Tianqi Lithium (002466.SZ), a China-based major lithium producers, has reportedly cited the anticipation for more consolidation in the lithium industry. The reckoning comes after the recent merger worth $10.6 billion between Allkem Ltd. and Livent Corp. The deal has showcased a possibility for more mergers & acquisitions among producers of lithium, which is a crucial metal in EV batteries.
As per the expert opinion, the demand for Li metal is expected to increase more than five-fold by 2030 due to the energy transition. In recent years, there has been a significant surge in demand for lithium ore from the electric vehicle battery industry. The global companies are scrambling for the metal acquisition, leading to increase in lithium prices by over 10 times from late 2020 to late 2022.
Yasmin Liu, Executive Vice President and Chief Integration Officer at Tianqi Lithium, emphasized the importance of reducing anxiety in material development during a seminar held by the London Metal Exchange in Hong Kong.
For the record, the lithium carbonate processing capacity has seen significant expansion, particularly in China, while the growth of lithium ore supply has remained limited.
According to a recent report by Susan Zou, an analyst at Rystad Energy, M&A within the lithium value chain have enabled companies to reduce capital spending and accelerate project developments. This is particularly significant for lithium producers, especially during times when prices are decreasing and lithium supply is at a long-term risk of a shortage.
Considering the Fastmarkets' evaluation, spot lithium carbonate prices dropped to a record low of USD 23,871.18 per tonne on April 20, a 72.4% decrease from the all-time high of more than USD 85,227 per tonne in November. However, prices have since rebounded to USD 34,801 per tonne as buyers have purchased cheaper material due to their low stockpiles of lithium carbonate.
Credit Source: https://www.reuters.com/markets/commodities/tianqi-lithium-exec-sees-more-sector-mergers-acquisitions-2023-05-16/