West Must Wrest Lithium Supply From China, Brinsden Urges

One of the world's foremost lithium influencers says the West must wrest control of the lithium supply chain from China by turning its high-quality resources into a long-term competitive advantage  

Patriot Battery Metals CEO Ken Brinsden says that currently, the lithium industry – crucial for electric vehicle (EV) batteries – is facing a period of low prices that is threatening to hinder the development of new mines. 

Brinsden argues that current lithium prices are unsustainable in the long term, as Western countries attempt to wrest control of the market from China.

He was speaking as Patriot Battery Metals – a hard-rock lithium exploration company – recently released a preliminary economic assessment for its Shaakichiuwaanaan project in Canada.

The assessment, which is an early-stage study of a mine's potential viability, estimates the initial phase of the project will cost US$487mn. The mine is expected to produce 400,000 tonnes per annum of spodumene concentrate, a lithium-bearing mineral, over a 24-year lifespan.

However, the economic assessment assumes a lithium price of US$1,500 per tonne for spodumene concentrate containing 6% lithium oxide. Yet current market prices are almost half this, at around US$770 per tonne. This is the reality that faces the lithium industry, says Brinsden.

Lithium prices slump caused by Chinese over-supply

The current low prices are caused by an oversupply last year. This is partly due to Chinese investment in lower-grade lithium resources in China and Africa, coupled with slower-than-expected growth in the electric vehicle (EV) market.

Brinsden suggests if prices remain at current levels the Shaakichiuwaanaan project – and many others like it – might not be developed as planned. Instead, he warns it could be scaled back to focus on high-grade underground mining, potentially leaving valuable resources untapped.

The situation underscores the volatile nature of the lithium market. 

Brinsden recalls his experience at Pilbara Minerals, which he turned into one of the world’s biggest lithium producers: "In the last cycle at Pilbara we sold our lowest-price cargo at about US$350 per tonne and were roughly cash-flow breakeven. At that time you wouldn't have developed Pilgangoora, yet just three years later that it made $900 million cash flow in a quarter."

China's dominance of the lithium supply chain is now seeing Western countries look for ways to diversify their sources. The Canadian and US governments, for example, have introduced tax incentives for domestic lithium production. This is a measure yet to be introduced in Western Australia, a major lithium-producing region.

Government support in West for lithium 'inevitable', says Brinsden

Brinsden says greater support for lithium mining is inevitable as the West seeks to reduce reliance on China. 

"China's dominance of the supply chain is actually a really big problem, and it does have to be diversified," he says.

Brinsden predicts the current lithium market downturn could present opportunities for mergers and acquisitions within the industry, with recent examples including Pilbara Minerals' acquisition of Brazilian explorer Latin Resources and Core Lithium's bid for Charger Metals.

Despite the challenging market conditions, Brinsden remains optimistic about the long-term prospects for lithium. 

"I think the quote I've used historically is the West has been asleep at the wheel, and in the past decade China's created a level of dominance in most of the critical minerals industries, and lithium is no exception. 

“The West should capitalise on our high quality resources, and that becomes our competitive advantage in building out these new supply chains."