Lithium Miners Revolutionize Pricing with Auctions (Spot Price)

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Facing unprecedented demand surges and volatile price swings, the world’s lithium producers are revolutionizing the way the commodity is bought and sold. Miners are using auctions to secure higher prices than those assessed by price reporting agencies (PRAs) as demand for the battery metal increases amid the energy transition. 

Traditionally, the lithium market relied on private contracts, but the surge in demand has led to the introduction of public trading platforms. PRAs now provide price assessments, and the London Metal Exchange and Guangzhou Futures Exchange have launched futures market.

However, with a 2024 lithium price slump affecting margins, producers turn to spot auctions that yield better prices than PRA reports. 

A Valuable Tool for Lithium Price Discovery

According to S&P Global Commodity Insights, market experts and participants expect auctions to continue, as companies aim to achieve favorable prices despite market downturns. 

Albemarle Corp., a major US lithium producer, stated that auctions help in responsible price discovery. This benefits both buyers and sellers and contributes to a more sustainable market. 

For Przemek Koralewski, global head of market development at price reporting agency Fastmarkets Global Ltd., auctioning lithium prices serve two things:

“It allows miners to get the price of the day and it means that the contracts on which most material is sold are truly reflective of market dynamics.”

Unlike other commodities with a single benchmark price, lithium prices are typically determined using a range of PRA assessments, incorporating data from various market stakeholders.

In 2022, lithium companies leveraged auctions to secure higher prices despite slowing demand for electric vehicles and rising COVID-19 infections impacting market prices. Alice Yu, an analyst at Commodity Insights’ Metals and Mining Research team, stated that “auction prices provide an extra means of price discovery and add to market transparency.”

The use of auctions decreased as pandemic effects waned and prices surged amid the energy transition. However, a supply glut and global decline in EV sales have caused lithium prices to drop again. 

RELATED: Lithium Prices and The Insights into the EV Market’s Pulse

On May 23, Platts reported the lithium carbonate CIF North Asia price at $14,250 per metric ton, down 81.8% from the four-year high of $78,200/t on Nov. 30, 2022. The lithium hydroxide CIF North Asia price also fell 83.2% to $14,250/t from a peak of $84,700/t on Nov. 28, 2022. 

Embracing Lithium Auctions for Better Pricing

Several lithium companies are now revisiting auctions, believing that price reporting agencies have overstated the price decline. Auctions have indeed yielded higher prices. 

For instance, Albemarle’s two lithium spodumene auctions on March 26 and April 24 increased the spot spodumene price by about 10% each time. Encouraged by these results, Albemarle plans to continue with auctions.

In late March, Australia-based Mineral Resources Ltd. sold lithium spodumene concentrate at $1,300/t through digital auctions. This was 13%-20.4% higher than the Platts lithium spodumene 6% FOB Australia price of $1,080/t to $1,150/t during that period. The company aims to continue using auctions for price transparency.

Joshua Thurlow, CEO of Mineral Resources, highlighted the market’s recognition of future lithium demand for the global energy transition, noting delays or failures in long-awaited supply projects. 

Similarly, Brazil-headquartered Sigma Lithium Corp. reported achieving higher prices through an “auction-price discovery process” compared to the traditional PRA approach.

These developments indicate that auctions are becoming a valuable tool for lithium producers to secure favorable prices and enhance market transparency. This is particularly crucial as demand for lithium, a critical element of EV batteries, will rise again amid the energy transition. 

A Dynamic Pricing Approach for A Resilient Lithium Market

Lithium prices have experienced a dramatic fall and the market is still adjusting to inflated inventories from the boom period. There’s also a growing divergence between different lithium products as the supply chain matures. 

Historically, long-term contracts have been linked to the downstream chemicals market rather than the raw material, spodumene, which has become significant only in the past decade. This has led to a disconnect between the prices of these two materials.

Ana Cabral, CEO of Sigma Lithium Corp., noted that lithium producers are gaining more control over pricing previously influenced by lithium chemicals. She emphasized the need for a risk-reward system aligned with the pricing mechanism, highlighting that those producing the raw concentrate bear most of the risk.

Lithium producers face not only explosive demand growth but also geopolitical and regulatory changes that could create regional market divisions. The West aims to reduce dependence on supply chains involving China, with increasing attention to the carbon footprints of various sources. 

Chris Berry, president of House Mountain Partners LLC, likened the current lithium market evolution to that of the iron ore market. He noted that auctions and increasing liquidity in lithium futures are positive developments. 

Regular, open spot pricing through bids and offers enables market participants to react swiftly to supply and demand changes, ensuring more efficient market clearing during both boom periods and downturns. This dynamic approach allows the market to adapt more effectively to fluctuating conditions.

READ MORE: Understanding Lithium Prices: Past, Present, and Future

The post Lithium Miners Revolutionize Pricing with Auctions (Spot Price) appeared first on Carbon Credits.

How Top UK Universities Are Reducing Their Carbon Footprint to Reach Net Zero

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Leading universities worldwide are at the forefront of driving innovation to combat climate change and achieve net zero goals. Institutions like Oxford, Cambridge, Imperial College London, the University of Edinburgh, and the University of Aberdeen are pioneering groundbreaking solutions in CCUS technologies, policy frameworks, and integration strategies in the United Kingdom.

Learn how these research initiatives are shaping the future of sustainable energy and environmental stewardship.

Oxford University’s Carbon Management Program

Launched in December 2022, the Carbon Management Program at the Oxford Institute for Energy Studies (OIES) focuses on the in-depth examination of business strategies aimed at implementing groundbreaking low-carbon technologies essential for transitioning to a net zero world. Specifically, these technologies include carbon capture, utilization, and storage (CCUS) as well as carbon dioxide removal (CDR) solutions, spanning both technological and natural approaches.

The program scrutinizes the role of carbon markets, encompassing both voluntary and regulatory compliance mechanisms, in stimulating investments towards these transformative technologies. The Program’s research activities focus on 3 key thematic areas:

Carbon Capture, Utilization and Storage (CCUS):

The research segment examines the feasibility of CCUS in various sectors like oil & gas, steel, cement, and waste-to-energy. It provides insights into the economic, policy, and regulatory aspects of CCUS adoption.

Additionally, it assesses different policy support methods like tax incentives and carbon pricing to promote CCUS deployment. Comparative analyses with alternative decarbonization solutions in sectors like steel production (e.g., hydrogen adoption) and renewables are also conducted.

Carbon Dioxide Removal (CDR):

COP27 emphasized the importance of taking CO2 out of the air to meet the climate goals outlined in the Paris Agreement. Research in this area looks into various ways to do this, known as Carbon Dioxide Removal (CDR) solutions, to help us transition to cleaner energy and reach those targets.

CDR methods cover a wide range of techniques, so this research zeroes in on the most promising ones like direct air capture (DAC), bioenergy with carbon capture and storage (BECCS), and biochar production. It also explores newer solutions to see how practical and scalable they are.

Carbon Markets:

The third research area of the Program focuses on integrating CCUS and CDR solutions into both voluntary and mandatory carbon markets. Specifically, it offers solutions to significant challenges that have slowed down the progress of CCUS and CDR in voluntary carbon markets and emissions trading systems.

These solutions address various issues, including the need for robust carbon accounting frameworks, methods to ensure the permanence of carbon removal and to manage the risk of leakage or reversal, and assessments of the types of claims companies can make by investing in these solutions.

The University aims to achieve its own net zero carbon goal and biodiversity net gain by 2035, with the following pathway:

“Oxford Net Zero” Initiative

Oxford Net Zero is an interdisciplinary research effort drawing on 15 years of climate neutrality research at the University of Oxford. It is dedicated to monitoring progress, establishing standards, and guiding effective solutions across various fields including climate science, law, policy, economics, clean energy, transportation, land use, food systems, and CDR.

Essential climate change questions that Oxford Net Zero addresses include:

How will carbon dioxide be distributed between the atmosphere, oceans, biosphere and lithosphere?
Where will it be stored, in what forms, how stable will these storage pools be, who will own them and be responsible for maintaining them over the short medium and long terms?
How does net zero policy extend to other greenhouse gases?
How will the social license to generate, emit, capture, transport, and store carbon dioxide evolve over the coming century? 

READ MORE: Oxford Revises Principles for Net Zero Aligned Carbon Offsetting

University of Cambridge Carbon Capture, Storage And Use Research

The University of Cambridge’s Carbon Capture, Storage, and Use (CCSU) research is part of the Energy Transitions@Cambridge initiative, an interdisciplinary research center dedicated to addressing current and future energy challenges. With over 250 academics from 30 departments and faculties, the initiative aims to develop solutions for energy transitions.

The CCSU research focuses on understanding and raising awareness of opportunities and risks associated with CCUS. Areas of focus include chemical looping of solid fuels to produce clean CO2, hydrogasification of coal to methane gas, reforming of methane to hydrogen, and seismological observations of active injection sites. On the use side, research covers manufacturing processes of CO2 and carbonate mineralization.

By bringing together academics and external partners, the university’s research program aims to explore cutting-edge technology themes in carbon capture for large-scale decarbonization.

Cambridge Zero, the University’s ambitious new climate initiative, will generate ideas and innovations to help shape a sustainable future – and equip future generations of leaders with the skills to navigate the global challenges of the coming decades.

The University made history by becoming the first university to adopt a science-based target for emissions reduction, aiming to limit global warming to 1.5 degrees Celsius. It plans to cut greenhouse gas emissions to zero by 2038.

To achieve this, Cambridge is exploring the substitution of gas with alternative heat technologies on a large scale and is progressively transitioning to renewable sources for its power supply. Watch below to learn more about the university’s climate initiative.

  

University Of Edinburgh CCS Research 

The University of Edinburgh’s School of Engineering hosts one of the UK’s largest carbon capture research groups, focusing on carbon dioxide capture through adsorption and membrane separations. This group is part of the Scottish Carbon Capture and Storage (SCCS) Centre, the UK’s largest CCS consortium, which includes over 75 researchers from the University of Edinburgh’s Schools of Geosciences, Engineering, and Chemistry, Heriot-Watt University, and the British Geological Survey.

The Adsorption & Membrane group at the University of Edinburgh specializes in:

Adsorbent Testing and Ranking: Using zero-length column systems to evaluate adsorbents for CO2 capture.
Membrane Testing: Assessing polymers for carbon capture membranes.
Molecular Modelling: Simulating novel nanoporous materials.
Dynamic Process Modelling: Simulating adsorption and membrane-based capture technologies.
Process Integration and Optimization: Enhancing efficiency of capture processes.
Circulating Fluidised Beds: Studying fluid dynamics for improved carbon capture.
Mixed-Matrix Membranes and Carbon Nanotubes: Developing advanced materials for capture applications.

This extensive expertise positions the University of Edinburgh as a leading institution in the research and development of carbon capture technologies.

Zero by 2040

The University has also committed to becoming zero carbon by 2040 as outlined in its Climate Strategy 2016. This strategy employs a comprehensive whole-institution approach to climate change mitigation and adaptation to achieve ambitious targets. 

In alignment with the 2016 Paris Agreement, which aims to reduce global greenhouse gas emissions, the University is committed to supporting Scotland’s and the world’s transition to a low-carbon economy.

Key goals include reducing carbon emissions by 50% per £ million turnover from a 2007/08 baseline and achieving net zero carbon status by 2040. The University plans to achieve these objectives through initiatives in research, learning and teaching, operational changes, responsible investment, and exploring renewable energy opportunities.

Furthermore, the University will use its 5 campuses as “living laboratories” to experiment with and demonstrate innovative ideas that can be implemented elsewhere, fostering a culture of sustainability and practical application in the fight against climate change.

This year, the University is undertaking a major project to achieve carbon neutrality, which is considered the largest of its kind in the UK. This multimillion-pound initiative involves planting more than 2 million trees and restoring at least 855 hectares of peatlands. The project is a crucial part of the University’s goal of 2040 net zero.

Initial regeneration efforts will focus on a 431-hectare site overlooking the Ochil Hills in Stirlingshire and 26 hectares at Rullion Green in the Pentland Hills Regional Park near Edinburgh. Over the next 50 years, the project aims to remove 1 million tonnes of carbon dioxide from the atmosphere, equivalent to the emissions from over 9 million car journeys between Edinburgh and London.

Imperial College London – CCS Research Program

Imperial College’s carbon capture and sequestration (CCS) research program is the largest in the UK, involving over 30 professionals across various departments. They focus on engineering, industrial CCS, subsurface CO2 behavior, and legal and regulatory aspects. The university collaborates with the UK CCS Research Centre, CO2 GeoNet, and the European Energy Research Alliance.

The program has refurbished a pilot carbon capture plant to provide hands-on experience for students and professionals. Built to industry standards, it captures flue gas from a power station and supports research conducted by leading industrial organizations.

Imperial College London is also employing various means to directly curb its GHG emissions. The school’s long-term goal is to be a sustainable and net zero carbon institution by 2040.

ICL’s Transition to Zero Pollution 

The Transition to Zero Pollution initiative is structured around 5 focus themes, each addressing a significant challenge that demands exploration, innovation, and interdisciplinary collaboration:

Emerging Environmental Hazards and Health
Resilient, Regenerative, and Restorative Systems
Sustainable Resources and Zero Waste
Urban Ecosystems: People and Planet
Zero Pollution Mobility

Know more about ICL’s TZP initiative here.

University of Aberdeen’s Carbon Capture Machine 

The University of Aberdeen is at the forefront of carbon capture and utilization research, with experts developing processes and products that not only sequester emissions but also add economic value.

In 2017, the university’s patented CO2 capture and conversion technology led to the establishment of Carbon Capture Machine Ltd (CCM), which became a finalist in the NRG COSIA Carbon XPrize competition, offering a $20 million prize to the winner.

CCM’s technology involves dissolving CO2 flue gas into slightly alkaline water, which is then mixed with a brine source containing dissolved calcium and magnesium ions. This process generates Precipitated Calcium Carbonate (PCC) and Precipitated Magnesium Carbonate (PMC), both of which are nearly insoluble and have various industrial applications.

PCCs are used in industries such as papermaking, plastics, paints, adhesives, and in the development of cement and concrete.

Additionally, sodium chloride (NaCl) is extracted from the final products. These carbon conversion products are carbon negative and in high demand across multiple industries, offering companies opportunities to reduce emissions and create new revenue streams through carbon capture and utilization technology.

Aberdeen’s Net Zero Goal

Same with the other top universities, the University of Aberdeen aims to reach net zero by 2040. As part of this climate commitment, the university became a member of the Global Climate Letter and the One Planet Pledge.

At a glance, here is the university’s carbon emissions, total and by scope, accessible through an online tool.

In addition to enhancing emissions reporting, the university is actively developing a comprehensive net zero strategy. This strategy includes setting targets and exploring pathways across various business functions to achieve carbon neutrality. The publication of this strategy will be available this year.

Conclusion

Leading universities in the UK are advancing carbon capture, utilization, and storage (CCUS) technologies, essential for achieving net zero goals. Oxford, Cambridge, Imperial College London, the University of Edinburgh, and the University of Aberdeen are driving research and implementation strategies that address the technical and economic challenges of CCUS.

Their interdisciplinary programs and climate initiatives integrate these solutions into broader carbon markets and regulatory systems. These universities’ efforts are crucial in transitioning to a sustainable energy future, demonstrating the critical role of academic institutions in global climate action. Through collaboration with industry and government, UK universities are setting the standard for climate action and paving the way for a net zero future.

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Carbon Emissions Averted? BHP and Anglo-American Deal Off the Table

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The potential merger between BHP and Anglo American has been a significant topic in the mining industry, with the possibility of creating the largest base metal company globally. However, the merger has faced multiple rejections and challenges.

Here are the key points of the merger proposal:

Initial and Revised Proposals:

BHP initially proposed a $38.8 billion all-share offer to acquire Anglo American, which included plans to demerge Anglo American’s platinum and iron ore assets in South Africa.
The revised proposal increased the merger exchange ratio by 15%, offering Anglo American shareholders 16.6% ownership in the combined entity, up from 14.8% in the initial proposal.

Rejections and Concerns:

Anglo American’s board has consistently rejected BHP’s proposals, citing that they significantly undervalue the company and involve a highly complex structure with significant execution risks.
The structure requires Anglo American to demerge its holdings in Anglo American Platinum and Kumba Iron Ore, which the board finds unattractive and risky for its shareholders.

Focus on Copper:

Both companies are heavily focused on copper due to its crucial role in the energy transition, with BHP aiming to become the world’s largest copper producer through this merger.
The combined entity would control significant copper assets, including major mines in South America, enhancing BHP’s position in the copper market.

The merger faces potential regulatory scrutiny, particularly concerning market concentration in the copper sector and the impact on South African operations. BHP has proposed several socioeconomic measures to address these concerns, including maintaining employment levels and supporting local procurement in South Africa.

Ultimately, BHP has pulled its bid as of May 29th. With or without the deal, each mining giant has been figuring hard how to deal with their carbon emissions.  

BHP’s Carbon Crusade and Net Zero Ambitions 

BHP has committed to achieving net zero operational (Scope 1 and 2) emissions by 2050. Their medium-term target is a 30% reduction from adjusted FY2020 levels by FY2030, involving an investment of around $4 billion. Key initiatives include transitioning from diesel to battery-powered haul trucks, which are more efficient, and investing in renewable energy sources to power their operations, especially in Western Australia and Chile. 

For example, BHP plans to build 500 megawatts of renewable energy and storage capacity to meet increased power demand from their operations as they transition to electric haul trucks. 

While BHP prioritizes internal GHG emission reduction, they recognize the temporary role of high-integrity carbon credits. The mining titan doesn’t plan to use carbon credits for operational GHG emission reduction medium-term targets. However, if abatement projects do not achieve the expected GHG reductions, BHP retains the flexibility to use high-integrity carbon credits toward their 2030 climate targets.    

BHP’s Scope 3 emissions, which account for 97% of their total emissions, are predominantly from the use of their products by customers. While BHP aims to achieve net zero Scope 3 emissions by 2050, this remains an aspirational goal rather than a strict target.      

They are focusing on developing low-carbon technologies in collaboration with the steelmaking industry, such as hydrogen-based Direct Reduced Iron (DRI) plants. BHP also supports carbon capture and storage (CCS) technologies, although these have faced criticisms for their limited effectiveness and low capture rates​.

BHP Carbon Emissions:

Scope 1 emissions (direct emissions from operations) in FY2023: 7.5 million tonnes CO2e 
Scope 2 emissions (indirect emissions from purchased electricity/energy) in FY2023: 5.0 million tonnes CO2e 
Scope 3 emissions (indirect emissions from value chain) in FY2023: 95.8 million tonnes CO2e 

READ MORE: BHP to Spend $4B to Decarbonize by 2030, Carbon Emissions Spikes Up Near-Term

Anglo American’s Eco Revolution: Slashing Emissions in Style

Anglo American aims to achieve carbon neutrality across its operations by 2040. Interim targets include reducing these emissions by 30% by 2030. Their FutureSmart Mining program is central to this effort, leveraging technology and digitalization to enhance sustainability. 

Notable initiatives include securing 100% renewable electricity for operations in Brazil, Chile, and Peru, and developing hydrogen fuel cell and battery hybrid trucks, which are set to replace diesel trucks across their global fleet from 2024​. 

Anglo American has set an ambitious target to reduce Scope 3 emissions by 50% by 2040. This will be achieved by working with customers and technology partners to decarbonize the steel industry and by making changes in their product portfolio. 

Anglo American Scope 3 emissions

They are also focused on improving efficiencies and controlling emissions within their supply chain and logistics, particularly in shipping​. 

Anglo American carbon emissions:

Scope 1 emissions in 2023: 7.5 million tonnes CO2e
Scope 2 emissions in 2023: 5.0 million tonnes CO2e 

Scope 3 emissions in 2023: 95.8 million tonnes CO2e 

The British mining giant is making significant progress in reducing emissions from Scope 3 sources. Processing iron ore remains the largest contributor, with steelmaking accounting for 50.9 Mt CO2e, or 47% of total emissions in 2023. The emissions intensity of the company’s iron ore has decreased by 5% in 2023 compared to the 2020 baseline.

Anglo American plans to reduce its Scope 3 emissions by prioritizing 7 initiatives over four themes, as specified in its Climate Change Report 2023. 

Cutting-Edge Clean Energy and Decarbonization Projects

BHP is investing in several clean energy and decarbonization projects. They are trialing “dynamic charging” for electric haul trucks, allowing them to be charged while in operation. In addition, they are developing carbon capture projects with steelmakers and exploring various renewable energy projects to power their operations. 

Despite these efforts, BHP has acknowledged that short-term emissions may increase due to production growth before significant reductions are realized​.

Similarly, Anglo American is actively engaging in clean energy projects as part of their decarbonization strategy. Their partnership with EDF Renewables aims to ensure that all electricity used by 2030 will come from zero-emission sources. 

They have already achieved a 100% renewable electricity supply for their operations in several countries and are developing hydrogen-powered haul trucks to replace diesel ones. These initiatives are expected to significantly reduce their carbon footprint and contribute to their net zero goals. 

The potential merger between BHP and Anglo American may have faced significant challenges, but both companies remain steadfast in their commitment to reducing carbon emissions and advancing towards net zero goals. Both miners are leveraging technology and strategic partnerships to drive their decarbonization efforts.

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Nature-Based Carbon Credits Skyrocket as Energy Sector Prices Tumble, Xpansiv Report

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Xpansiv voluntary carbon credit trading data saw a significant divergence in prices for nature-based and technology-based carbon credits. The report is from Xpansiv Data and Analytics, which offers a comprehensive database of spot firm and indicative bids, offers, and transaction data.

Xpansiv delivers extensive market data from CBL, the world’s largest spot environmental commodity exchange. It provides daily and historical data on bids, offers, and transactions for carbon credits, compliance and voluntary renewable energy certificates, and Australian Carbon Credit Units (ACCUs) traded on the CBL platform.

The exchange recently secured a major capital raise from Aramco Ventures to further enhance its environmental markets infrastructure solutions.

SEE MORE: Xpansiv Secures Major Investment from Aramco Ventures

The spot data is further enhanced by forward carbon prices from top market intermediaries, along with aggregated registry statistics and ratings from leading providers.

Nature-Based Credits Surge While Energy Sector Prices Drop

Last week saw large blocks of Verified Carbon Standard (VCS) Nature Group Eligibility (N-GEO)-eligible and Climate Action Reserve (CAR) nature credits driving the 20-day moving average of recent-vintage AFOLU (Agriculture, Forestry, and Other Land Use) credits to $12.05, a 125% week-over-week increase. Conversely, a significant block of Asian renewable credits pushed the energy sector average price down by 60% to $0.76.

These blocks accounted for most of the 316,124 metric tons traded on CBL last week. This is composed of 224,730 nature credits and 91,394 energy credits. CME Group’s emissions futures also reflected this trend, trading 584,000 tons through CBL N-GEO and 284,000 via CBL GEO futures contracts.

Specific credit trades on CBL included vintage 2019:

VCS 1477 Katingan credits at $6.00, 
ACR 556 industrial process credits at $2.85, 
ACR 658 credits at $2.30, and 
Vintage 2020 VCS 1753 Indian solar credits at $1.25.

Who Leads the CBL REC Markets?

Last week, a $9.50 offer for 5,000 tons of vintage 2019 VCS Afforestation, Reforestation, and Revegetation (ARR) credits from Uruguay was reposted. New and renewed offers for VCS and Gold Standard renewable energy and REDD+ (Reducing Emissions from Deforestation and Forest Degradation) credits ranged between $1.00 and $2.75.

Project-Specific Credit Offers on CBL

REC trading activity on CBL was light but included larger blocks of bilaterally traded PJM credits settled via the exchange, along with smaller PJM and NEPOOL trades matched on screen.

Virginia Credits: 2024 Virginia credits traded at $0.25, closing the week at $35.25.
New Jersey Solar Credits: Over 1,400 2023 New Jersey solar credits were matched at $207.50, $1.50 higher than the previous week’s close, with an additional 1,500 credits cleared via reported trade.
New Jersey Class 2 Credits: 355 vintage 2024 RECs were matched at $37.50.
NEPOOL Credits: 189 Massachusetts Class 2 non-waste credits were matched at $31.50.

In related news, the White House released new voluntary carbon credit guidelines to promote high-integrity emissions reductions and support nature-based projects and carbon removal technologies.

Xpansiv’s data highlights a stark contrast in the carbon credit market: with nature-based credits experiencing a significant price surge while energy sector credits see a sharp decline. This divergence underscores the growing demand for high-integrity, nature-based solutions in the voluntary carbon market.

READ MORE: Xpansiv’s CBL VCM Saw Significant Block Trades, Xpansiv Connect Launched

As companies strive to meet their net zero targets, understanding these market dynamics will be crucial for making informed investment and sustainability decisions.

The post Nature-Based Carbon Credits Skyrocket as Energy Sector Prices Tumble, Xpansiv Report appeared first on Carbon Credits.

Ørsted Secures Major Carbon Removal Deal with Microsoft

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Ørsted has announced a significant expansion of its partnership with Microsoft, agreeing to sell an additional 1 MT of carbon removal over 10 years from the Avedøre Power Station. This is part of the bioenergy carbon capture and storage (BECCS) initiative known as the ‘Ørsted Kalundborg CO2 Hub’. This new deal builds on Microsoft’s existing commitment to purchase 2.67 million tonnes of CO2 from the Asnæs Power Station, bringing their total contracted carbon removal to 3.67 MTs.

The Key Highlights of the Ørsted-Microsoft Deal

1. Carbon Capture Implementation

As part of the ‘Ørsted Kalundborg CO2 Hub’, Ørsted will install carbon capture technology at the wood chip-fired Asnæs Power Station in Kalundborg, western Zealand, and the straw-fired boiler at Avedøre Power Station in Greater Copenhagen. The combined heat and power plants will capture 430,000 tonnes of biogenic CO2 annually, which will then be transported to a storage reservoir in the Norwegian North Sea for permanent storage. The hub is expected to be operational by early 2026.

2. Microsoft’s Carbon Removal Commitment

Starting in 2026, Microsoft will receive one million tons of carbon removal from the straw-fired unit at Avedøre Power Station. This plant uses locally sourced straw, an agricultural by-product, to generate electricity and district heating. By capturing and storing biogenic carbon from these biomass-fired plants, the process not only reduces CO2 emissions but also removes carbon from the atmosphere, creating negative emissions. This is because biogenic carbon from sustainable biomass is part of a natural cycle.

3. Supporting Sustainable Development

The collaboration between Ørsted and Microsoft is crucial for advancing the ‘Ørsted Kalundborg CO2 Hub’, especially since bioenergy-based carbon capture and storage technology is still emerging. The project, which received a subsidy from the Danish Energy Agency, included anticipated revenue from carbon removal certificates in its investment decision. This competitive pricing was a key factor in the subsidy award.

4. Importance of BECCS for Climate Goals

The UN’s Intergovernmental Panel on Climate Change (IPCC) has highlighted the importance of carbon removal technologies like BECCS for limiting global warming. Projects such as the ‘Ørsted Kalundborg CO2 Hub’ are essential for helping companies like Microsoft achieve their sustainability targets and contribute to global climate goals.

Is Microsoft Leading the Charge Toward a Carbon-Neutral Future? 

Decoding its carbon emissions and net-zero plans

In 2023, Microsoft expanded its renewable energy assets to over 19.8 gigawatts (GW), incorporating projects across 21 countries. Additionally, last year the company secured contracts for 5,015,019 MTs of carbon removal to be retired over the next 15 years. Its net-zero plans focus on three primary areas:

Reducing carbon emissions
Increasing the use of carbon-free electricity
Removing carbon 

The company’s latest ESG report suggests that the pathway to becoming carbon-negative has the following milestones: 

Reducing Scope 1 and Scope 2 Emissions

Microsoft aims to nearly eliminate its Scope 1 and 2 emissions by increasing energy efficiency, decarbonizing its operations, and achieving 100% renewable energy by 2025. It achieved a 6% reduction in its Scope 1 and 2 emissions from the 2020 base year by advancing clean energy procurement, implementing green tariff programs, and using unbundled renewable energy certificates

Reducing Scope 3 Emissions

Microsoft’s Scope 3 emissions account for more than 96% of its total emissions. Most of these emissions come from purchased goods and services, capital goods, downstream, and the use of sold products downstream. By 2030, Microsoft aims to cut its Scope 3 emissions by 50% from the 2020 baseline.

Although Scope 3 emissions have surged by 30.9% since 2020, Microsoft remains committed to expanding clean energy purchases across its supply chain. It aims to invest in the decarbonization of hard-to-abate industries like steel, concrete, and other materials used in its data centers.

Tracking progress toward carbon negative by 2030

Microsoft’s overall emissions increased by 29.1% in FY23 from the base year. Additionally, it retired 605,354 MTs of carbon removal as part of its net zero goals.

Can Ørsted’s Bold Strategies Propel Us to a Carbon-Free Future? Find Out…

Ørsted has committed to achieving net-zero emissions across its value chain by 2040, aiming to reduce emissions through various initiatives, including renewable energy projects, energy efficiency measures, and engaging stakeholders in sustainable practices.

The company reports its greenhouse gas emissions under three categories: Scope 1, Scope 2, and Scope 3, as defined by the Greenhouse Gas (GHG) Protocol.

Reducing Scope 1 and Scope 2 Emissions

Ørsted significantly reduced its Scope 1 emissions by transitioning from fossil fuels to renewable energy sources like wind and biomass. For Scope 2 emissions, Ørsted focused on increasing energy efficiency and sourcing renewable energy to reduce the emissions from purchased electricity and heat.

Scope 1 and 2 emissions: FY2023 was 38g CO2e/kWh

Reducing Scope 3 Emissions

To address Scope 3 emissions, Ørsted engages with suppliers, optimizes logistics, and promotes sustainable practices across its value chain, targeting emissions from fuel production and transportation, manufacturing of wind turbine components, business travel, and the use of sold products.

Scope 3 emissions: FY2023 was 80g CO2e/kW

The image depicting Ørsted’s installed renewable capacity and GHG emissions intensity

source: Ørsted

Key sustainability targets 

Scope 1-2 emissions intensity: 98 % reduction by 2025 and 99 % reduction by 2030 (from 2006)
Scope 1-3 emissions intensity (excl. natural gas sales): 77 % reduction by 2030, and 99 % reduction by 2040 (from 2018)
Scope 3 emissions (from natural gas sales): 67 % reduction by 2030, and 90 % reduction by 2040 (from 2018)

Top Clean Energy and Decarbonization Projects

Microsoft:

The company invests in renewable energy sources such as wind, solar, and hydroelectric power, and implements energy efficiency measures across its operations. Like its partnership with Ørsted, and other CDR projects alike to offset emissions and remove CO2 from the atmosphere. Through these efforts, Microsoft aims to become carbon-negative by 2030, addressing both its direct emissions and those across its entire value chain.

Some remarkable decarbonization achievements of Microsoft include:

Microsoft to Buy Carbon Removal Credits from CarbonCapture (carboncredits.com)
Microsoft and Stockholm Exergi Strike Historic Deal for 3.33 MTs of Carbon Removal • Carbon Credits
Microsoft Teams Up with Aker Carbon Capture and CO280 to Boost CDRs • Carbon Credits
Microsoft to Purchase 95,000 Biochar Carbon Removal Credits from The Next 150 • Carbon Credits

Orsted:

Ørsted is leading the way in clean energy and decarbonization. It is transitioning from fossil fuels to renewable energy sources such as wind, solar, and biomass. The company majorly focuses on:

Large-scale offshore wind farms
Onshore wind energy
Bioenergy carbon capture and storage projects.
Solar power and grid stabilization

These initiatives aim to reduce and remove CO2 emissions, contributing to Ørsted’s goal of achieving net-zero emissions across its value chain by 2040. Thus, Ørsted is making significant strides in combating climate change and promoting sustainable energy solutions through these projects.

Ørsted’s Global Footprint

source: Ørsted

Notably, Ole Thomsen, Senior Vice President and Head of Ørsted’s Bioenergy business has commented:

 “This expanded collaboration with Microsoft is a testament to our shared vision for a sustainable future. By combining Ørsted’s expertise in bioenergy carbon capture and storage with Microsoft’s commitment to reducing its carbon footprint, we’re showcasing how strategic relations can accelerate the transition to a greener economy.”

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Singapore-Ghana Carbon Credit Transfer Agreement: Advancing Sustainable Solutions

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Singapore and Ghana signed a carbon credit agreement on May 27, 2024, in a significant step towards global environmental sustainability. This deal enables businesses in Singapore to offset a part of their carbon tax by investing in certified carbon reduction projects in Ghana.

Unlocking the Details of the Singapore-Ghana Carbon Credits Agreement

The carbon credit agreement, officially known as the “Implementation Agreement” promotes cooperation under Article 6 of the Paris Agreement. Singapore’s Minister for Sustainability and the Environment and Minister-in-charge of Trade Relations, Grace Fu, and Ghana’s Minister of Environment, Science, Technology and Innovation, Ophelia Hayford, officiated the signing.

The important attributes of this agreement are:

Project developers must contribute 5% of proceeds from authorized carbon credits to climate adaptation efforts in Ghana. It would assist the country in preparing for climate change impacts.
Developers will have to cancel 2% of authorized carbon credits upon initial issuance to contribute further to global emissions reduction. These carbon credits cannot be sold, traded, or counted towards any country’s emission targets. They will contribute only to a net decrease in global emissions.
Under Singapore’s International Carbon Credit (ICC) framework, eligible ICCs from this Implementation Agreement can be used by Singapore-based companies to offset up to 5% of their carbon tax liabilities.
The Agreement can meet binding mandates like Nationally Determined Contributions (NDCs) and international mitigation requirements such as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

Singapore’s Minister Grace Fu said,

“Singapore and Ghana share many mutual interests in the sustainability sphere. The conclusion of the Implementation Agreement is a testament to our shared commitment to advance global climate action through high-integrity carbon markets.”

She further assured that carbon credit projects under this Agreement will deliver climate and economic benefits. Subsequently, Singapore will keep collaborating with partners like Ghana to create opportunities for a sustainable future.

READ MORE: Nestlé Unveils New Initiatives to Cut Cocoa Supply Emissions • Carbon Credits

Promoting Sustainable Development in Ghana

Media reports state that the bilateral agreement follows Temasek-backed investment platform GenZero’s ongoing investments in a forest restoration project in Ghana’s Kwahu region.

The project, in collaboration with Singapore-based AJA Climate Solutions, aims to replant degraded forest reserves. It includes sustainably growing cocoa trees in shaded farms to protect them from climate impacts like floods, heat stress, and pests.

The project area within the Kwahu region, once a lush forest 40 to 50 years ago, has been heavily exploited for timber in recent decades. This deforestation has resulted in Ghana losing more cocoa hectares each year, leading to economic downfall. Consequently, this Agreement under Article 6 and the project came as a blessing for Ghana.

The forest project will eventually focus on regenerating native tree species across degraded forests. It plants to grow 20 million seedlings within seven years to balance the impact of heavy deforestation.

Talking about economic benefits, Ghana will experience increased investment in its green projects.

These initiatives, which range from reforestation to renewable energy, will not only reduce carbon emissions but also promote sustainable development and create job opportunities within Ghana.

Supporting Singapore’s Climate Goals

For Singapore, this partnership is a strategic move to meet its ambitious climate goals. The city-state has committed to cut down its GHG emissions by 50% by 2030. The country aims to help businesses by allowing them to offset their carbon taxes through overseas credits.

Notably, the Kwahu project extends Singapore’s intergovernmental partnerships regarding Article 6. In November 2022, Singapore and Ghana finalized substantive negotiations on the Implementation Agreement on Cooperative Approaches. This agreement allows for the bilateral transfer of carbon credits aligning with Article 6.

Singapore is most likely to witness the following impacts on its carbon credit economy:

Carbon credits traded under this Implementation Agreement, upon completion, might offset a portion of corporate carbon tax liabilities in Singapore.
This would be the first project in the country to generate carbon credits with corresponding adjustments under this Implementation Agreement.

We may infer that the carbon credit agreement offers a win-win scenario economically and environmentally. Singaporean companies gain flexibility in managing their carbon tax liabilities, potentially lowering their operational costs. Simultaneously, Ghana benefits from the inflow of funds into its green economy, bolstering its efforts to combat climate change and fostering economic growth.

However, both nations must establish a robust monitoring and verification mechanism to maintain the integrity of the carbon credits.

All said and done, The Singapore-Ghana carbon credit agreement can leverage international cooperation to combat global climate change. No wonder it provides a scalable model for other nations to follow and paves the way for a more sustainable future.

FURTHER READING: Nestlé Unveils New Initiatives to Cut Cocoa Supply Emissions • Carbon Credits

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Australia Unveils Ambitious National Battery Strategy to Power Clean Energy Future

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The Australian government unveiled the country’s first National Battery Strategy, detailing plans to establish a domestic battery industry. The strategy aims to develop processing capacity for upgrading raw minerals into processed battery components. This will enable Australia to supply battery-active materials globally, as stated by Prime Minister Anthony Albanese’s government.

Key elements of the strategy include building energy storage systems to bolster renewable power generation in the national grid and leveraging industry expertise to develop safer, more secure batteries for grid connection. Additionally, Australia plans to create batteries for its transport manufacturing sector, including heavy vehicle production.

Federal Budget Boosts Battery Breakthrough

The strategy is funded by Australia’s 2024–2025 federal budget, which allocates A$523.2 million for the Battery Breakthrough Initiative. The initiative offers production incentives to enhance battery manufacturing capabilities. Furthermore, the Building Future Battery Capabilities plan provides A$20.3 million to support battery research.

Prime Minister Albanese emphasized the importance of this initiative, saying that:

“We want to make more things here and with global demand for batteries set to quadruple by 2030, Australia must be a player in this field. Batteries are a critical ingredient in Australia’s clean energy mix. Together with renewable energy, green hydrogen, and critical minerals, we will meet Australia’s emission reduction targets and create a strong clean energy manufacturing industry.”

Australia aims to transition its electricity grid to 82% renewable energy by 2030, supporting the country’s commitment to reduce emissions by 43% within the same period. 

The federal government has also announced an A$7 billion tax incentive for critical mineral producers. It aimed at bolstering domestic supply chains for raw materials essential to the energy transition. 

RELATED: Australia Has A US$400B Carbon Capture Opportunity, Wood Mackenzie Says

Unveiled as part of the 2024–2025 federal budget, the Critical Minerals Production Tax Incentive will cover 10% of relevant processing and refining costs for 31 critical minerals. This incentive will apply to minerals processed and refined between 2027-2028 and 2039-2040, extending up to 10 years per project.

Future Made in Australia: Jobs, Innovation, and Sustainability

This initiative is a key component of the government’s A$22.7 billion Future Made in Australia package. It is designed to create jobs and strengthen the economy while striving for net zero greenhouse gas emissions by 2050. The government sees it crucial in helping the country meet its 82% renewable energy target and cement its position in global battery supply chains. 

Prime Minister Albanese and Treasurer Chalmers highlighted that the plan aims to maximize economic and industrial benefits from the global shift to net zero, securing Australia’s position in the evolving economic and strategic landscape.

Additionally, the government will allocate A$14.3 million to enhance trade competitiveness in critical minerals and A$10.2 million for prefeasibility studies of common-use infrastructure to support the sector.

Australia’s critical minerals list includes lithium, nickel, cobalt, vanadium, graphite, and rare earths. 

The country is a leading global producer of lithium, iron ore, and bauxite, and boasts the largest reserves of lithium, iron ore, zinc, and vanadium, according to S&P Global Market Intelligence and federal government data. 

The Prime Minister emphasized the need for Australia to enhance its competitiveness in the global metals and battery investments market, particularly in response to the US Inflation Reduction Act and other international incentives promoting domestic supply chains.

Albanese noted that “Australia cannot compete dollar-for-dollar with the US Inflation Reduction Act, but this is a competition, not an auction.” He acknowledged the global competition, noting initiatives in the US, EU, Japan, Korea, and Canada aimed at strengthening their industrial and manufacturing bases. 

Below is the country’s battery actions identified in the federal budget 2024-2025. Amounts are in Australian dollars.

Industry Praise and Economic Resilience

The Association of Mining and Exploration Companies (AMEC), which includes over 500 members such as Fortescue Ltd. and Albemarle Lithium Pty. Ltd., praised the tax incentive.

AMEC’s chief executive, Warren Pearce, stated that the incentive would spur new projects and industries, driving economic growth and job creation, while maintaining Australia’s high standard of living. He emphasized that this proven mechanism would reward those taking risks in new and costly industries, promising significant returns on investment.

AMEC advocates for a 10% federal production tax credit for downstream materials producers to mitigate Australia’s production cost disadvantages compared to countries like the US. Pearce believes the proposed legislation could be a “game-changer” for clean manufacturing and critical minerals investment.

Amanda McKenzie, CEO of the Climate Council, also expressed support. She remarked that the legislation could catalyze immediate investments in clean energy sectors.

Indeed, Australia’s National Battery Strategy marks a significant step toward a sustainable energy future, backed by substantial federal investment. By enhancing battery production and innovation, the strategy aims to strengthen the nation’s position in the global market, create jobs, and support the transition to renewable energy. 

READ MORE: Is the Battery Boom Heating Up?

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Enbridge’s $1.2B Solar-Plus-Storage Project Fuels Path to Net Zero

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Enbridge Inc. has received a permit from Wyoming’s Industrial Siting Council to proceed with a major solar-plus-storage project in Laramie County, Wyoming. The $1.24 billion Cowboy Solar I & II Project, paired with the Cowboy Battery Project, will be one of the largest in the U.S., featuring up to 771 MW of solar power and 269 MW of battery storage. 

Solar power, using the sun’s energy to produce electricity, is fundamental to the global move toward sustainable energy. As a clean and renewable resource, it plays a crucial role in reducing greenhouse gas emissions and addressing climate change.

Enbridge’s Solar Ambitions Take Root

In the United States, solar energy has grown tremendously due to technological improvements, falling costs, and greater environmental consciousness. This rapid expansion has also propelled the rising demand for battery storage, positioning Enbridge in this burgeoning industry.  

Enbridge, headquartered in Calgary, Alberta, operates natural gas, oil, and renewable energy projects across North America. It is the region’s largest natural gas utility by volume and owns the world’s longest crude oil and liquids pipeline system. 

As pressure for companies to help in decarbonization efforts continues to intensify, energy companies must step up in slashing their carbon footprint. Enbridge is employing various means to decarbonize its operations and reach net zero by 2050. 

In 2020, Enbridge set new ESG targets, including a goal to reduce GHG emissions intensity by 35% by 2030. Since 2018, the energy company has achieved a 27% reduction in emissions intensity. 

Enbridge Net Zero

In 2022, despite increased energy consumption, Enbridge saw a slight decrease in emissions intensity, mainly due to enhanced system efficiency and the use of lower-intensity power.

The company is reducing the emissions intensity of the electricity it buys with solar self-power projects and advocating for policies that decarbonize the power grid. Below are the company’s renewable projects, operational and under development. 

Source: Enbridge net zero report 2023

A Landmark Solar-Plus-Battery Storage Initiative

The $1.24-billion Wyoming solar-plus-storage project is one of the initiatives Enbridge pursues as part of its net zero efforts. Construction will start in March 2025, with the first phase expected to be operational by January 2027 and the second by August 2027.

The first phase includes a 400-MW photovoltaic (PV) system and 136 MW of battery storage, while the second phase will add 371 MW of PV and 133 MW of storage. 

Fluence Energy Inc. will supply the battery system, and American Hyperion Solar LLC, a subsidiary of China’s Jiangsu Runergy New Energy Technology Co. Ltd., will provide the solar panels.

The project will connect to the local grid operated by Cheyenne Light Fuel and Power Co., an affiliate of Black Hill. Enbridge’s application mentions planned data centers in Laramie County, including one by Microsoft Corp., which will require substantial electrical power.

Enbridge’s gas utilities in Canada are receiving requests from data centers, according to Cynthia Hansen, president of gas transmission and midstream. She noted that they’re supplying the utilities that are getting such requests. While their main lines haven’t received direct requests from data centers yet, they would support those markets through their utilities.

RELATED: Data Centers Power Demand Fuel U.S. Utility Q1 Earnings Discussions

The Wyoming project faced some opposition from local mining and ranching interests but received support from the Cheyenne-Laramie County Corporation for Economic Development and local labor groups. Enbridge estimates a peak workforce of around 375 workers during construction.

John Fulk, business manager of Construction and General Laborers’ Local 1271, remarked on the project approval, saying that:

“The development of solar, wind power and battery storage creates an opportunity for the state’s legacy coal workers to expand their skills so they may fully participate in new job opportunities created by the energy transition.”

Enbridge’s Pathway to Reducing Carbon Footprint

In addition to its renewable energy initiatives, the energy company is also balancing residual emissions by purchasing carbon offset credits. These credits are from nature-based solutions and renewable energy credits, with a primary focus on areas near their operations. According to its recent net zero report, the company invested a total of $350,000 in carbon credit projects. 

Enbridge’s GHG emissions reduction targets focus specifically on Scope 1 and Scope 2 emissions. However, carbon emissions from the midstream constitute only a small part of its total GHG emission on a lifecycle basis.

Oil sands transportation accounts for less than 2% of lifecycle emissions, with most emissions from combustion, production, and upgrading. Enbridge leads in tracking, reporting, and reducing Scope 3 emissions, doing so since 2009 despite limited sector guidance. 

The company reports on utility customer natural gas use, employee air travel, and electricity grid loss. In 2021, Enbridge added metrics for emissions intensity of delivered energy and emissions avoided through renewables, lower-carbon fuels, and conservation programs. They’re also committed to collaborating with suppliers to further reduce Scope 3 emissions.

Through innovative projects and comprehensive emission reduction strategies, Enbridge continues to lead in the global shift towards renewable energy.

RELEVANT: US Corporations Ramp Up Renewable Energy, Amazon Leads the Pack

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Understanding Lithium Prices: Past, Present, and Future

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Lithium, a critical element in modern technology, has become a focal point in discussions about renewable energy and electric vehicles (EVs) due to its importance in batteries. The fluctuating prices of lithium have significant implications for industries and economies worldwide. This article explores the dynamics of lithium pricing, offering insights into historical trends, current market conditions, future predictions, and the key factors that drive its valuation.

Background Information

Lithium is a soft, silvery-white metal belonging to the alkali metal group. It is highly reactive and flammable, making it essential in various industrial applications. Most notably, lithium-ion batteries power everything from smartphones to electric vehicles.

The demand for lithium has surged with the rise of renewable energy technologies and the global push towards reducing carbon emissions. Lithium’s unique properties make it irreplaceable in high-performance batteries, which are pivotal in energy storage solutions and portable electronics.

Lithium is also on several countries’ Critical Minerals lists, such as the U.S., Canada, and Australia.

Historical Lithium Price Trends

Lithium prices have seen dramatic changes over the past decade. From 2010 to 2015, prices remained relatively stable, with minor fluctuations due to steady demand and supply conditions. However, from 2015 onwards, prices began to soar, driven by the booming EV market and increased demand for renewable energy storage solutions.

By 2017, lithium prices had tripled compared to their 2015 levels. This spike was primarily due to the rapid expansion of China’s EV market and increased lithium mining and production investments.

The year 2018 saw prices peaking, but by 2019, an oversupply in the market led to a sharp decline. From 2019 to 2021, prices remained subdued, reflecting a period of market correction and stabilization.

In 2022, however, a record-breaking price rally occurred due to a large supply deficit. Lithium’s largely agreement-based supply model also contributed to this squeeze, sending lithium prices skyrocketing over 5x. This push would continue until midway through the year as China re-implemented full lockdowns nationwide due to rising COVID-19 case numbers, leading to a brief economic slowdown.

While the end of lockdowns coincided with another surge in demand, sending lithium prices to their all-time high of 575,000 CNY (USD 80,000) per tonne, this rally was short-lived. With inflation rates on the rise and EV supply finally overtaking demand, lithium prices plummeted back down in 2023 before stabilizing around the 100,000 CNY (USD 14,000) level, where it continues to trade today.

The past few years have been marked by significant market adjustments. Producers ramped up supply, anticipating continuous high demand, but the market did not grow as quickly as expected.

Consequently, this led to a surplus, driving prices down. Moreover, technological improvements in mining and processing lithium contributed to cost reductions, which also played a role in lowering market prices during this period.

Lithium Price Volatility

One of the main factors contributing to the volatility of lithium prices is that unlike other minerals like gold or copper, the lithium markets are still fairly young and hence the spot market is not very well established. With the recent explosive growth in lithium demand added on top of that, the result is a market sector that’s very much still going through growing pains.

Right now, instead of purchasing contracts for delivery on a spot market most lithium consumers choose to directly sign long-term offtake agreements with lithium miners, securing a guaranteed supply at a fixed price. The current state of the lithium markets has drawn parallels to the iron ore market prior to the 2010s, where pricing would follow an annual benchmark negotiated between miners and steelmakers each year.

In the early 2000s, explosive growth in iron ore demand from China was the catalyst that finally led to change in the iron ore markets. It would take a concerted effort from BHP and other top miners for the iron ore markets to shift towards the spot pricing model it follows today.

Something similar is happening in the lithium markets, with top producer Albemarle having begun holding auctions for its mined lithium since March 2024. These auctions allow buyers to secure pricing that’s more truly reflective of the present supply-demand dynamic, as opposed to being forced to lock in fixed long-term pricing to avoid not having enough supply.

Albemarle plans on holding auctions every two weeks in order to provide more timely and consistent data on lithium pricing.

The lithium spot market has been seeing increasing activity as well, as shown in the chart above. In conclusion, while lithium prices will likely continue to be volatile for the foreseeable future, there are changes under way that will help stabilize the market as it matures and develops.

Current Market Analysis

As of 2024, lithium prices have stabilized from their major plunge of 2022-2023. The current price is attributed to several factors:

Increased Demand: The global shift towards electrification and decarbonization has accelerated the demand for lithium-ion batteries. EVs, energy storage systems, and consumer electronics continue to drive this demand. The Paris Agreement and other international efforts to curb carbon emissions have further intensified the focus on lithium as a key resource for achieving climate goals.
Supply Chain Dynamics: While demand is rising, supply chain disruptions have hindered the steady flow of lithium. These disruptions are caused by geopolitical tensions, logistical challenges, and regulatory hurdles in major lithium-producing countries. For instance, political instability in regions like South America, where a significant portion of lithium is mined, has led to production slowdowns and export restrictions. However, there is still a significant surplus of lithium supply to work through.
Technological Advancements: Innovations in battery technology, such as solid-state batteries, promise higher efficiency and longer life cycles. These advancements have spurred further investment in lithium production, contributing to the current price dynamics. Additionally, advancements in extraction technologies, such as direct lithium extraction (DLE), are expected to enhance the efficiency and environmental sustainability of lithium production.

The increased focus on domestic production in countries like the United States and Australia is also reshaping the market landscape. Efforts to reduce dependence on imported lithium are driving investments in local mining projects, which, in turn, affect global supply and pricing dynamics.

Future Price Predictions 

Looking ahead, the future of lithium prices is shaped by a combination of technological, economic, and geopolitical factors. 

Analysts predict that demand for lithium will continue to grow, driven by several key trends:

Expansion of the EV Market: With governments worldwide setting ambitious targets for EV adoption, the demand for lithium is expected to skyrocket. For instance, the European Union aims to phase out internal combustion engine vehicles by 2035, significantly boosting lithium demand. Major automakers are also announcing aggressive plans to electrify their fleets, further driving demand.

RELATED: Lithium Prices and The Insights into the EV Market’s Pulse

Advancements in Energy Storage: Beyond EVs, the need for efficient energy storage solutions in renewable energy systems will drive lithium demand. Solar and wind energy projects increasingly rely on lithium-ion batteries for energy storage, ensuring a steady demand. The development of grid-scale storage solutions is particularly significant, as it addresses the intermittency issues associated with renewable energy sources.
Sustainable Mining Practices: The push for sustainable and ethical mining practices may impact the supply side. While this could constrain supply in the short term, it is expected to ensure a stable and environmentally friendly lithium supply in the long run. Innovations in recycling technologies and the development of closed-loop systems are also expected to play a crucial role in meeting future demand sustainably.

Factors Affecting Lithium Prices

Several factors influence lithium prices, creating a complex and dynamic market landscape:

Supply and Demand Dynamics: The fundamental economics of supply and demand play a crucial role. Any imbalance, such as oversupply or undersupply, directly affects prices. For example, the rapid development of new mining projects can lead to temporary oversupply, depressing prices until demand catches up.
Geopolitical Factors: Lithium-rich countries, such as Australia, Chile, and Argentina, play a significant role in the global supply chain. Political stability and regulatory policies in these regions can impact lithium prices. Trade policies, tariffs, and international agreements also influence the global flow of lithium and its pricing.
Technological Developments: Breakthroughs in battery technology can influence lithium demand. For example, the development of alternative battery chemistries could reduce reliance on lithium, affecting its price. Conversely, improvements in lithium extraction and processing technologies can increase supply efficiency and reduce production costs, impacting prices favorably.
Environmental Regulations: Stricter environmental regulations on mining practices can limit supply and drive up prices. Conversely, advancements in sustainable mining techniques can stabilize prices. The growing emphasis on reducing the environmental footprint of lithium extraction is prompting the industry to adopt greener practices, which may initially increase costs but lead to long-term sustainability.

Key Players in the Lithium Market

The global lithium market is dominated by a few key players who control a significant share of the mined supply. Here are five of the top producers from 2023, who combined for roughly half of total global production:

Albemarle Corporation: Currently the world’s largest lithium producer, Albemarle operates major lithium mining projects in Australia and the United States. The company has invested heavily in expanding its production capacity to meet rising demand.
SQM (Sociedad Química y Minera de Chile): Based in Chile, SQM, the world’s second largest producer, is known for its extensive lithium brine operations in the Atacama Desert. The company has leveraged its strategic location and technological expertise to become a dominant player in the market.
Ganfeng Lithium: A Chinese company, Ganfeng is a major player in the lithium market, with operations spanning from mining to battery production. The company’s vertically integrated business model allows it to control the entire supply chain, ensuring stable supply and competitive pricing.
Tianqi Lithium: Another Chinese giant, Tianqi, has significant stakes in lithium mining operations globally, including the Greenbushes mine in Australia. The company’s strategic investments and partnerships have positioned it as a key supplier in the global market.
Arcadium Lithium: A vertically integrated lithium company formed from a merger between American refiner Livent and Australian miner Allkem, Arcadium focuses on high-quality lithium compounds used in batteries and other applications. The company’s commitment to innovation and sustainability has made it a preferred supplier for many high-tech industries.

Challenges and Opportunities

The lithium market faces several challenges and opportunities that will shape its future:

Challenges:

Environmental Impact: Lithium mining has significant environmental repercussions, including water usage and habitat destruction. Addressing these concerns is crucial for sustainable growth. The industry is under increasing scrutiny to minimize its environmental footprint and adopt greener practices. Expect to see a more pronounced price premium for “green” sustainable lithium once the market matures further.
Market Volatility: Fluctuations in supply and demand combined with the infancy of the lithium markets can lead to volatile prices, making it challenging for investors and producers to plan long-term strategies. The cyclical nature of commodity markets adds to the unpredictability, requiring robust risk management practices.
Technological Risks: Dependence on lithium-ion technology poses a risk if alternative battery technologies emerge, potentially reducing lithium demand. The rapid pace of technological innovation necessitates continuous adaptation and investment in research and development.

Opportunities:

Technological Innovation: Advancements in mining and processing technologies can enhance efficiency and reduce environmental impact. Innovations such as direct lithium extraction (DLE) and improved recycling techniques are expected to revolutionize the industry.
Strategic Investments: Investing in lithium recycling and alternative sources can diversify supply and stabilize the market. Developing secondary sources of lithium, such as extracting lithium from geothermal brines or recycling used batteries, offers promising avenues for ensuring supply security.
Global Collaboration: International cooperation on sustainable mining practices and environmental regulations can ensure a stable and ethical lithium supply chain. Collaborative efforts among governments, industry players, and environmental organizations can drive the adoption of best practices and foster a resilient market.

Types of Lithium Companies: Technology, Exploration, Production, Extraction, Refining

The lithium industry comprises various types of companies, each playing a crucial role in the supply chain. These companies can be broadly categorized into technology, exploration, production, extraction, and refining. Understanding the distinct roles and contributions of each type is essential for grasping the complexity of the lithium market.

Technology Companies

Role and Contribution: Technology companies are pivotal in the development and advancement of lithium battery technologies. These firms focus on enhancing the performance, efficiency, and safety of lithium-ion batteries. Innovations by technology companies drive the demand for lithium by creating new applications and improving existing ones.

Examples:

Tesla: Known for its electric vehicles (EVs), Tesla also invests heavily in battery technology through its Gigafactories, which produce lithium-ion batteries for both EVs and energy storage systems.
Panasonic: Partnering with Tesla, Panasonic manufactures lithium-ion batteries, focusing on improving energy density and reducing costs.

Impact: Technology companies push the boundaries of battery capabilities, influencing the overall demand for high-quality lithium and driving advancements that make renewable energy solutions more viable and efficient.

Exploration Companies

Role and Contribution: Exploration companies are responsible for discovering new lithium deposits. These firms conduct geological surveys, drilling, and sampling to identify potential lithium reserves. Exploration is the first step in the lithium supply chain, determining future supply availability.

Examples:

LiFT Power Corp: An exploration company focused on developing its lithium project in Northwest Territories, Canada, aiming to establish a domestic North American supply of lithium.

Impact: Successful exploration leads to the development of new lithium mines, increasing the global supply of lithium and potentially stabilizing prices. These companies are crucial for ensuring a steady pipeline of lithium resources to meet future demand.

Production Companies

Role and Contribution: Production companies are involved in the extraction of lithium from mines and brine sources. They manage the operations of lithium mines and are responsible for bringing raw lithium materials to the market.

Examples:

Albemarle Corporation: The world’s largest lithium producer in 2023 with operations in Australia and the USA, Albemarle is a key supplier of lithium compounds to various industries.
SQM (Sociedad Química y Minera de Chile): Operating extensive lithium brine extraction facilities in the Atacama Desert, SQM is a leading global producer of lithium.

Impact: Production companies are the backbone of the lithium supply chain, ensuring that sufficient quantities of lithium are available to meet industrial and consumer needs. Their production capacities and efficiencies directly influence lithium prices and availability.

Extraction Companies

Role and Contribution: Extraction companies specialize in the technologies and processes used to extract lithium from raw materials. These firms develop and implement methods for efficiently and sustainably extracting lithium from both hard rock (spodumene) and brine sources.

Examples:

Standard Lithium: Known for its proprietary extraction technology that aims to streamline the lithium extraction process and increase efficiency.

Impact: Advancements in extraction technology by these companies can significantly lower production costs and environmental impact, making lithium more accessible and sustainable. Efficient extraction processes are essential for meeting growing demand while minimizing ecological footprints.

Refining Companies

Role and Contribution: Refining companies are responsible for processing raw lithium materials into high-purity lithium compounds that are suitable for use in batteries and other applications. These companies ensure that the lithium meets stringent quality standards required by technology and battery manufacturers.

Examples:

Ganfeng Lithium: A vertically integrated company that not only mines lithium but also refines it into battery-grade compounds.
Tianqi Lithium: Engages in refining lithium to produce battery-grade lithium hydroxide and carbonate, supplying major battery manufacturers.

Impact: Refining companies add value by transforming raw lithium into a usable form, ensuring a consistent supply of high-quality lithium to downstream industries. Their operations are critical for maintaining the supply chain’s integrity and meeting the specifications required for advanced lithium-ion batteries.

Conclusion

Lithium prices are influenced by a myriad of factors, from technological advancements and supply chain dynamics to geopolitical and environmental considerations. The future of lithium pricing looks promising, with growing demand driven by the global shift towards electrification and renewable energy.

However, addressing the challenges of sustainable production and market volatility will be crucial for long-term stability. As the world continues to embrace green technologies, lithium remains a critical component in the journey towards a sustainable future.

References and Further Reading

Lithium Market Overview and Trends. (2023). International Energy Agency. https://www.iea.org/reports/critical-minerals-market-review-2023/key-market-trends#abstract.   
The Future of Lithium: Supply, Demand, and Prices. (2023). BloombergNEF (https://about.bnef.com/blog/the-future-of-lithium-supply-demand-and-pr)

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