Lithium spot prices have plummeted by around 90% since 2022, leading to vital mine closures and market shifts worldwide. However, CATL’s recent shutdown in Jiangxi, China, stands out as one of the most significant closures to date. What led to this decision, and how has it impacted the global lithium industry?

CATL Shuts Down Major Lithium Mine Amid Plunging Prices

Jiangxi province, located in southeastern China, accounts for about 5% to 6% of the global lithium supply. Despite its large reserves, CATL’s Jiangxi mine has faced financial strain due to rising production costs and falling prices. According to BMO (Bank of Montreal) analysts, mining lepidolite has become unprofitable because, despite its high lithium content, lepidolite is costly to convert into usable lithium.

CATL has remained competitive by utilizing its fully integrated business model, which includes refining, cathode active material (CAM) production, and battery manufacturing. However, the company could not sustain the current market pressure. The closure of this lepidolite mine, a key source of lithium carbonate, has caused significant disruptions in the market. Additionally, CATL is considering pausing one of its three lithium carbonate production lines in Jiangxi.

CATL’s Mine Closure and Its Global Impact: UBS Analysis

This news has garnered significant attention across the lithium market. According to UBS Lithium Analyst Sky Han, this mine accounts for roughly 5% of the world’s primary lithium supply and about 20% of China’s supply. The mine was expected to increase production from 60,000 tons of lithium carbonate equivalent (LCE) in 2024 to 95,000 tons in 2025, positioning it as the fifth-largest lithium mine globally.

While the closure is notable, it is not expected to drastically alter the overall market surplus for 2025. However, a tighter supply situation could develop if other lepidolite producers in China follow suit.

Experts believed that integrated lithium producers like CATL would navigate falling lithium prices effectively through their downstream operations. However, recent developments suggest that even vertically integrated companies might struggle in a low-price environment. Reports from China and Africa indicate that the challenges are substantial, with vertically integrated companies also facing difficulties.

Source: Wood Mackenzie, Company Filings, UBSe.

READ MORE: Global Lithium and Battery Trends: Top Stories You Need to Know!

What Lies Ahead for Lithium Prices?

The suspension of the mine will reduce China’s monthly lithium carbonate output by 8%, or approximately 5,000 to 6,000 tons, according to UBS analysts. With reduced output from one of China’s largest mines, experts anticipate that lithium prices could stabilize, potentially offering relief to struggling producers. The significant cost outcomes include:

Prices could stabilize between $10,000 and $11,000 per ton, reflecting global cash costs. The upper limit is driven by CATL’s cost base, estimated at $10,968 per ton.
Conversion costs of around $3,000 per ton could push spodumene prices up to as high as $1,000 per ton in the near term, compared to current spot prices of about $730 per ton.

While CATL’s closure could positively impact pricing, more supply reductions will be necessary to address the anticipated market surplus in 2025. The evolving situation in China’s lepidolite supply will be crucial. Analysts remain cautious about the growth of Africa’s lithium supply, and the seaborne spodumene price, rather than the GFEX, will be critical for Australian lithium producers ramping up production.

For now, analysts recommend selling stocks like IGO, LTR, PLS, and Ganfeng, while maintaining a neutral stance on companies like Albemarle (ALB), Livent (LTM), and Tianqi. They are more optimistic about Qinghai Salt Lake and PMET. Falling lithium prices have led to mine closures and project delays globally.

The mine in Yichun City, Jiangxi province, had significantly boosted China’s lithium supplies. Now, CATL faces the difficult decision to cut back.

CATL’s Move Drives Stock Surge

CATL’s decision has already impacted the global market. Contrary to expectations, shares of several global lithium companies have seen gains. Furthermore, the closure has eased oversupply concerns, leading to a surge in lithium prices and a boost in stock performance for producers around the world. For instance, Bloomberg reported that shares of Albemarle jumped as much as 17% in New York, while SQM saw a 12% rise. In Australia, Pilbara Minerals Ltd. shot up by 16%, and Tianqi Lithium Corp. climbed by 16% in Hong Kong.

Following the CATL announcement, lithium carbonate futures on the Guangzhou Futures Exchange rose by 5.5%, hitting 76,700 yuan per ton ($10,700), although they remain down 27% for the year.

Several lithium producers in Australia, including Arcadium Lithium Plc and Core Lithium Ltd., have shut down high-cost sites due to plummeting prices. Global Lithium Resources Ltd. is reducing costs at its promising project as it faces a longer-than-expected price slump. Additionally, Albemarle has paused its global expansion plans in response to the ongoing price drop. This was reported by Bloomberg.

Source: Bloomberg

Analysts from Guotai Junan Securities Co. predict that lithium prices might rebound by 2026, and lithium stocks could start rising six to nine months before the commodity’s price improves.

Alice Yu, lead metals & mining research analyst at S&P Global Commodity Insights, stated,

“There is a stronger signaling effect from CATL’s cut. As the world’s largest battery producer, its mine-side suspension reinforces the expectation of a prolonged weakness in downstream demand.”

In conclusion, as lithium prices continue to plunge, CATL’s actions are crucial for stabilizing the supply chain. The company is adjusting its operations to navigate the tough market conditions, hinting at possible shifts in the industry’s lithium production strategies in the coming months.

FURTHER READING: CATL Unveils Ambitious 2,000 km Electric Plane Vision 

The post CATL Shuts Jiangxi Mine: How Will It Affect Global Lithium Balance? appeared first on Carbon Credits.

As AI data centers surge in number, their energy consumption poses a significant challenge. These facilities are increasingly straining power grids and threatening the climate commitments of major tech companies like Microsoft, Google, and Amazon. This is what the Miami-based Exowatt, a startup backed by Sam Altman of OpenAI, tries to solve.

The next generation renewable energy company aims to provide a clean, affordable alternative with its modular system that can generate, store, and dispatch solar energy to power these data centers. With a 1.2-gigawatt demand backlog, Exowatt is stepping into a market hungry for sustainable energy solutions.

Following a $20 million seed round led by a16z, Atomic, and Sam Altman, Exowatt could make a significant impact in renewable energy.

Revolutionizing Energy Storage

Exowatt’s system is revolutionary; it’s called Exowatt P3. It pairs a solar energy collector with a thermal battery that can either provide heat or electricity on demand. According to Jack Abraham, Exowatt’s co-founder, data center operators are desperate for affordable, renewable energy. Highlighting the demand for cleaner power, he said that:

“Even if our energy costs were three or four times higher, we’d still have nearly the same number of customers.” 

The system has been designed to help data centers self-sustain, thereby reducing their dependency on traditional grids or, worse, fossil fuels.

Exowatt’s Unique Energy Collection Process

Exowatt P3’s optical collection system features cutting-edge technology. It is akin to using a magnifying glass to focus the sun’s rays. The energy is then stored in a heat battery composed of a clay and ceramic composite—a readily available and cost-effective material.

The solar energy can be stored for months, but most customers are interested in storing energy for periods of 8 to 24 hours, to be used when other power sources become more expensive. Compact enough to fit within a 40-foot shipping container, this low-maintenance “install and forget” system meets the needs of industries aiming to cut energy costs and reduce their environmental footprint.

According to the company, their unsubsidized energy cost is $0.04 per kilowatt hour, competitive with conventional energy sources. Producing electricity at this rate, the Exowatt P3 is both scalable and efficient, storing energy for 24-hour use. 

In real-world application, the system can save up to $35 million in energy costs and reduce CO2 emissions by 438,000 tons for an average data center project.

Meeting Data Center Power Demand

As data centers continue to grow, Exowatt’s solution becomes even more critical.

EPRI U.S. Data Center Load Projections

RELATED: US Data Center Power Use Will Double by 2030 Because of AI

Exowatt’s first data center project will go live in West Texas later this year, targeting a large crypto-mining customer. 

By next year, this project could reach 50 megawatts. While Exowatt has declined to name its current customers, the demand points to its system’s ability to alleviate energy pressures on the grid and meet the clean energy needs of these power-hungry facilities.

Thermal Batteries and the Climate Tech Boom

Exowatt is part of a broader wave of investment in thermal battery technology. Competitors like Antora Energy and Rondo Energy have raised substantial funds to scale systems that store energy as heat. While these companies primarily target heavy industries such as cement and steel production, Exowatt has chosen a simpler and more scalable market in data centers.

Despite the fast-growing interest, scaling thermal battery systems can be challenging. Industries often require customized retrofits that are costly and complicated. Convincing customers to transition from fossil fuels can be a hard sell, especially where there’s institutional resistance. But by starting with data centers, Exowatt avoids much of this complexity, offering a more straightforward path to market.

Scaling Up: Challenges and Opportunities

The demand for the energy startup’s product is strong. However, scaling Exowatt’s production will be a significant challenge. As co-founder Hannan Parvizian pointed out, building a few prototypes is easy, but producing thousands or millions of units is an entirely different case. 

Supply chain issues and manufacturing capacity will play a critical role in determining whether Exowatt can meet the huge market potential.

Moreover, Exowatt’s solution also has geographical constraints. According to Abraham, about 60% of U.S. data centers are located in areas with enough sun to make the system viable. This means Exowatt’s technology may not be a universal fit, leaving a significant portion of the market unserved.

Despite its challenges, Exowatt’s approach to clean energy for data centers is a promising step toward reducing the carbon footprint of the tech industry. By providing an affordable, renewable alternative to fossil fuels, the startup is helping data centers meet their climate goals while also easing the strain on power grids. 

As AI continues to grow, the need for sustainable, reliable energy solutions like Exowatt’s will only become more pressing. The company’s success will depend on its ability to scale manufacturing, build a robust supply chain, and continue innovating in the thermal battery space. With the backing of Sam Altman and a growing list of eager customers, Exowatt could play a significant role in the future of clean energy for AI and data centers.

READ MORE: Who Leads the Data Center Surge in the US? S&P Global Report

The post Altman-Backed Startup Reveals Solar-Powered Solution for AI and Data Centers appeared first on Carbon Credits.

In a significant move to enhance transparency and reliability in carbon credit markets, Zefiro Methane has entered a strategic partnership with Fiùtur, a digital verification network ecosystem. This collaboration is poised to streamline the aggregation, verification, and delivery of environmental data critical for carbon credit issuance. 

By addressing gaps in the current system, Zefiro aims to bring much-needed integrity and transparency to carbon credit markets. The methane offsets provider gone public in Cboe Canada in April.

Tackling Environmental Market Deficiencies

One of the major challenges in today’s voluntary carbon markets is the lack of auditable, verifiable data. Through its partnership with Fiùtur, Zefiro intends to bridge this gap by using cutting-edge technology to generate reliable, large-scale data sets. These will be integrated into Fiùtur’s SMART Data Governance Framework, ensuring standardized and verifiable environmental data for carbon credit issuance.

Image from company website

Fiùtur created the SMART system to enhance financial investment opportunities in environmental outcomes. By automating and processing environmental data using structured digital monitoring, reporting, and verification (MRV) systems, SMART Programs ensure transparency and integrity in environmental claims, allowing them to be accurately priced and trusted.

Moreover, the Governance Framework aims to enable effective collaboration, ensuring an accurate and indisputable representation of climate action. The data comes from various sources, including farms, forests, factories, refineries, and infrastructure projects like buildings and energy systems.

Secured and Traceable Data

The partnership is set to leverage Fiùtur’s SMART ID-enabled partner ecosystem, enabling digital tracking or “digital lineage” from real-world field data to institutional-level distribution channels. This means that data collected from Zefiro’s well-plugging operations will not only be securely stored but also made traceable for issuing offsets, insets, and other related data products.

Additionally, Zefiro will use this digitally captured data for advanced analytics. This will help the company pinpoint high-leakage wells, optimizing its operations by reducing both costs and cycle times. 

The Zefiro Lifecycle Solution, built on Fiùtur’s technology, is scheduled for launch in Q4 2024.

Zefiro’s experience in methane measurement and abatement, coupled with Fiùtur’s advanced data-driven tools, allows for more accurate tracking and auditing of emissions reductions. This collaboration ensures that emissions removal data—whether from leaking wellheads or completed projects—will be captured, verified, and ready for the carbon market.

RELATED: Methane Offsets Provider Zefiro Methane Goes Public on Cboe Canada

Strengthening Carbon Markets with Transparency

In an era where trust is paramount in environmental markets, this partnership seeks to bolster confidence in carbon credit solutions. 

Zefiro and Fiùtur are focused on embracing interoperability with emerging network tools like Xpansiv Connect and the Canton Network, adding further credibility to their mission.

Zefiro Methane’s CEO, Talal Debs, emphasized the barriers institutions face in accessing high-quality environmental solutions, including reliable carbon offsets. According to Debs, data limitations have hindered progress in these markets, and Zefiro’s partnership with Fiùtur is a step toward resolving those issues. Debs further stated that:

“This step will enable Zefiro to deliver more high-quality environmental contract volumes to our existing customers and open up numerous new buyers and delivery channels.”

By embedding rich digital data and provenance into their offerings, Zefiro plans to meet the growing demands of institutional markets.

Forging A New and Digital Era for Carbon Credits

In a sign of its confidence in Fiùtur, Zefiro has also invested in Fiùtur’s Series A round. This financial commitment underscores the long-term potential of the partnership and the significant role Fiùtur will play in supporting Zefiro’s environmental remediation services.

Fiùtur’s open architecture platform allows for transparent, digitally enforced measurement, reporting, and verification (dMRV) protocols. This creates a robust ecosystem where market participants can develop and deliver verifiable, real-world outcomes—a critical need in the evolving carbon credit market.

Fiùtur CEO Joe Madden commented, “Zefiro’s vision of a digital future, combined with their unique commercial approach, is set to elevate these markets to new levels of scale and integrity.”

The Zefiro and Fiùtur partnership comes at a pivotal moment for carbon markets, as buyers increasingly demand verifiable, high-quality data. The Zefiro Lifecycle Solution could streamline the carbon credit process, enabling more efficient and trustworthy carbon offset and inset projects.

READ MORE: The Pitfalls of Low-Quality Carbon Offsets: Are They a Threat to Our Planet?

With the launch set for later this year, the collaboration between Zefiro Methane and Fiùtur is poised to lead the charge toward greater transparency, accountability, and scalability in the fight against methane emissions.

The post Zefiro Methane Works with Fiùtur to Boost Transparency in Carbon Credits appeared first on Carbon Credits.

The International Energy Agency (IEA) reported that “In Germany, where battery electric car subsidies ended in 2023, sales of electric cars fell by almost 5% in the first quarter of 2024.” Does this signal the impending downfall of Germany’s EV market? Absolutely not. Although the EV momentum has slowed down with Volkswagen’s planning closure, the German government is making bold moves to revive its domestic EV industry.

Is Volkswagen Shutting Down in Germany as Competition Looms?

Lately, this news has been making rounds as Germany’s home brand Volkswagen plans to shut down factories to cut costs. This is because the company has been facing stiff competition from Chinese EV makers, particularly in its largest market, China.

VW CEO Oliver Blume warned that Germany was losing its competitiveness as a manufacturing hub, noting that the European automotive industry was under significant strain. Industry experts explained this problem somewhat this way- Volkswagen, which launched a €10 billion ($11.1 billion) cost-cutting plan in 2023, struggled in China as local EV brands like BYD gained market share.

Consequently, the automaker saw a 7% drop in deliveries in the Chinese market in the first half of this year. This decline further contributed to an 11.4% fall in group operating profit, which dropped to €10.1 billion ($11.2 billion). Simply put., falling market share in China added to the pressure.

The transition to EVs disrupted Germany’s traditional automobile industry. In another media report, we discovered that car suppliers like ZF Friedrichshafen planned to cut up to 14,000 jobs in Germany by 2028 due to financial pressure and reduced orders. Amid all this clamor and turmoil, Volkswagen indicated that plant closures were a possible option to “future-proof” its business.

SEE MORE: Tesla Faces New 9% Tariff as EU Tightens Grip on China-Made EVs 

Volkswagen’s Alarm Prompts Urgent Government Action

Looking ahead, the German government has served some good news for its domestic EV industry. The coalition approved a new tax proposal to boost the EV market after last year’s sudden end to the subsidy program slowed progress. The initiative came just after Volkswagen blew the whistle of closing down. Notably, new registrations of EVs in Germany plummeted by 36.8% in July compared to the previous year. This highlighted the urgency for a renewed tax policy.

The plan, which is part of a larger package designed to revitalize the German economy, introduces significant tax reductions for company fleets of electric and zero-emission vehicles. Starting in 2024, companies will be able to write off up to 40% of the value of newly purchased EVs, gradually decreasing to 6% by 2028.

The government expects this tax relief to cost around €465 million ($514 million) annually.

Germany Pushes for EV Growth with New Tax Breaks

Chancellor Olaf Scholz’s cabinet also raised the price threshold for company cars eligible for tax breaks from €75,000 to €95,000. This change will benefit a broader range of vehicles, including luxury models from German automakers. Economy Minister Robert Habeck emphasized the importance of the car industry to the country’s economy, calling it a “cornerstone” that must keep up with global competition, especially from China.

However, while the auto industry association VDA praised the government’s initiative, critics argued the tax breaks would primarily benefit high-income earners. Environmentalists also doubted whether the new measures would significantly boost EV sales, especially after the sudden halt to consumer subsidies late last year, which led to a 70% drop in new EV registrations in August.

With Germany’s EV market struggling and competition from China increasing, the government’s move to incentivize corporate EV adoption signals a critical effort to revitalize the country’s automotive industry and ensure it remains competitive on the global stage.

Germany Drives Dynamic Developments in Automotive R&D

Germany has always pushed investment in automotive R&D. Currently, its automotive industry experiencing a major transformation, with digital and sustainable mobility emerging as the top choice for consumers.

In the latest report released by the EU Industrial R&D Investment, German automotive companies increased their R&D investments by 15% in 2022, reaching a total of €52.2 billion. This shows the industry’s commitment to staying competitive and leading the charge in future technologies.

Other than this, German automakers are making a significant impact on the global stage. Data shows:

In 2022, 30% of the global automotive R&D investments came from German companies.
German manufacturers and suppliers accounted for 72% of all R&D spending by European automotive companies worldwide.

Hildegard Müller VDA President noted,

“The massive investments by the German automotive industry show our determination to turn the transformation into an international success story. The German automotive industry supports the climate goals and wants to make climate-neutral mobility a reality as quickly as possible. We are drivers of transformation.”

Source: VDA Germany

With nearly one-third of global automotive R&D investments coming from Germany, the country is crucial in shaping the industry’s future. This strong focus on innovation, coupled with new EV tax incentives, demonstrates Germany’s commitment to advancing the EV market and tackling emissions. As a result, Germany is set to lead the way toward a brighter, more sustainable automotive future.

READ MORE: EU Commission Backs Germany’s Renewable Hydrogen Plan with $380M Funding

The post Potential Volkswagen Demise Looms, Germany Gears Up for EV Revival appeared first on Carbon Credits.