Lithium and cobalt prices down 30%; EV’s watershed moment looming?

Investment intelligence platform Zerohedge reported that the global prices for lithium and cobalt had dropped  30% since the beginning of the year. The development stands somewhat in contradiction to what many investors globally expected, as battery and EV sales are soaring across the world, with particularly strong increases in EV adoption rates in China and the U.S. The increased demand was believed to drive commodity prices up.

In an attempt to counter lower lithium extraction volumes from DR Congo, mine operators worldwide had increased their output, to the effect that global prices are falling, with a ‘normalization’ of the market not in immediate sight.

Commenting on the insight by Zerohedge, Francesco Venturini, CEO at Enel X said that the development could be of significant magnitude. The rapid fall of commodity prices related to storage and EV technology could mean that a watershed moment is looming. Venturini said that the development is rather similar to what the PV industry experienced in 2010. Since that year prices for PV systems had come down by 84%, he said. Commodity prices for polysilicon declined steeply from $450/kg in 2008 down to $70/kg in 2009. Shortly afterward photovoltaics experienced a large uptake in deployments globally.

“The significant decrease in lithium and cobalt prices recorded over the past months was driven by the looming perspective of a lack of supply and soaring prices, causing miners to increase production, which resulted in oversupply, refuting recent fears of supply shortage,” Venturini explained. “The decrease in lithium and cobalt prices, which followed an opposite trend recorded in previous years, is expected to continue in 2019.”

He further notes, that due to falling costs, price parity of EV’s in comparison to conventional vehicles might come as early as 2025. While he believes that the current price development is generally a driver for the EV market, it would also ‘not be surprising’ if new battery materials are found in the near future. He notes that global car makers are expected to spend $300 billion on electrification over the next five to ten years, hence new technologies could easily arise.

New materials that can be extracted with a lower ecological footprint is on many development institutes agenda. Lithium and cobalt mining is associated with harmful and water intensive mining practices, in often politically volatile regions, such as DR Congo.

Last October, the University of the West of England has produced a report on battery sustainability for the European Commission in which the team of researchers examined alternative battery technologies, according to environmental and socio-political standards. The researchers claim they “without a doubt” see sodium-ion batteries as the most appealing candidate to circumvent the adverse impacts of lithium-ion systems. Sodium, they state, is highly abundant and not associated with geopolitical issues.