Per WSJ, Albemarle announced plans in 2023 for a $1.3 Billion lithium processing plant in SC to supply the growing electric vehicle (EV) industry. Fast forward to 2024 and they have deferred project spending due to a slump in battery metal prices driven by weaker EV demand in the U.S. and China.
Producers of lithium/nickel, used in lithium-ion batteries for EV’s, have been slowing projects and closing mines to cut cost after a fast fall in commodity prices. Lithium prices have dropped by ~90% since January 2023 while nickel prices are down by ~50%.
Glencore recently said nickel production would be suspended at an unprofitable mine/processing plant in New Caledonia, a Pacific island, that provides ~6% of world supply. Several days later, BHP said it may need to close its Australian nickel mine for an uncertain period due to weak market conditions.
The world is suddenly over-supplied with the metals after vehicle producers geared up new projects to meet growing demand, then sales began losing momentum. Several automakers, including Ford, GM and Volvo, are delaying EV spending and showing caution about the outlook for EV demand.
EV adoption is happening, just not as fast as expected, and much lower metals prices could help auto companies stimulate sales growth with lower prices. The mining slowdown risks metal shortages if demand quickly turns upward, potentially forcing consumers to scramble for supplies once again.
Some analysts fear the current situation will hurt efforts to diversify key-mineral supply chains away from China. They also have concerns that the global market will be filled with metals from low cost, high polluting mines if producers with stricter environmental standards are priced out. Some low-cost lithium producers, such as Sigma Lithium in their Brazil operations, are gaining market share due to lower processing costs. And cheap Indonesian nickel exports are forcing other producers to close some unprofitable mines. The downturn has cut >20% of Australia’s nickel mine supply.
Boom and bust cycles in the mining industry can force companies to pivot to new strategies in the wake of changing market conditions. MOSIMTEC helps mining companies do that by using computer simulation and digital twins to explore options virtually before implementing in the real world.
MOSIMTEC has significant experience in the mining industry. For a metals/mining company, we developed a detailed global supply chain model to evaluate the feasibility of a new mine related to supplying the material and infrastructure to construct the port, railway and mine. For a platinum group metals producer, we supported development/analysis of a smelter facility to support decision making of major renovations and planned upgrades at the metallurgical complex. MOSIMTEC industrial engineers/data scientists help mining companies explore new ways to future-proof their business.
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