By Dr. Admire Dube
HARARE – THE lithium market, once the darling of the energy transition narrative, is now at a crossroads. Prices for lithium carbonate have plummeted from their euphoric highs of $85,000 per metric tonne in late 2022 to a sobering $23,000 per metric tonne as of January 2025 – a staggering 73% collapse.
The market’s volatility, coupled with evolving technologies and geopolitical shifts, raises a critical question: Is there a rebound in the horizon or has this lithium train already left the station?
Grudgingly, I think it has.
Lithium ion batteries might as well weep silver tears as dreams of their electric glory days begin to fade like morning mist, leaving only the cold calculus of supply and forgotten ambition. And the bitter taste of having failed to oust even the “dirty” crude oil!
A Market Oversupplied and Undermined
The Numbers Behind the Glut
Global lithium supply is expected to grow by 16% in 2025, reaching 1.58 million tonnes of lithium carbonate equivalent (LCE), up from 1.36 million tonnes in 2024. However, demand is forecast to rise by only 20% year-on-year, creating a surplus of approximately 33,000 tonnes. This surplus follows an even larger glut of 84,000 tonnes in 2024, underscoring persistent imbalances.
China’s discovery of a massive 30-million-tonne lithium deposit in Jiangxi Province has exacerbated the oversupply narrative. With China already controlling over 60% of global lithium refining capacity and dominating battery production through giants like CATL and BYD, its oligopolistic grip has allowed it to dictate prices downward.
William Adams of Fastmarkets notes that “stocks along the supply chain, especially in China, are being held tightly. This prevents shortages but also suppresses any meaningful price recovery”.
Macroeconomic Implications
From a macroeconomic perspective, this oversupply reflects classic Keynesian disequilibrium: supply far outstripping effective demand. Producers are caught in a prisoner’s dilemma, hesitant to cut output for fear of losing market share. This dynamic mirrors the oil market’s struggles during OPEC’s price wars in the mid-2010s.
Technological Disruption: The Rise of Alternatives
Sodium-Ion Batteries: A Real Threat?
Sodium-ion batteries are emerging as a formidable competitor to lithium-ion technology. With sodium abundantly available and significantly cheaper than lithium, these batteries offer cost advantages for low-cost EVs and stationary storage solutions. CATL has already begun mass production of sodium-ion batteries for EVs as of late 2024.
The sodium-ion battery market is projected to reach $4 billion by 2031, driven by its thermal stability and reduced reliance on critical materials like nickel and cobalt. While sodium-ion batteries currently account for less than 5% of global battery production, their share is expected to grow rapidly as costs fall.
Other Alternatives
Solid-State Batteries: Offering higher energy density and safety compared to lithium-ion batteries, solid-state technology is forecast to grow at a CAGR of over 40%, reaching $963 million by 2030.
Redox Flow Batteries: Ideal for grid-scale energy storage due to their scalability but limited by low energy density.
Metal-Air Batteries: Promising ultra-high energy densities but still constrained by technical challenges.
These alternatives collectively accounted for approximately 7–10% of global battery production in 2024 but are expected to capture up to 20% by 2030 as advancements accelerate.
Geopolitical Risks and Regional Shifts
China’s dominance in lithium refining and battery production has created significant geopolitical risks. Western nations are increasingly wary of relying on Chinese supply chains for critical minerals. The USA Inflation Reduction Act (IRA) has spurred domestic investments in alternative battery technologies and recycling infrastructure but remains years away from reducing dependence on imports.
Meanwhile, emerging markets like Argentina and Zimbabwe are ramping up production. Argentina alone is expected to double its output in 2025 through projects like Rio Tinto’s Rincon brine operation. However, these developments may only add to the global surplus unless demand accelerates significantly.
Demand Dynamics: EVs Under Pressure
EV Market Growth Slows – While EV sales remain robust globally, growth rates have moderated. In Europe, subsidy cuts led to a decline in sales in early 2024 before recovering under stricter emissions regulations set for 2025. In North America, uncertainty surrounding government policies has tempered enthusiasm.
China remains the linchpin of EV demand, accounting for over half of global sales. Yet even here, growth has plateaued due to market saturation and reduced subsidies.
EVs currently account for approximately 70% of global battery demand. However, with alternative chemistries gaining traction and non-battery energy storage systems (e.g., pumped hydro) expanding their footprint, lithium’s dominance may erode over time.
Financial Projections: A Stabilising Market?
Using basic supply-demand elasticity models: Assuming a supply increase of 16% and demand growth of 20%, prices are projected to stabilize around $25,000 per metric ton—a far cry from the highs of $85,000 but above current levels.
Benchmark Mineral Intelligence forecasts that lithium prices will remain range-bound through 2025 as producers adjust output and inventory levels normalise.
Conclusion: The Train Has Left the Station
The lithium market’s golden era may already be behind us. Prices are unlikely to revisit their speculative highs as oversupply persists and technological alternatives gain momentum. Investors should brace for continued volatility but temper expectations for outsized returns.
For stakeholders across the value chain—from miners to automakers—the message is clear: adapt or risk obsolescence. As Chris Berry aptly puts it: “The name of the game is oversupply… I would not think we can dig ourselves out of this hole anytime soon”.
In an era defined by rapid technological change and geopolitical flux, betting solely on lithium may no longer be the sure thing it once was. The train might have already passed – but there is still time to catch another ride on emerging technologies redefining the future of energy storage.
- Dr Admire Maparadza Dube is a non-executive director at FinAcco Capital, providing strategic leadership for the Holding Business and finance functions for the Operating Units. He has a wealth of experience in executive positions spanning banking, project management, wealth management, financial planning, the statutory environment, tax and customs procedures in Financial Services companies, Banks, Energy sector, Wealth Management and a Tax Authority
- He holds an Honours Degree in Banking & Finance, MSc in Development Finance, a CFA Charter Holder, as well as Internal Controls Investments and Certificates. He recently graduated with a Ph.D. in Finance and his thesis was : The Relevance of Central Banks In A More Global Economy Where More Exogenous Factors Than Local Policies Determine Direction of National Macroeconomics.
- His career objectives are to grow professionally in the fields of Finance & Admin, Strategy, Capital Markets and Economic planning & Research to realise his full potential leading to a simultaneous growth of his organisations and make a positive impact in his community.
- http://www.admiremaparadzadube.com
- X: @admire_dube