Lithium producers hit by first big downturn of electric vehicle era | Hacker News Reader

Lithium producers hit by first big downturn of electric vehicle era

reuters.com

67 pointshoward94139 comments

The headline makes no sense when they follow it up by saying

> Battery-grade lithium is used primarily in EV batteries, and many automakers have high purity standards. Much of the industry’s capacity to produce high-quality, battery-grade lithium is locked up until 2024

They're just putting two unrelated things in a headline to imply they're related. It's clickbait/FUD. If they're selling all the battery-grade lithium, why don't they tell us about why demand is down for low-grade lithium?

This is very much standard accounting practices, especially in mining and other limited resources.

If you read the article properly, you will see that quote is attributed to a commodity analyst. The article is adding nuance to the story and canvassing a range of views.

It's not clickbait. The downturn in lithium prices recently has been significant and publicly traded companies have been sold off strongly (even high grade producers).

Downturn in low-quality lithium price. We don't know what the real price of high quality battery quality lithium is, as all battery quality supply is locked in long term confidential offtake agreements.

What we know, is lithium companies latest round of results was not great. Stock prices are spiralling. EV makers will find out without paying more to lithium suppliers, they won't get as much batteries as they wish.

Just last year[1] there was hand-wringing that the world was using up the entire production capacity for lithium and batteries were going to skyrocket in price.

[1] https://www.engineering.com/AdvancedManufacturing/ArticleID/...

Lots of mining sites have created a supply glut, this isn't a downturn just a market correction. Not a negative for consumers.

Markets with long time between investment and realization have some funny dynamics.

The article claims a 5% difference between production and sales. That small difference means entire players will fail, and every one will suffer. A 5% difference on the other direction means incredibly large profits, but electrical automobiles priced outside of the capacity of most people to pay.

With time it will stabilize, but you can expect many more of those headlines.

Lithium supply can be grown without meaningful limit, if someone is willing to invest the capital for it. The problem is that the supply follows the capital investment with a ~5 year lag, and 5 years ago a little too much was invested, so now there is a glut.

As the actual extraction costs are relatively small compared to the initial capital outlay, and everyone needs to pay their investors, no-one can really cut production and everyone needs to sell at whatever price they can until someone goes bankrupt and capacity is reduced again. This is how relatively small mismatches in capacity can lead to major price fluctuations.

>and everyone needs to pay their investors, no-one can really cut production and everyone needs to sell at whatever price they can until someone goes bankrupt and capacity is reduced again.

So it has nothing to do with market supply and demand problem but companies cashflow problems? So theoretically the banks which funded these extraction can also hedge against it with the rise and fall of lithium price?

This is just a temporary blip. Long-term demand for lithium is going to explode, and so of course will production. That is because demand for both ev's and storage is going up rapidly over the long term. The smart investors with deep pockets are going to get very rich. And let us not forget that commodity mineral prices often fluctuate.

As for the current drop in ev sales in China, from what I understand that is because there are at present 486 ev producers there (no, I'm not kidding) and the government cut subsidies to weed out the vast majority that will never be competitive. Once that happens the government will no doubt go back to promoting sales.

I've seen a lot of people online suggest that the Bolivian coup was CIA-backed to take control of their lithium production.

First time I've heard this, although I've heard similar things about Afghanistan. If this is true, what have been the beneficial lithium-based financial outcomes of the intervention Afghanistan?

I've seen this too, and I don't think it's ridiculous at all. But I don't even think the CIA needs to have been involved. Private companies are now entirely capable of running their own disinformation campaigns and meddling in electoral processes.

I actually think that it's less likely for companies to be going after the lithium than it is that they're going after the natural gas. BP has every incentive in the world to want to overthrow Morales.

Bolivia has 9 million tons of unexploited lithium reserves in their salt flats. "The region has 50% to 70% of the world's lithium reserves in the Salar de Uyuni salt flats."

https://www.commondreams.org/news/2019/11/11/bolivian-coup-c...

Between that and the natural gas, Bolivia will be a key natural resource in the eventual solar-dominated energy economy.

That doesn't seem to track with the latest USGS numbers here. https://prd-wret.s3-us-west-2.amazonaws.com/assets/palladium...

Bolivia doesn't even chart for reserves (i.e., extractable right now). Have they brought significant capacity online in the last year since this report was collected?

For resources (extractable in principle) there are 62 million tons of identified resources worldwide, of which Bolivia has 9 million tons. That is a lot, about 15%, but certainly no where near 50-70%. Notably Argentina has 14.8 million tons.

I guess I'm just curious if there are better sources or if I'm misunderstanding the USGS report.

>Bolivia has 9 million tons of unexploited lithium reserves in their salt flats. "The region has 50% to 70% of the world's lithium reserves in the Salar de Uyuni salt flats."

>I actually think that it's less likely for companies to be going after the lithium than it is that they're going after the natural gas. BP has every incentive in the world to want to overthrow Morales.

So basically lithium is Quantum, and some organisation wants the world to hold on to most of the World's Lithium Reserves?

[deleted]

There's a pretty hilarious screenshot going around showing that the bot accounts tweeting support for the coup are not very sophisticated either (they're literally copy and pasted).

I wonder if it's because they only have a limited number of agents and they are trying to cover all the leftists talking about the coup, so they are forced to copy paste as they read rapidly and switch accounts. They probably aren't using a pure ML solution as it'd look stupid.

Also, anyone remember this?

https://taskandpurpose.com/army-psyop-promotions

link to that screenshot please ..

https://twitter.com/smutcollecter/status/1194116947786551297...

Yeah Morales was just about to give the profits from their lithium supplies to social programs etc. and suddenly he's sleeping outside.

It's kind of the plot of the newly release season 2 of Jack Ryan..

That doesn’t sound like the reason he stepped down. It looks like he didn’t have popular support but people sympathetic to him in order to garner support put out this plausible narrative to garner populist support

"stepped down" seems extremely euphemistic in this situation

I dunno. A few other leaders-for-life like Mugabe, dos Santos, Zuma all stepped down due to popular pressure. Morals had the Supreme Court rule that the term limits in the constitution violated his human rights to seek a fourth term ! (He had the excuse previously that the new term limits reset the number of terms he had served!)

That seems silly and preposterous. There's no shortage of lithium. There is a shortage of manufacturing capacity of finished products. That's where the squeeze comes in. Batteries is the current limitation in production capacity. There's also not enough demand to be mining existing lithium supplies, just like there is not enough demand to do us mining of rare earth materials.

On the npr program I listened to about Bolivia this morning, it seemed to be the previous president had basically violated the constitution by running again. Which is separate from the process by which a new president is chosen.

> On the npr program I listened to about Bolivia this morning, it seemed to be the previous president had basically violated the constitution by running again.

The situation is more complex than that. First, historically the racist far right in Bolivia was just aching for a reason to kick the indigenous president out (there is a now deleted tweet by the now semi-legally acting president outright stating she doesn't like "Indians". The far right Camacho, one of the key instigators of the coup, vowed to "never again let the Pachamama in the government"; the Pachamama being an indigenous and non-Christian deity). Second, while it was legally dubious for Evo Morales to run for a fourth term, it was deemed legal by a court from Bolivia and it was accepted by the OAS (yes, the same OAS which later claimed there were "irregularities" with the voting -- so this isn't an organization that particularly sides with Morales). Finally, before being kicked out (er, "suggested by the military to resign", which in Latin America carries ominous undertones), Morales had finally accepted to have completely new elections, as suggested by the OAS. By this point the instigators of the coup had already seen they had the upper hand and accepted nothing less than the president's resignation.

So no, the re-election of Morales was not the cause of the coup. It was merely an additional argument they used to force him out.

thanks for explaining those other details.

I can only see one scenario where there would be a need to depose the Bolivian government in the short-term as the lithium isn't currently being mined. That would be if they were planning on giving a Chinese company a 50-100 year exclusive mining lease, possibly as part of a belt and road deal.

While production would mostly go to China it could still affect global demand and prices and give China a lot of leverage in the lithium market.

I read an older articles that German compaanies were seeking access to Bolivian lithium deposits. https://www.reuters.com/article/us-germany-bolivia-lithium/g...

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