BASF, a leading German chemical company, has abandoned plans to invest in lithium mining assets in Chile. This decision comes amidst a slowdown in electric vehicle adoption worldwide, which has dragged down battery metal prices.
Talks with Wealth Minerals Ended
BASF had been in initial discussions with Wealth Minerals, a Vancouver-based firm with exploration projects in Chile. These talks involved potential funding and offtake agreements if Wealth secured production contracts in Chile. Additionally, BASF was exploring the possibility of building a plant in Chile to produce cathode material, a critical component in electric vehicle batteries.
“No collaboration between BASF and Wealth Materials materialized in the end,” BASF said in a statement. The company did not provide specific reasons for ending the talks or mention the proposed cathode plant.
BASF’s withdrawal from Chile follows its recent decision to scrap plans for a $2.6 billion nickel-cobalt refinery in Indonesia. Slowing growth in electric vehicle sales has caused a significant decline in the prices of key battery metals. Lithium, for example, has reached a three-year low after surging to a record high in late 2022.
In light of these market conditions, BASF is now focusing on securing raw materials for its European operations through a new battery recycling plant in Germany. This plant is scheduled to begin operations later this year. Battery recycling offers an alternative source of lithium and other critical metals, potentially reducing BASF’s reliance on mined resources.
Impact on European Battery Ambitions and Wealth Minerals
While BASF’s involvement in Chile was in the early stages, its withdrawal deals a blow to European authorities’ efforts to encourage companies to secure deals with key battery metals suppliers. Europe aspires to become a leader in electric vehicle production, but this ambition hinges on a stable supply of battery metals.
This development also presents a setback for Wealth Minerals as it navigates the implementation of a new lithium extraction strategy in Chile. One of the company’s projects is located in an area designated as strategically important by the Chilean government. This designation requires Wealth to partner with a state-owned company as a majority shareholder, potentially limiting Wealth’s control over the project.
Wealth’s CEO, Henk van Alphen, declined to comment on BASF’s exit. He acknowledged the slow pace of implementing the government’s lithium strategy but expressed optimism about ongoing progress. Authorities are expected to announce details of companies interested in new contracts for non-strategic salt flats next week. These non-strategic areas may offer Wealth more flexibility in developing its projects.
The Broader Context: A Changing Battery Metals Landscape
BASF’s decision to pull out of Chile reflects a broader shift in the battery metals landscape. The initial surge in electric vehicle demand that drove up lithium prices has cooled somewhat. This, coupled with increasing production from existing mines, has led to a decline in prices.
However, the long-term outlook for battery metals remains positive. Electric vehicle sales are still expected to grow significantly in the coming years, driven by factors such as stricter emissions regulations and technological advancements. This growth will necessitate a continued and reliable supply of battery metals.
BASF’s decision to focus on battery recycling in Europe highlights a potential solution to the challenge of securing battery metals. Recycling can help to reduce Europe’s dependence on mined resources and create a more circular economy for battery metals.
Source: Mining.com
