Chairman of Surge Battery Metals: US lithium prices need more transparency to secure domestic supply

“We need more price transparency. In some contracts … you see foreign pricing without any context of size,” Harris said. “We hear that some contracts between domestic suppliers and battery/automakers are much more expensive than the daily published lithium prices.”

“While transactional pricing exists, it would be great if there was more transparency in the markets,” Harris added.[Lithium] is not listed on [the London Metal Exchange] “For example, we have no future market.”

Fastmarkets latest price assessment for Lithium Hydroxide Monohydrate LiOH.H2O 56.5% LiOH min Battery Grade Spot Price cif China Japan Korea was at USD10.00-11.20 per kg on Tuesday August 20, down 0.93% from USD10.00-11.40 on Monday August 19.

Meanwhile, Fastmarkets estimated the spot price for spodumene (min. 6% Li2O) cif China at USD 750-790 per tonne on August 20, unchanged from August 19.

Chinese lithium prices are generally declining in 2024 due to weak demand and oversupply. Several Chinese lithium producers are considering production cuts or a complete shutdown to mitigate losses from high costs amid continued price declines and subdued demand.

On April 4, Fastmarkets launched weekly price ratings for battery-grade and technical-grade lithium hydroxide and carbonate for the United States and Canada.

The move followed feedback from market participants interested in regional price references for lithium in the US and Canada that reflect the evolving battery supply chain in the region.

“Demand is growing in North America, [electric vehicle] “Penetration is slower than expected, but it's still growing at about 25% a year. We know the market needs domestic supply, but almost nobody is doing anything about it, neither the automakers nor the battery manufacturers,” Harris said.

The Chairman is convinced that although the lithium market is characterized by low prices and oversupply, there will be a turning point between 2024 and 2030 when people will have to ensure domestic supply.

“In the long term, people want green energy, the government wants to support green energy and companies want to provide green energy. Electric vehicles are a natural solution,” Harris said.

Surge Battery Metals owns the Nevada North Lithium Project, which has an estimated resource of 4.7 million tonnes of lithium carbonate equivalent grading 2,839 ppm lithium and 4,939 ppm total lithium in the Granite Range southeast of Jackpot, Nevada.

“Our grade is three to four times higher than conventional clay deposits being developed in North America and we consider it to be the highest-yielding clay-lithium resource in the Americas,” noted Harris.

New projects in North America are being challenged by Chinese investments in some regions, such as Africa, which offer a cost advantage, according to Harris.

“They may have a competitive cost advantage, but they will not allow reimbursement of these batteries in North America due to the Inflation Reduction Act (IRA),” Harris said.

The chairman also said that investing in trading partner countries outside the United States was not a solution because of the IRA.

“For example, we are not participating in a project in Argentina because if raw lithium products are shipped to China for processing and incorporation into batteries, those batteries are not eligible in the United States under the current IRA,” Harris said, adding that it would be better to focus on domestic supply.

Supply page for lithium

In the short term, the market is facing oversupply, but this will not last long as market dynamics will adjust, said Harris.

“As long as prices remain low, some companies will cut production, some will delay expansion, and some companies in the feasibility stage will not get financing,” Harris said, but added: “The cure for low prices is low prices.”

“As it takes a long time for supplies to come on stream, it is inevitable that there will be another supply shortage. Demand for electric vehicles is still growing at 25%,” he said.

The Fastmarkets research team forecasts that available lithium production will reach 1,439,400 tonnes of lithium carbonate equivalent (LCE) in 2025, while demand will reach 1,390,370 tonnes.

Slowing growth in electric vehicle sales and an oversupply of battery capacity in China are likely to weigh on demand for battery metals, according to ANZ analysts Daniel Hynes and Soni Kumari.

“Lithium, cobalt and nickel are likely to remain oversupplied in the short term, but the reaction of producers to cut production in the face of low prices should limit the downside. We see good long-term prospects. Supply still needs to increase by a factor of 1.5 to 3.5 over the next five years, which is a difficult target,” said a report published on Sunday, August 18.

The Nevada North Lithium Project

Surge Battery Metals completed its maiden assessment of the Nevada North Lithium Project in February 2024. The estimate indicates that the project contains an inferred mineral resource of 4.67 million tonnes LCE grading 2,839 ppm lithium at a 1,250 ppm cut-off.

“We are in the preliminary economic and development phase. Based on additional drilling in 2024, we will provide an updated [estimate] in September. Our goal is to deliver a Preliminary Economic Assessment (PEA) in December of this year,” Harris said.

“We do not yet have a specific date for the start of production, but based on similar project schedules, we estimate 2030 as the target start date,” Harris added.

The lithium extraction process uses the same flowsheet as the Thacker Pass sedimentary clay deposit, which owner Lithium Americas says is the largest known measured and indicated lithium resource in North America.

The Thacker Pass Project will use a newly developed process to extract lithium from the clay deposit, similar to mining techniques used for coal deposits. Typically, lithium is mined using either hard rock mining or brine mining.

According to Lithium Americas, the production process is designed to use conventional and commonly available equipment arranged to take advantage of the special properties of the high-grade ore. The process involves a series of steps to concentrate, separate and produce battery-grade lithium chemicals.

“One of the main advantages of clay, as opposed to spodumene, where you sell a concentrate at a reduced price, is that we can produce carbonate and/or hydroxide directly,” Harris said.

“We can get a premium price from the clays because we are producing a premium end product,” Harris added, noting that spodumene is typically shipped to China to be processed into battery-grade lithium, which would disqualify it under the IRA.

However, Harris said that producing lithium from clay requires higher capital expenditures (capex) than spodumene.

“[There is less capex] in spodumene, but you get a much lower price for your product. With Ton and our Nevada North project containing such high-quality lithium, we are confident that the [operational expenditure] will be more consistent with traditional, lower-cost brine projects,” Harris said.

In addition, Surge Battery Metals will seek funding from the Department of Energy.

“We will definitely apply [funding] because traditional construction financing is expensive for mining companies. And … the IRA would significantly increase the economic viability of the projects,” said the chairman.

The IRA, which came into force on August 16, 2022, prohibits the use of critical minerals and battery components from “foreign entities of concern,” which include companies based in China, Russia, North Korea and Iran.

Data from the U.S. International Trade Commission's Interactive Trade DataWeb shows that the U.S. imported nearly 154,000 lithium cells and batteries (excluding legacy products) from China in 2022, up from nearly 109,000 units in 2021 and more than double the roughly 71,000 units imported in 2019. Indonesia, Japan and Singapore were the other major suppliers in 2022.

However, from January to May this year, U.S. imports of lithium cells and batteries from China, Indonesia, Japan and Singapore fell significantly compared to the same five-month period last year.

However, the global lithium market is still seeking more clarity on which lithium reserves are eligible for the financial incentives offered by the Directive. Definitions of IRA-compliant lithium have yet to be clarified, and opinions vary on whether there would be an IRA premium for lithium.

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