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This Week in Lithium: Miners May See Improved Pricing
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This Week in Lithium: Miners May See Improved Pricing

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Lithium miners may be headed for better times amid a recovery in prices.

Lithium prices have been hovering at multi-year lows recently. However, the recent first-quarter results from Sigma Lithium (NASDAQ:SGML) indicate that better pricing dynamics may be in store for miners. Meanwhile, Chinese EV maker BYD (OTC:BYDDF) (HK:1211) has postponed a key lithium plant in Chile, while Albemarle (NYSE:ALB) charges ahead in the country.

Better Times for Miners

This week, Sigma Lithium announced results for the first quarter. While its numbers may have come in lower than estimates, the results point to a potentially improving pricing environment for the lithium mining industry. In May, SGML clocked 11% higher prices for lithium hydroxide compared to April. Additionally, the company increased its proven and probable reserves by 40% to 77 million tonnes.

Meanwhile, in Chile…

Meanwhile, China’s top EV maker, BYD, has postponed its plans for a lithium cathode plant in Chile. Production at the plant, with a nearly $290 million investment, was previously slated to begin by the end of next year. However, Stella Li, BYD’s Chief of Americas, noted that the company’s plans to resume the development of the plant now appear uncertain due to complications around the project. Notably, a cathode is the most expensive component of an EV battery cell.

Chile is the world’s second-largest lithium producer, and the country is maintaining its pace of boosting output. This week, Chile granted Albemarle, the largest lithium producer for EV batteries globally, an option to increase its production quota in the country by 240,000 metric tons of LME (lithium metal equivalent). This would represent a 50% increase in ALB’s production quota.

How Much Is LIT?

At present, lithium miners abound with optimism over the recent modest recovery in prices. However, the steady increase in new production, along with capacity expected to come online in the future, could weigh on the industry. Amid this dynamic, the Global Lithium & Battery Tech ETF (LIT) at $45.15 per share, is up by nearly 7% over the past three months but still remains nearly 28% lower over the past year.

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