Core Lithium has also announced that the sale of the first 18,500 tonnes of spodumene concentrate was awarded to its long-term offtaker, Chinese company, Sichuan Yahua Industrial Group.
Core Lithium owns the hard-rock Finniss Lithium Project in the Northern Territory of Australia.
The Finniss Lithium Project will produce the equivalent of 160,000 tonnes of battery-grade lithium concentrate over an initial 12-year mine life. The company also has plans to continue study works to expand the lifetime of its operations.
Australia is the largest exporter of hard-rock mined spodumene that is processed into lithium salts, which is currently largely done in China. Pilbara Minerals, a major exporter of spodumene from the country, has also announced expansion plans for its spodumene operations.
China’s Sichuan Yahua has also agreed to the purchase of an additional 15,000 tonnes of spodumene concentrate under a pre-payment arrangement. Payment for 80% of this volume is scheduled for April 2023, with the balance to be cleared upon shipment. Pricing for both cargoes is linked to the Fastmarkets spodumene 6% CIF China price with no floor or ceiling, according to Core Lithium.
The one-off sales are in addition to the long-term binding agreement between the two parties signed in 2019 for a total of 30,000 tonnes of spodumene concentrate to be delivered over a four-year period.
Core Lithium also executed offtake agreements with Chinese lithium producers Ganfeng Lithium and United States electric vehicle (EV) producer Tesla.
Spodumene price volatility
The lithium market has historically been dominated by long-term contracts based on a fixed price negotiated between seller and buyer. But the uptrend in prices over recent years, alongside the unpredictability of future lithium prices, has prompted a shift along the lithium value chain to a pricing mechanism based on more transparent and up-to-date supply-demand dynamics.
Spodumene is the hard-rock mineral that contains lithium. It is a key input for the production of lithium-ion batteries for EVs.
The uptrend in spodumene prices has been tracking the surge in downstream lithium chemical prices since 2021. The ultralight metal entered a bullish cycle in recent years, supported by high demand for EV batteries.
This supported a price uptrend across the whole lithium industry, including technical grades, battery grades and spodumene concentrate feedstock.
But these gains seem to have slowed since the last quarter of 2022. Chinese lithium prices have been on a downward trend since the fourth quarter of 2022.
Fastmarkets assessed the spodumene, min 6% Li2O, spot price, cif China at $4,900-5,800 per tonne on March 16, down by 13.01% from two weeks earlier but up by 15.67% from the corresponding time last year.
Spodumene prices have come under pressure due to weakness in the Chinese downstream lithium salt prices arising from a slowdown in demand and resulting in reduced demand for spodumene units.
“Further forward, prices are likely to remain volatile owing to strong demand, which is generally likely to expand at a fast pace as the green transition unfolds. But we expect there will be periods when too much new supply reaches the market in too short a space of time, creating bouts of oversupply, as we are currently seeing,” said William Adams, Fastmarkets’ head of battery raw materials research.
Lithium market fundamentals remain strong, and Fastmarkets’ research team forecasts that the total lithium market will be in a deficit of 68,900 tonnes of lithium carbonate equivalent for 2023.
In light of persistently strong fundamentals, new expansion projects continue to be announced.
Spodumene miner Pilbara Minerals said on Wednesday, March 29 that it has approved a final investment decision for the P1000 Project at its Pilgangoora lithium deposit in Western Australia to boost production capacity of spodumene concentrate from approximately 680,000 tonnes per year to nearly one million tonnes per year.
The company said that its decision to expand was made to capitalize on expectations that the lithium market will continue to grow, despite the recent pricing weakness.
Keep up to date with global market insights and predictions for 2023 and beyond with our NewGen forecasts.
