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Lithium demand slows as EV momentum falls, but miners stay bullish

Greenbushes in Western Australia, the world's largest lithium mine. Image courtesy: IGO

Albemarle, the world's largest lithium miner and among the largest suppliers of the mineral to EV battery makers, reported lower-than-expected quarterly profit and cut its annual forecast citing slowing EV demand.

The company still expects lithium volumes to grow, estimating sales would increase at least 30 percent over last year's levels. However, says prices could rise by only 15 percent, much below analyst expectations.

Albemarle's results are similar to news emanating from other industry players, all of which reflect a cooling in the demand for electric vehicles. The slowdown has affected companies across the automotive chain. Manufacturers such as Ford have scaled back plans. Players such as Volkswagen have frozen plans for a new giga factory, and even Tesla, everybody's favourite EV bellwether, might be going slow on its Mexican investment.

Lithium prices have tanked more than 60 percent this year as a result of demand cooling, and earlier this month, Albemarle walked away from a proposed merger with Australian lithium company Liontown Resources citing "growing complexities" in the arrangement.

But even through lithium companies have sounded alarms, they remain bullish on the sectors overall prospects, according to a report in Reuters.

BMW and Tesla supplier Livent says it expect strong lithium sales despite its own weak results, with CEO Paul Graves quoted as saying: "We see lithium supply continuing to be the constraint on demand."

Australia's Pilbara Minerals has flagged a "softening market backdrop" but company executives remain positive on demand. "Demand is absolutely there," CEO Dale Henderson said. "It's just a case of moderating pricing. It's still a very healthy market."

Pilbara has ruled out dividends for now, but the company says the decision was a result of caution rather than panic.

IGO, which holds an indirect stake in the world's largest lithium mine, also warned market volatility, but said it believed the industry's troubles were only "near term". IGO owns 49 percent in Talison Lithium, a joint venture with Tianqi Lithium Corp (51 percent stake). Talison in turn owns 51 percent in Greenbushes Lithium Mine in Western Australia (Albemarle owns the remaining 49 percent) and 100 percent of the Kwinana Lithium Hydroxide Refinery.

Another lithium company, Mineral Resources, says the current market scenario is best described as a "rebalancing" of supply chains. Mineral Resources operates lithium mines in partnership with Albemarle as well as China's Jiangxi Ganfeng Lithium.

Even Albemarle remains upbeat. In an investor call after its results announcement, Eric Norris, head the company's Energy Storage division, told investors, "We see what's happening now as road bumps, but certainly not a determinant for the long-term growth we have."

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