MercoPress. South Atlantic News Agency

Plummetting lithium price leads BASF to drop investment plans in Chile

An oversupply of lithium is feared given a recent increase in worldwide output so prices went down

Chemical giant BASF SE dropped its plans to invest in lithium mining assets in Chile after a recent downward turn in the mineral's price, it was reported. The German company thus canceled all talks with Canada's Wealth Minerals Ltd., which has exploration projects in the South American country, it was explained.

BASF was to take over financing and purchase commitments if Wealth won production contracts in Chile, in addition to the possibility of building a lithium cathode plant for electric vehicle batteries in Chile.

“In the end, no collaboration between BASF and Wealth Materials materialized,” BASF said in a statement after slower growth in electric vehicle sales pushed lithium prices to their lowest value in three years from a record in late 2022. BASF now plans to bolster the supply of raw materials for operations in Europe with a new battery recycling plant in Germany due to start operations later this year.

BASF's withdrawal comes on the heels of its announcement last week about canceling its plans for a US$ 2.6 billion nickel and cobalt refinery in Indonesia.

Projections of a lithium oversupply have mounted as miners and producers have continued to increase capacity and explore new reserves. In addition, battery surpluses caused by government subsidies throughout the supply chain worsen this situation as Chile intends to up production over the next ten years.