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More than half of deals struck between western carmakers and miners during a rush to secure supplies of battery metals have been delayed, amended or cancelled after the price of materials such as lithium slumped.
General Motors, Tesla and Stellantis were among automakers that signed long-term deals for metals including lithium and nickel from 2020, as they sought to avoid potential shortages of key raw materials when the race to roll out electric vehicles heated up.
But prices have fallen sharply from their peaks, making it difficult for miners to finance new projects. That is threatening efforts to set up alternatives to China-dominated supply chains for metals needed for industries from EVs to defence. Slow permitting processes for new mines has also pushed back timelines for the delivery of metals.
As a result, 17 of 32 deals for lithium, nickel and cobalt signed between 2020 and 2024 have been scrapped or had their terms renegotiated, or delivery dates pushed back, according to a Financial Times analysis of a database compiled by research group Benchmark Mineral Intelligence.
“Delays are reflective of the low price environment for lithium and other battery metals at the moment,” said Adam Webb, head of battery raw materials at Benchmark. “This makes it challenging to secure financing, leading to project development delays.”
Prices of lithium, nickel and cobalt also fell after a jump in Chinese production created a glut in supply. Lithium carbonate was trading at just under $10,000 a tonne at the end of October, down from more than $70,000 a tonne in 2023, according to Benchmark.
The surplus in battery metals has reduced the incentive for carmakers to commit to long-term offtake agreements — promises to buy future output that help suppliers raise financing — as they can secure the materials from elsewhere, analysts said.
Carmakers have also scaled back their EV targets because of the vehicles’ lower profitability relative to conventional models, and as concerns mount that the Trump administration’s policies will slow the market in the US.
Delays have become the “base case” with parties in deals amending “timing and resetting price bases”, according to Christian Grimmelt, a partner at consulting firm AlixPartners.
Ford agreed in 2022 to buy lithium from Ioneer’s Rhyolite Ridge project from this year, but the mine in Nevada has not yet been built.
South Africa’s Sibanye-Stillwater pulled out of a deal to buy a 50 per cent stake in the project for just under $500mn. Ioneer said it had “worked together” with the US carmaker to change the start date for delivery, with production expected to start in 2028.
Jasper Jung, executive director of global public policy at General Motors, told the Financial Times Metals & Mining Summit last month that carmakers were being “more strategic” and not simply securing “as much raw material as they could.”
“We’re facing softening EV markets . . . the EV demand obviously has a lot to do with some of the investments” in battery metals, Jung said. He added that changing battery components — such as moving away from high nickel options — had also led carmakers to “evolve their thinking” about what they needed.
Direct supply deals were seen as a way to help junior miners, in particular, because they demonstrated demand and made project financing easier by showing the “bankability” of projects, said a senior lawyer in the sector.
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