Lithium price drivers for 2022 and beyond, producer ESG rankings: Benchmark Minerals Intelligence

Mon 29 Aug 22, 2:42pm (AEST)
File photo: generic image of solar panels
Source: File photo: generic image of solar panels

Key Points

  • China's record breaking heatwave and drought is expected to tighten near-term lithium supply
  • The lithium market is forecast to become more balanced by 2026 before widening again from 2030 onwards
  • Mineral Resources, Pilbara Minerals and Allkem pass Benchmark Mineral Intelligence's ESG criteria with flying colours

Benchmark Minerals Intelligence takes a look at short and long-term drivers for lithium prices.

Short-term landscape

Demand for lithium ion batteries is forecast to grow 36% this year to 610 gigawatt-hours while lithium supply is projected to increase 33%, according to Benchmark.

"In the short-term, continued robust electric vehicle demand globally and record-breaking heat and drought in the southwest of China are the key drivers for the market," the report said.

The drought has seen Chinese authorities in Sichuan pause industrial production until August 25 to help ration electricity due to a lack of hydropower. The shutdowns could impact up to a quarter of China's lithium production capacity, according to Benchmark.

From a contract pricing perspective, Benchmark notes that prices between lithium miners and buyers are still catching up to Chinese spot market prices. Its estimated that the lag might take between 6-12 months to be fully realised.

“So even if the spot market were to fall, contract pricing has still got some chasing to do well into 2023," said senior price analyst, Daisy Jennings-Gray.

Little relief for lithium deficit

"There is very little additional lithium production capacity coming online before late 2023 and early 2024 ... and many projects are still being delayed," said Benchmark.

"Longer-term, the lithium market is likely to remain tight this decade but become more balanced by around 2026, pushing prices to more stable levels."

Still, "the supply deficit is expected to worsen from 2023 onwards, as demand grows by another 1 million tonnes LCE in a few years."

Lithium market balance
Lithium market balance (Source: Benchmark Lithium Forecast)

A new ESG benchmark

Benchmark launched its first-ever ESG report that ranks global lithium producers based on 'seven flagship indicators' including:

  1. Does the company have a current ESG or sustainability report?

  2. Is the report publicly available and easily accessible?

  3. Does the company have a designated ESG team or committee?

  4. Does the company use biodiversity indicators to assess its impact on the ecosystem?

  5. Does the company have a timeline or plan to reach net zero or carbon neutrality?

  6. Does the company have a 3rd party verified life cycle assessments or carbon emissions which declare scope 1 to 3?

  7. Does the company have female representation at the board level?

There are five rankings, classified as 'Benchmark Approved' which is followed by Tiers 1 to 3.

Companies in the Benchmark Approved category include:


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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