jobs. I think what they will do is continue with the IRA, continue with the battery plant build-out in the United States and look to take advantage of this.
“In the medium to long term… there will be a shift back to the electric vehicle industry because it’s a new industry the U.S. can dominate as it does in other industries.”
A busy year of exploration ahead
While keeping its portfolio whole and balance sheet in check had served Chariot well during the price slump, the board is now enthusiastic about its upcoming drilling work at both the flagship Black Mountain project and Resurgent.
The former is built around 352 unpatented lode mining claims featuring multiple outcropping pegmatites known to host spodumene, with previous (diamond) drilling demonstrating the presence of high-grade lithium originating near the surface.
Optimism about the project was there from the beginning, with grades of up to 6.68% recorded through rock chip sampling. The first drill hole also showed potential, yielding 15.48 metres at 1.12% lithium oxide (Li2O) from 2.74 metres, including 4.27 metres at 2.46% Li2O from 9.94 metres.
Mr Pathmanathan said this year’s work would build on this, with assays expected to come out by the end of the quarter.
“We’ve done two rounds of drilling now – the last one was completed a few weeks ago, and samples are in the lab right now,” he said.
“Our plans for Black Mountain remain unchanged: Defining a small-scale resource at the top of the mountain, launching a much larger drill program in the North American summer coming up, and thirdly, developing a pilot mine by 2026.”
He said the company also had plans to drill Resurgent during the same season, as well as divesting Horizon. They’re going to “triple down on lithium” too, “like we have over the last few years.”
“We are well-positioned, we’ve grown our portfolio, we’ve kept everything intact, the balance sheet hasn’t taken on too much damage with this lithium downturn, so we’re well-positioned for the upturn coming up,” Mr Pathmanathan promised.
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