Can Australia’s lithium industry survive?

Full story: https://grafa.com/insights/mining-can-australia-s-lithium-industry-survive--271692

Australia produces lithium primarily from hard rock mining of spodumene deposits, not from lithium brine sources. 

But there is a big problem emerging, in that lithium brine production is more cost effective and more environmentally friendly than spodumene mining.

Spodumene mining, a traditional method that involves extracting lithium from hard rock, often requires extensive land disruption, heavy machinery, and the generation of significant amounts of waste. 

Brine extraction, on the other hand, involves the evaporation of lithium-rich brines in large ponds.

This is an important point in a market in which lithium prices have slumped to their lowest in more than three years.

One of the most significant benefits of brine extraction is its lower environmental impact. 

While this process can still have environmental consequences, especially in arid regions, its footprint is generally smaller and less destructive.

Adding to the pros of lithium brine mining are the recent advancements in brine extraction technology, like "redox-couple electrodialysis," which have dramatically reduced production costs. 

This new method creates high-purity lithium for a fraction of the price compared to traditional methods.

The rise of South America’s lithium industry

Lithium brine producers are primarily located in South America, particularly in Chile and Argentina, which are known for their rich lithium brine deposits. 

The Salar de Atacama in Chile is one of the world's most significant lithium brine sources, contributing a substantial portion of global lithium production. 

Argentina also has notable brine resources, particularly in the Lithium Triangle, which includes parts of Chile and Bolivia.

In addition to South America, the United States has some lithium brine production, mainly in Nevada, although this is on a smaller scale compared to Chile and Argentina. 

So what does this mean for Australia?

The performance of Australian ASX-listed lithium companies in 2024 has been challenging, with many experiencing significant declines in their stock prices year-to-date.

Pilbara Minerals (ASX:PLS) has consistently been the most shorted stock on the ASX in 2024, with its share price down nearly 40% this year.

Mineral Resources (ASX:MIN) shares are at a four-year low, down almost 60% since the beginning of the year.

And Liontown Resources (ASX:LTR) is trading at 60 cents a share, which is 80% below Abermarle’s $3 per share failed takeover bid in 2023.

Australia's lithium industry is facing a challenging period, with many mines operating at a loss due to declining prices. 

The industry's potential for recovery depends on factors such as global demand for lithium, technological advancements, and government policies.

Set against a backdrop of slowing EV market growth, watch this space.