The entire e-vehicle supply chain is at the mercy of miners and their ability to bring on new production quickly enough to meet spiralling demand for lithium
The entire e-vehicle supply chain is at the mercy of miners and their ability to bring on new production quickly enough to meet demand for lithiumElon Musk says there’s big money to be made by turning raw lithium into battery chemicals, but shrinking profit margins suggest the mining end of the business might still be a better bet.
But the refiners’ profits can quickly wither if the cost of raw materials rises faster than the price of the lithium chemicals they sell. While China’s Covid-19 lockdowns have weighed on demand for finished products from battery- and vehicle makers in recent months, the price of mined raw materials has continued to surge.
“Merchant refining can be a pretty horrible place to be in any commodity market, because you can get squeezed at both ends,” said Peter Hannah, a senior price development manager at Fastmarkets. “I don’t think these margins will be a long-term feature of the market.” In a strategy that goes against the grain of the industry’s traditional just-in-time procurement practices, they’re now increasingly striking deals with miners directly, even in cases where the projects are years away from production.
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