China is Flooding Lithium Market to Undermine Rivals, US Official Reports

By Sergio Goncalves

LISBON – Chinese lithium producers are significantly increasing their output of this essential metal, leading to what a senior U.S. official has termed a "predatory" price drop aimed at undermining competing projects. The remarks were made during a recent visit to Portugal, a country rich in lithium resources.

Jose Fernandez, the U.S. under secretary for economic growth, energy, and the environment, stated in a briefing that China’s lithium production far exceeds global demand. He noted, "That is an intentional response by the People’s Republic of China to what we are trying to do" with major U.S. climate and energy initiatives.

Fernandez characterized the situation as one of predatory pricing, where China lowers prices to eliminate competition, asserting, "That is what is happening." Currently, around two-thirds of the world’s lithium chemical production originates from China, primarily for use in battery technologies, such as those found in electric vehicles. Over the past year, lithium prices have plummeted by more than 80%, mainly due to China’s overproduction and a decrease in electric vehicle demand.

This price decline is also adversely affecting Chinese companies, including battery manufacturer CATL, which has had to halt production at certain mines.

JOB CUTS

Europe is striving to lessen its reliance on imports of lithium and other crucial materials for the green transition from China and other nations. Fernandez emphasized that the low prices hinder efforts to diversify supply chains globally and negatively impact countries like Portugal that require investment to develop local industries.

The sharp decline in prices has compelled numerous global lithium producers to reduce production and implement job cuts. Portugal, already the largest lithium producer in Europe with approximately 60,000 tons of known reserves, has traditionally mined lithium for ceramics.

In partnership with neighboring Spain, Portugal aims to utilize its local lithium deposits to manage the entire value chain, from extraction and refining to cell and battery manufacturing, as well as battery recycling. Several mining firms in Portugal are actively seeking financing, customers, and suppliers to advance their projects.

Fernandez expressed a commitment to assist these companies, remarking, "Lithium mining companies everywhere have to survive this difficult phase that was created by predatory pricing."

In June, China’s Premier Li Qiang defended his country against accusations of unfair subsidies during a World Economic Forum meeting, countering claims from the United States and EU regarding cheap green technology flooding their markets.

Trade tensions escalated recently when the European Union announced it would proceed with substantial tariffs on electric vehicles produced in China, viewing them as a response to perceived unfair subsidies. In retaliation, China implemented temporary anti-dumping measures on brandy imported from the EU.