Lithium and nickel price slump together with inflation and high costs may force mining companies to exercise a more strict capital discipline and even lead to a new wave of takeovers, according to analysts cited by media sources.
“Both the nickel and lithium markets look likely to remain substantially in oversupply until the end of the decade,” said Wood Mackenzie analyst James Whiteside as reported by Bloomberg.
“A lot of producers are burning cash, so any non-essential spend will remain curtailed.”
Prices of lithium have failed to rebound from a crash caused by softer electric vehicle demand and oversupply as miners have brought rapid production online since 2022. Several miners have curtailed output, shuttered mines, and paused investment on expansion projects in the past 12 months.
Meanwhile, Indonesia’s nickel boom which took the industry by surprise just two years ago has decimated Western miners of the material. The world’s top miner, BHP Group, shut down its Nickel West business in October.
At the same time, lower evaluations of lithium and nickel producers may trigger a new wave of mergers and acquisitions in the sector.
“There may be a window of opportunity for deals to be finalised. It’s cheaper to buy than to build in nickel at current valuations,” Whiteside added.
Theodor Lisovoy, Managing Editor, Rough&Polished
