If you were to throw a dart at all human history to see what, where, and when you'd be mining, lithium in Australia during the early stages of the global energy transition would be a great place to hit, all things considered. 

However, that hasn't been the story throughout 2024. There's been a negative narrative, and sentiment has soured. 

As the story goes, Australia's fleet of seven still-afloat operating lithium mines is adrift in the price doldrums, praying for a tailwind as a rogue wave of Chinese and China-backed supply threatens to swamp them. 

Adding to the jitters are the all-too-fresh memories of the (perhaps exaggerated) demise of Australia's nickel sector under similar circumstances. 

Then there are the demand doubts. Slowing electric vehicle demand growth in the US has fuelled rumours that the great lithium demand promises of the global energy transition are just tall tales. 

That all makes for a bleak supply/ demand narrative and helps explain why investors have been jumping ship and heavily shorting lithium stocks. 

But perspective is everything. The oft-quoted 88% fall in lithium spodumene prices is a fall from a short-term record price spike. Prices rose from over $2000/t in January 2022, to $6,401/t 11 months later.

In September Benchmark Minerals said that Australian spodumene prices were at their lowest level for three years.

"Spodumene FOB Australia prices have fallen 14.4% so far this year to $818/t in the assessment period ending September 4, according to the Benchmark Lithium Price Assessment. Prices have shrunk to one eighth of the peak levels of $6,401/t seen in December 2022," the price reporting agency said.

That's not to say lithium miners and the market weren't blindsided. They were clearly largely caught off guard by the pace of growth in supply, particularly of Chinese lepidolite and China-backed African ore. 

There are concerns, however, among Western stakeholders that amid this second lithium winter, Beijing largely controls the price climate, supply/ demand forecasts, and the lithium narrative. 

Do Western banks dance to Beijing's tune?

Industry veteran Joe Lowry, sometimes known as Mr Lithium, voiced his opinion on September 5 on his Global Lithium show. 

"You have China wanting to keep the price down, that's clear," he said. 

He added that Chinese lepidolite and African spodumene are "mechanisms to do that". 

Given the integrated nature of Chinese companies, they are considered to have an advantage over others in a low-price environment. The vertically integrated mine-owning battery-producing companies can offset losses at their mines through savings further down the value chain.

To a point, at least. Reports of CATL cutting lepidolite production in China brought questions to that ability, while Rio Tinto's recent entry into lithium gave fresh perspectives on price cycles. 

China's hand in lithium prices has not gone unnoticed by the US government, particularly given the close attention being paid to the metal during the ongoing trade war and the race to secure critical minerals. 

Earlier this month, US Undersecretary for Economic Growth, Energy, and the Environment at the Department of State, Jose Fernandez, accused China of deliberately overproducing lithium in an act of "predatory pricing". 

"[They] lower the price until competition disappears. That is what is happening," he was quoted as saying by Reuters. 

Beijing, meanwhile, accuses the US of isolationism aimed at stifling China's lead in energy transition industries. 

Of course, greater collaboration between China and the West would be the optimal path forward for decarbonisation, but the rise of nationalism and protectionism has thrown a big spanner in those works. 

Earlier in the year, Lowry expanded on his thesis on how Beijing controls the lithium narrative. 

"China not only controls the majority of lithium demand, it also controls the majority of hard rock lithium processing. Chinese companies also lead in lithium resource investment outside of China," Lowry said.

"These factors, coupled with the opaque nature of the lithium industry in general, have enabled companies like Shanghai Metals Markets to effectively control the lithium narrative of many Western investment banks. 

"The typical bank will boast about their ‘local team in China' while their output and references to ‘SMM' in their graphs demonstrates that many (read most) Western banks that write about lithium let SMM have significant influence bordering on control of their narrative," he said.

He added that Chinese analysts are often "pressured into writing the ‘party' line". 

"This influence impacts what investment banks write about supply and demand, inventory levels across the supply chain, battery technology, etc. It is my opinion that much of the information about the industry is intentionally distorted to China's advantage," he said. 

With the prevailing lithium narrative, many have wondered why there have not been heavier supply cuts from Australian and non-integrated operations. 

Considering the lack of curtailments, US investment bank Citi last month observed that "the key investor debate has been: Are long-term lithium prices too high, and are the lithium companies just poorly run?"

Batteries politically charged in the West

Beijing isn't alone in muddying the waters.

"The US narrative on an almost daily basis by CNBC and FOX Business is that ‘nobody in America wants EVs'," the founder of the Global Lithium advisory said. 

But it's not consumers behind the US' lagging EV uptake, it's the manufacturers, he said. 

They're only now "starting to deal with the reality that they overstated their ability to have affordable EVs in the market," which has been compounded by "wrong choices" on battery type, he said. 

"The Western press continues to dampen sentiment by focusing on downgrades to the US/ EU electric vehicle demand growth story, ignoring global EV growth and the demand for [Energy Storage Systems]," he said. 

"The key metric for lithium demand is total battery GWh growth, not the US EV penetration rate," he said. 

From 2020 to 2023, the total volume of batteries used in the energy sector increased fourfold to 2400GWh, according to the International Energy Association. 

EVs accounted for more than 90% of battery use, but battery storage in the power sector is the fastest-growing commercially available energy technology. 

"The global market for battery storage doubled in 2023, reaching over 90GWh and increasing the volume of battery storage in use to more than 190GWh," the IEA said, adding that it has grown exponentially from about 1GW in 2013.

But, back to EVs. It's a common misconception that demand for EVs has fallen. As recently as last week, it was casually stated in one of the world's largest and most trusted news organisations. 

The reality is that massive demand growth has slowed. But demand is still growing – and isn't expected to stop growing any time soon. 

Fitch Solutions subsidiary BMI forecasted last month that global EV sales will grow by 23.1% year over year in 2024. 

Generally, that would be considered very strong demand growth. But when stacked against the enormous demand growth of the previous three years (2021: 109.3%, 2022: 63.3%, 2023: 36.4%) and a political want to talk down EVs, it gets unfairly diminished. 

The market may, however, need to get used to the slower growth for the next few years. BMI forecasts sales growth to drop to 5.3% next year before rising to 12.8% in 2026, and then ranging between 7.4-9.8% for the rest of the decade. The rapid rise in energy storage systems will somewhat offset the slowed EV growth. 

Also, given that EVs are a relatively new and rapidly growing sector, many variables are at play. 

"New markets may open up more rapidly than anticipated, as automakers expand their EV operations and new entrants compete for market share. This could lead to accelerated growth in electric car sales globally, surpassing the initial estimates," the IEA said. 

 

Meanwhile, the association noted there are, of course, downside risks. 

"Factors such as high interest rates and economic uncertainty could potentially reduce the growth of global electric car sales. 

"Other challenges may come from the [Inflation Reduction Act] restrictions on US electric car tax incentives and the tightening of technological requirements for EVs to qualify for the purchase tax exemption in China," it said. 

Lowry doesn't expect to see a change in the politicised narrative until after the US Presidential election in November.

"Despite the rhetoric, another Trump presidency won't kill the EV in the US," he said. 

Likewise, CRU's principal consultant Jason Needham told Mining Journal in June that the likelihood of Trump taking an axe to policies such as the Inflation Reduction Act isn't "as likely as you'd think because his voters are relying so heavily on investments from this exact same act". 

"When you look at the US, the IRA has triggered a lot of investment, and, in fact, you see something like 80% of that investment is in Trump states. So, if he cancelled it, he'd be cancelling hundreds of billions of dollars of investments in his states for jobs," he said. 

 

‘Politicians – masquerading as leaders – help no one' 

The issue has also been heavily politicised in Australia. 

Gone are the days when Australian Prime Ministers and party leaders would promote outright climate change denialism, such as Liberal-National Party (LNP) PM Tony Abbott (PM: 2013-2015) calling the issue "absolute crap" and climate action akin to killing goats to appease "volcano Gods". 

Despite the LNP having drifted further to the right of Australia's effective two-party system, it has largely toned down its climate change denialist rhetoric in recent years. However, it has continued to push a negative narrative and misinformation on EVs, batteries, and renewables. 

For example, former LNP Prime Minister Scott Morrison (PM: 2018-2022) campaigned against EVs in the 2019 election, claiming they couldn't perform basic tasks such as towing a trailer. 

In March this year, current LNP leader, the hard-right populist Peter Dutton, claimed that "battery technology" had yet to be "discovered". 

A second Trump presidency may not kill the EV in the US, but a Dutton LNP government could deal a serious blow to the extent of opportunities Australia could seize throughout the energy transition. 

Prime Minister Anthony Albanese's Australian government announced in April the Future Made in Australia Act, which has a Critical Minerals Production Tax Incentive (CMPTI) as its cornerstone. 

The purpose of the CMPTI is to assist Australian sectors in the race for critical minerals, capture more value by developing more downstream capacity, such as lithium refining, and counter supply risks and dependence on other countries. 

Australia is the world's largest lithium producer, claiming a 39% global share last year, and the world's second-highest reserves, but it is heavily dependent on China. In 2022-2023, Australia exported 96% of its lithium ore to China for refining and processing. 

Australia's Association of Mining and Exploration Companies (AMEC), in consultation with Tesla, Pilbara Minerals, Mineral Resources, IGO, and Liontown, has been heavily involved in creating the CMPTI. 

While it's a big step in the right direction, industry and government will need to continue to work together to carve out a flourishing critical minerals value chain in Australia. 

But it's a step that, right out of the gate, the Dutton opposition vowed to undo if elected. 

AMEC is very concerned at the prospect. 

The group was hopeful that Dutton's August visit to Western Australia to voice his ‘strong support' for the industry indicated a softening to his earlier criticisms of the CMPTI. 

This was, however, immediately followed by shadow treasurer Angus Taylor taking to national radio to categorically state that the party does not support it. 

"It feels like Mr Taylor is unaware that Australian industry is impacted by global policies. We either react and respond, or we watch these new industries and new jobs head overseas," AMEC chief executive officer, Warren Pearce, said. 

The vision the LNP puts forward for Australia's future is one of nuclear power, in which the government would use taxpayer dollars to build seven nuclear reactors. 

Given the party's unwillingness to provide significant details, and their timeframes not lining up with reality, the announcement has widely been viewed as an attempt to sabotage investment in renewable energy and battery storage. 

"It is very difficult to take Opposition Leader Peter Dutton's nuclear announcement seriously. His proposal for seven nuclear power stations is, at present, legally impossible, technically improbable, economically irrational and environmentally irresponsible," Emeritus Professor, School of Economics and Science, Griffith University, Ian Lowe wrote in The Conversation. 

Australian billionaire businessman and philanthropist Andrew Forrest was even more scathing at the National Press Club earlier in the year: "They push nuclear knowing it will just keep expensive and unreliable fossil fuel going for another 20 years as opposed to green energy". 

"These misinformed, unscientific, uneconomic, plucked-out-of-thin-air, bulldust nuclear policies of politicians – masquerading as leaders – help no one," he said. 

 

Kill the chicken to scare the monkey

Even amid the fracturing geopolitical landscape, Australia will likely continue supplying China with significant lithium volumes for the foreseeable future. Relationships between Canberra and Beijing must be cautiously navigated amid the tensions between China and the West. 

Of course, should support for Australia's downstream sector be wound back, the dependence will likely be even greater. This would make navigating those tensions all the more crucial. 

Australia is no stranger to Beijing's political retribution. The country felt the economic pain of A$20 billion worth of trade sanctions, which were dished out in response to former Prime Minister Scott Morrison's sloppy lobbying in May 2020 for an inquiry into the origins of COVID-19. 

The last of the sanctions was lifted only this month following an agreement between Albanese and Chinese Premier Li Qiang. 

In Dutton's 20+ years as a member of parliament, two of his favourite tools in his political kit bag have been race-baiting and recklessly stoking tensions with China. 

As Defence Minister in the lead-up to the 2022 election, Dutton repeatedly compared China's growth ambitions to nazi Germany and said Australia should prepare for war. He is cast as a sabre-rattler by Chinese media. 

He has struck a softer tone towards Beijing as party leader, but given his history, it's hard to imagine him getting through an entire term as PM without poking the dragon – especially if he needs a bump in the polls or is called upon to do so by a powerful political ally. 

The Chinese have an old idiom: "Kill the chicken to scare the monkey". 

Political commentators have applied this to Beijing's view on Australia and the US, with the former being the chicken and the latter being the monkey. 

If 2025 brings a world in which Trump is president and Dutton is PM, it could be a bad time for some of the chicken's industries dependent on China. 

‘Predatory pricing' 

If it is China's want to engage in ‘predatory pricing', its ability to do so may grow over time – making developing an Australian value chain even more crucial. 

Reuters reported on October 14 that China is moving to have a bigger say in determining battery metal prices by trying to persuade international investors to use the Shanghai Futures Exchange. 

"If successful, the push would help give Shanghai's contracts benchmark status and upend the system for reference prices of industrial metals in place since 1877 when the London Metal Exchange started life above a hat shop in London," Reuters noted. 

It went on to say that ShFE benchmarks would eliminate the need for Chinese firms to link their physical contracts to LME prices and create the need for foreigners to trade on ShFE to influence reference prices in their contracts, shifting market sway from the West to China. 

Casting a light on supply chains

The sector's next great challenge is casting a light on battery supply chains to expose those with poor ESG standards. 

There are still those who view the three-letter ESG acronym as a four-letter word, hoping it's a passing trend. They could very well get their wish in terms of the acronym becoming a thing of the past, but its core principles are here to stay and will become more heavily scrutinised and enforced over time. 

Known as traceability, the issue has become a key focus for miners. And it should be encouraged by industry, not resisted. 

Given its world-class mining standards, the more light that is cast, the brighter Australia will shine.

China may have burst out of the gate in developing energy transition supply chains, but the balance of its scale is tipped to the productivity side, leaving ESG priorities wanting in some areas. 

The University of Cambridge Institute for Sustainability Leadership argued in a report last month for business leaders to go beyond setting targets and making commitments for individual company change – and instead focus on a ‘whole of economy' transition, with a strategy to compete and win. 

"It is time to recognise that the market has failed to deliver at the pace required and there is no realistic prospect that, without much deeper structural changes, market forces will ‘bend the curve' and protect the social and environmental foundations on which society – and businesses – depend," authors Lindsay Hooper and Paul Gilding wrote in the Survival of the Fittest: From ESG to Competitive Sustainability report. 

They said the world is moving beyond the ESG "hype bubble", and businesses must recognise that "irrespective of short-term market sentiment, an economic transition is inevitable". 

"We cannot do business on a dead planet, and we can be certain that business as usual will not continue," they wrote. 

Although facing many challenges, attempts at implementing traceability are gaining traction. 

Last week, mining associations – including nearly 100 companies – launched a 60-day public consultation on consolidating different responsible mining standards into one global standard and multi-stakeholder oversight system. 

"Our aim is for the Standard to be adopted by a wide range of mining companies – large and small, across all commodities and locations – to drive performance improvement at scale. It will be applicable to any facility, anywhere in the world that is committed to responsible practices," the collaboration known as the Consolidated Mining Standard Initiative said. 

The truth has its boots on

Of course, EVs can tow trailers and much more, and battery technology is well and truly here. Australia should lead in the energy revolution and, with the right support, can absolutely do so. 

The old saying that a lie can get halfway around the world before the truth gets its boots on came into prominence long before the age of satellites and revved up fervour for convenient misinformation. Now, the lie can engulf the world in seconds. 

But the truth is lacing up its boots and the interconnected world can assist with traceability, accountability, and sustainability.  

Global warming denialism isn't dead, but it is dying. To help it on its way, consider: Average global temperatures hit their highest level in 2023 in World Meteorological Organisation records dating back 174 years. The nine years leading up to that were also the warmest. And the WMO forecasts with an 86% probability that at least one of the next five years will set a new temperature record. 

Last year, records were also set for concentrations of greenhouse gases, ocean heat, sea levels, low levels of Antarctic Sea ice, and the largest loss of ice—in other words, every single climate indicator. 

Meanwhile, critical minerals companies have had to convince the world that the path to decarbonisation requires more mining. This was a tough sell given that the industry had unfairly largely inherited the reputation of its predecessors and peers in the fossil fuels sectors. 

But it was and is the truth. And it's broken through. 

"Even those once opposed to mining now realise that a green energy transition depends upon a greater supply of minerals and metals," British professional service network EY said on October 1 after surveying senior mining and metals leaders globally. 

Hooper and Gilding said in the Cambridge report that the next step for businesses is to market sustainability as a social and economic benefit while painting the alternative to action as deeply negative for the economy and for people. 

There are those who will continue to distort the reality of markets, climate, critical minerals and energy technologies for personal and political gain. 

Populists will provide "simplistic counter-narratives that present false dichotomies while sowing doubt and fear in order to oppose action on sustainability, exploiting growing inequality and legitimate concerns about security, jobs and the cost of living in order to undermine evidence-based decision-making and governance", according to the report. 

It's important for businesses to make the case for "swift action" on sustainability challenges and to "take control of the story from those seeking to defend the status quo for personal gain", it said. 

"Business needs policy to design out the conflict between long-term sustainability and short-term commerciality. Business needs to build social engagement and buy in for transition. And business needs to compete aggressively on superior sustainability performance," it said.