Recently, during a visit to Portugal, Jose Fernandez, the Deputy Secretary of State responsible for economic growth, energy, and environment, expressed concerns about China’s massive supply of lithium to the global market. According to Fernandez, this has caused a “predatory” drop in prices as China aims to eliminate competition.
Fernandez mentioned in a briefing that China’s lithium production far exceeds current global demand. He suggested that China’s actions are a deliberate response to the United States’ Inflation Reduction Act, the largest climate and energy investment plan in U.S. history worth over $400 billion.
He further explained that China is engaging in predatory pricing, lowering prices until competitors are forced out of the market. This has led to a significant decline in lithium prices, with a decrease of over 80% in the past year due to oversupply and reduced demand for electric vehicle batteries.
Not only has the plummeting lithium price impacted global lithium producers, but it has also affected China itself. Major Chinese battery companies like CATL have had to halt certain mining operations due to the consequences of the price collapse.
Consequently, European countries are now aiming to reduce their dependence on lithium imports from China and other countries. Fernandez highlighted that the low prices have restricted the ability to diversify supply chains globally and have harmed countries like Portugal that require investment for industrial development. Portugal, which possesses substantial lithium reserves estimated at around 60,000 tonnes, is the largest lithium producer in Europe.
Portugal hopes to collaborate with neighboring Spain to exploit local lithium mines, establishing an entire value chain from mining and refining to battery manufacturing and recycling.
Several mining companies in Portugal have been seeking financing, customers, and suppliers to accelerate project progress. Fernandez stated, “We want to help them, and we believe we can… Lithium mining companies worldwide must navigate through this challenging period caused by predatory pricing.”