Trymore Tagwirei

The global lithium market faced significant challenges in the second quarter of 2025, despite long-term projections showing sustained demand growth through the next decade, according to Paul Lusty, head of battery raw materials at Fastmarkets.

As one of the most trusted cross-commodity price reporting agencies in metals and energy markets, Fastmarkets reported that lithium carbonate prices remain depressed due to abundant supply, particularly from Australia and Africa.

Battery-grade lithium carbonate prices fell to their lowest levels since January 2021, dropping from $10 484.37 per metric ton at the start of the year to $8 329.08 by June 24. Lithium hydroxide prices followed a similar trend, plummeting 89 percent between 2022 and 2025.

Lusty described the current market as navigating complex conditions, noting that bearish sentiment often overshadows the sector’s strong underlying demand.

He emphasized that long-term fundamentals remain solid, driven by climate change mitigation efforts, the global energy transition, and growing demand from energy-intensive technologies like artificial intelligence.

However, oversupply continues to pressure prices, with global lithium production increasing 22 percent in 2024, outpacing demand growth. Fastmarkets projects an additional 260 000 tons of lithium carbonate supply in 2025, with China, Australia, Argentina, Chile, Brazil, and African nations all expanding production.

China’s lithium output surged 55 percent since 2023, positioning it to overtake Australia as the world’s top producer by 2026. Africa’s role in the lithium supply chain is also growing, with China increasingly investing in the continent’s hard-rock lithium resources.

Claudia Cook, another industry expert, noted that Africa is expected to supply 18 percent of global hard-rock lithium by 2030, with production projected to increase 170 percent between 2025 and 2035.

Zimbabwe currently leads Africa’s lithium output, accounting for 70 percent of production in 2025, though its share is expected to decline to 43 percent by 2035 as Mali, the DRC, Ethiopia, and Namibia begin production.

Despite weak prices, lithium demand continues to rise, with global consumption increasing 29% in 2024. Electric vehicle sales, which grew 35 percent in the first quarter of 2025, remain a key driver, with lithium demand from EVs expected to grow 12 percent annually through 2030.

Other factors, including rising electricity consumption and the expansion of data centers, are also boosting demand.

Renewables are projected to meet 95 percent of future electricity demand growth, increasing reliance on battery storage systems. Data centers alone are becoming a major lithium consumer, with their electricity use growing 12 percent annually since 2017.

While China currently accounts for 60 percent of global lithium demand, its dominance is expected to decline as other regions expand.

Lithium prices saw a brief rebound in early July amid rumors of production cuts by Australian miners, but the rally faded when the reports were denied.

Policy uncertainty in the U.S. and China continues to influence market sentiment. Cook noted that the market remains highly reactive to news, though high inventories and growing production suggest sustained deficits are unlikely in the near term.