J&K’s Lithium plans face challenge as global prices down by 75% in 2 years

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Ziraat Times
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Srinagar: Jammu & Kashmir’s plans of leveraging its sizeable Lithium reserves to boost its income may be jeopardy as global prices of this precious commodity have fallen by 75% in 2 years.

Lithium prices, which are down 70 per cent year-on-year, had soared to 0.575 million yuan ($79,000) a tonne in December 2022. Lithium carbonate and lithium hydroxide are refined lithium products. This substantial drop in prices is anticipated to dent J&K’s efforts in exploiting its mineral reserves in a beneficial manner.

The Geological Survey of India (GSI) reported in 2022 that lithium reserves in Jammu and Kashmir were about 5.9 million tonnes of inferred lithium resources in the Salal-Haimana area of Reasi district.

In March 2024, the union government held another auction for lithium reserves of J&K after the initial auctions saw only two bids being submitted. That less favourable response from bidders had prompted the government to modify certain conditions to make the bidding process more attractive to mining companies. If successfully mined, the reserves are expected to help J&K raise considerable revenue and improve its overall revenue situation.

The World Bank, in its Commodity Outlook, said this week that lithium prices tumbled by 18 per cent quarter-on-quarter. “Price declines were driven partly by weak demand, particularly for EVs, and subdued activity in China, but also by a continued ramp-up of supply anticipating prospective needs for the energy transition,” it said.

Research agency BMI, a unit of Fitch Solutions, said in 2024-2025 lithium prices are expected to remain below 2022-2023 highs, owing to a rapidly expanding global lithium supply that has pushed the lithium market into surplus.

“We forecast Chinese lithium carbonate 99.5 per cent to average $15,500/tonne in 2024 and $20,000/tonne in 2025 (compared with $72,081/tonne in 2022 and $35,956/tonne in 2023), and for Chinese lithium hydroxide monohydrate 56.5 per cent to average $14,000/tonne in 2024 and $20,500/tonne in 2025 (compared to $69,496/tonne in 2022 and $38,324/tonne in 2023),” said BMI in its outlook.

The global lithium supply is projected to broadly keep pace with rising demand, with sizeable project pipelines among large producers (such as Australia and China) as well as among new and emerging producers (such as Argentina and Zimbabwe).

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