➡️ You say 2024 brought pleasant surprises and a dose of realism to the battery industry. What can we expect in 2025? More bad or good news to come?

Personally I think it's not going to be surprisingly different in terms of sentiment compared to 2024. 2025 will be a transitional year without many game-changing upturns in the industry, no fireworks. We don't expect prices to escalate significantly, opposed to what other experts consider. We expect a bigger price increase in 2026, most likely H2 2026. We are a bit optimistic in the sense that we foresee prices crossing upward of the $10,000/tonne mark, averaging around $12,650/t LCE [lithium carbonate equivalent]. But that doesn't mean that the market is rebounding to levels seen in 2021, 2022. So, that means that it's still very challenging for most of the companies operating outside of China.

The greenfield projects that are developing their preliminary economic assessments or the profitability studies will most likely be delayed – both the mining and the refining projects… At the moment, we are absorbing a little bit of realism into the Western lithium-ion battery supply chain. And that is extremely important because some of the projects are underwater, even though many don't disclose that. Some of them will not make it; they are under a lot of financial stress and will not survive through 2025-26 – the two-year window of extremely difficult conditions, with a lot of pressure from China to keep prices low. With the lack of investment from Western governments, many companies will struggle, particularly those in the European refining space. Most of these new companies are literally bankrupt at the moment. However, not all will be bad news. For us, 2025 is still the year of M&A and a transition towards better perspectives in 2026.

➡️ In your opinion, what is driving the slowdown we’ve seen in the western lithium-ion battery supply chain? Are recent struggles and failures related to technology competence or simply market conditions?

No, it's definitely both. The slowdown is not constrained to the failures of new EU and US ventures such as lithium converters, cathode manufacturers, and some LIB cell producers such as Northvolt. It’s a much broader phenomenon: the big squeeze. This is when margins have fallen across the sector causing many to reconsider midstream investments.

Meanwhile, the growth of Chinese integrated players continues and as their business is focused on selling batteries and/or EVs, the margins are made downstream of the electrode and refined chemicals. This is especially relevant for Europe, where battery manufacturer Northvolt, cathode manufacturers and lithium converters are withdrawing or postponing their announced plans from 2021/2022, with the growing presence of Koreans and Chinese players in Europe. The CAM [cathode active material] sector is facing a gloomy environment, that’s one of the reasons why Johnson Matthey withdrew from the sector, why Northvolt decided to focus only on cell production. BASF just put on hold every expansion that they had previously planned, and finally, why UMICORE is going back to study and revise its presence in the cathode sector. It’s unlikely that the last two European firms will withdraw from the sector, but they are getting rid of every single hint of expansion for 2026.

➡️ Sounds like 2025 will see the survival of the fittest. Who do you expect to survive in the European lithium refining sector?

I don’t want to get into calling out the weakest links, as companies have enough pressures already. But, on the fittest side, AMG, then LevertonHelm are strong companies, well positioned to keep pushing ahead as others stumble and fall away. Survival of the fittest for sure, which is why it will be a year for the right M&A opportunities. There is also room for a few more independent companies, like Green Lithium, who have a partnership with Rio Tinto. They are phenomenal companies that know their business.

➡️ With slower growth in EV adoption, many battery minerals are facing oversupply and weak prices. What are SC Insights’ forecasts for lithium supply and demand fundamentals, and prices this year?

We don’t see the lithium price crossing the $15,000/t LCE mark during 2025. That’s because Chinese redundant capacity is capable of smoothing prices with not only idle refining capacity but also with low and mid-grade concentrate inventories. Plus, end-of-life LFP batteries ready to be processed in China would also cap any price gains.

The revision of demand has been a constant throughout 2024, with many trimming down their forecast for 2030. We continue forecasting demand crossing 2.5 million tonnes LCE by the decade’s end, with a CAGR [compound annual growth rate] of 15.2%. The truth is that these numbers need to be carefully reviewed and monitored, especially after the EV sales results of 2024. Sales of battery electric vehicles (BEVs) ended below expectations, with a surprising increase in sales of plug-in hybrids (PHEVs) and a consequent detrimental effect on lithium demand.

On the supply side, we anticipate nearly 1.5m t LCE this year, surpassing that in 2026. The bulk of supply comes from spodumene mines, closely followed by brine assets. To meet forecast demand, the lithium market should double every five years. But it will be challenging to ramp up to over 2m t LCE in 2030 and 4m t LCE by 2035.

➡️ Do you foresee further production cuts due to weak prices? Can alternative sources of lithium supply, such as Chinese lepidolite and Brazilian tailings, survive the market environment?

We expect more Australian projects to cut/stop production. In the case of Brazil, the existing producers, they have a competitive cost. For example, CBL has been producing since the early 90s and that's an extremely competitive project, despite being underground; the AMG mines, in southern Minas Gerais the same, and even Sigma, which started production just a couple of years ago. The same is applicable for Argentina projects which are competitive despite rough conditions and, of course, SQM and Albemarle (Salar de Atacama), which are the most competitive players ever. If you go back to prices in 2019, they were exporting at $3,500/t and despite going through the pandemic where the costs significantly increased and got updated by inflation everywhere, they still have costs close to $4,000/t - cash costs. If you check, for example, the Chinese lepidolite, most of the projects that were pumping feedstock into the market in 2021 and 2022 are out of business despite having been subsidised by the government. The majority of them have cost of above $14,000/t LCE, so that means that at $10,000 they're out of the market.

The only ones that will survive are the ones that are automated or the ones that due to by-products end up with a full cost (C3) below $10,000/t. As an example, the only Chinese lepidolite producers that have survived, which is a minuscule group of the entire domestic supply of China, are the ones that are mechanised. Additionally, players who have repaid their capital, because, for current projects that are in the process of repaying capital and have entered the market, such as some Australian spodumene concentrate players, they are hardly making any margins. With plenty of spodumene available, the standalone refining of lepidolite is economically and technically suboptimal.

➡️ We saw a major M&A last year, with Rio Tinto acquiring Arcadium Lithium. Do you anticipate further activity in 2025? If so, do you have any potential guesses?

There are some glimpses of M&A. Rio’s acquisition is outstanding news for the Western lithium-ion battery supply chain, and a great effort to move in a low-price environment – which a lot of companies would procrastinate on before doing such a big merger.

The situation for CAM in Europe, for example, doesn't look very promising. But, I would say this entails a great opportunity for M&A. We just were very vocal about that, that we hope and anticipate that 2025, might be a good year for M&As and further consolidation. Rio’s merger move brought some light back to Argentina’s lithium space, as in addition to the Olaroz and Hombre Muerto producing assets, the company is now also developing Sal de Vida and Rincón. However, let’s see how Rio copes with and deploys this – the management of existing assets and future ones. Direct lithium extraction can be a major challenge to get the greenfield Rincón off the ground. It’s a proprietary, not proven technology. Its application is currently constrained to one single asset in Argentina and a handful of assets in Qinghai in Tibet, China.

➡️ Looking downstream, do you expect automakers to increase the adoption of lithium iron phosphate (LFP) chemistry outside of China? Will Western companies have the tech know-how, or will they continue to rely on Chinese suppliers?

Yeah, absolutely. I completely agree with that statement. And the interesting part is that it's not going to be only adopted on the electric vehicle side of things, but also on the energy storage. And I think that's the case in North America, in Europe, a lot of renewable projects are using LFP BESS. And that's one thing that's happening as we speak.

Between 2025 and 2026, major OEMs will start socialising intentions of using more LFP and LMFP [lithium manganese iron phosphate] chemistries. With the current price environment and delicate margin situation, the latter is vital to react early and offer a cost-competitive solution in CAM/LIB manufacturing spaces. While this could be complicated by a Chinese ban on exporting such technology, it is the manufacturing experience that Chinese companies have an advantage in, rather than the IP for cathode materials themselves. We believe this would mitigate some of the impact of a Chinese ban on LFP/LMFP technology.