Optimism amidst despair: key takeaways from the 17th Lithium Supply and Battery Raw Materials Conference

Resilient Optimism in a Challenging Market 

Wood Mackenzie’s Research and Consulting teams recently attended the 17th Fastmarkets Lithium Supply and Battery Raw Materials conference in Las Vegas. The event gathered ~1,000 participants, covering a wide range of stakeholders from across the lithium industry and battery value chain. Here are some of our main takeaways from the event: 

The overview 

Despite substantial oversupply and four-year price lows, industry confidence remains strong in lithium's fundamentals. Conference attendees - including project developers, technology providers, investors and analysts - expressed optimism about long-term demand from electric vehicles and emerging energy storage systems. This creates substantial upside potential for companies that navigate current market challenges effectively. 

However, optimism meets practical reality. Many developers have paused operations, focusing on cost reduction and capital preservation whilst awaiting improved market conditions. This strategic pause reflects disciplined capital allocation during volatile periods. 

Market outlook: recovery expected, but slow and uneven 

Market participants expect subdued conditions to persist through 2025, with early recovery signs emerging in the medium term. Prices should climb gradually to sustainable levels, potentially accelerating sharply towards the next decade's start. This recovery depends on successful demand-supply rebalancing across global markets. 

China remains the critical uncertainty. Beijing's policy and investment decisions could dramatically accelerate or delay market recovery. This geopolitical dimension adds complexity to traditional supply-demand forecasting models. Chinese influence extends beyond domestic markets into global pricing mechanisms. 

A unique market dynamic complicates the supply response. Lithium carbonate's flat cost curve across middle quartiles means modest price increases bring large supply volumes back online quickly. This creates little incentive for production curtailment. The dynamic further prolongs oversupply conditions in low-price environments. 

Technology in focus: the promise and limits of direct lithium extraction 

Technological innovation, especially in Direct Lithium Extraction (DLE), was a focal point of the conference. DLE is seen as a potential game-changer that could diversify lithium supply, improve operational and environmental performance, and reduce production timelines. The technology is particularly promising for accessing geothermal and oilfield brines, including those in the Salton Sea, California and Smackover Formation across Arkansas and Texas. However, despite its potential, the industry remains cautious. No dominant commercial technology has emerged, and many DLE providers are still in early stages although working hard to prove out the viability of their technologies via demonstration scale plants across a variety of brine resources. Eramet's project in Argentina stands out as the only recent large-scale entrant outside of China, having delivered first lithium carbonate from Centenario in December 2024. 

Developer retrenchments and financing challenges 

Another clear indicator of the industry's current strain was the absence of many project developers from the conference. This reflected broader sector challenges, including widespread layoffs, deferred project timelines, and an overarching focus on cost-cutting. Financing remains difficult. Offtakers are increasingly cautious, preferring pricing mechanisms that limit downside risk, and are pushing developers to bear the bulk of project risk. 

Automakers are particularly risk-averse, seeking future optionality without committing capital upfront. In this environment, Export Credit Agencies have become a lifeline for project financing, generally offering better financing conditions than commercial banks. 

A strategic blind spot: underestimating China's moves 

Perhaps one of the more surprising takeaways was the limited discussion around China's activities. Many attendees noted a significant lack of focus on developments such as China's investments in lepidolite processing, its strategic moves into African lithium supply, and its continued capital deployment during the downturn. This omission is increasingly seen as a strategic blind spot. 

By overlooking China's expanding dominance in both upstream supply and downstream processing, Western industry participants may be underestimating the competitive pressure and missing a critical part of the recovery equation. Some observers warned that this creates a "false sense of optimism" around Western recovery timelines, particularly if Chinese players continue to invest aggressively whilst Western firms remain on the sidelines. 

Investment landscape: value exists, but confidence lags 

From an investment perspective, the current environment presents both opportunities and confusion. Many assets are undervalued, with long-term potential that is not reflected in today's pricing. Yet, investors face an overwhelming number of projects to evaluate, many of which differ widely in quality, jurisdiction, and feasibility. There's also growing difficulty in assessing which assets will benefit most from government incentives and onshoring trends. Strategic buyers, for now, are largely inactive adding to the sense of inertia and further slowing momentum. 

Supply chain inefficiencies and policy shifts 

• Regional challenges: Regionally, battery supply chains remain incomplete, and this is particularly pronounced in North America. Even if the US develops a lithium supply chain, a lack of battery mid-stream means materials would still need to be shipped to Asia for processing before returning as an input for battery manufacturing. 

• Strategic approach: Whilst the long-term vision is to build domestic capacity, the current approach favours partnerships with established producers rather than launching new, capital-intensive startups. Furthermore, in an industry with tight margins, there is an ongoing preference for developing capacity in more established or low-cost jurisdictions. 

Policy outlook: 

• Gradual EV incentive pullback expected in the US under current administration, but EV adoption projected to slow rather than reverse 

• 45X tax credit removal expected to impact supply development more significantly than 30D credit removal would affect demand 

• Argentina's new RIGI fiscal regime being tested by Rio Tinto, though considerable political and regulatory risks remain 

Refining bottlenecks and technical barriers 

Technically, building refining capacity outside China remains challenging. Permitting hurdles, high costs, and a general lack of technical expertise compared to Chinese operators have hindered progress in places like Canada and Australia. Many integrated ore-to-lithium chemical projects are viewed as unattractive due to their capital intensity and pressure from ample refining capacity in China. 

Brine-based operations are comparatively better positioned on the cost curve and offer more economic insulation, though they too face challenges in scaling and commercialisation. Demonstration plants continue to be a critical step in securing offtake agreements, but they require significant upfront investment and often lack immediate commercial payoffs. 

Strategic outlook: positioning through uncertainty 

In summary, the lithium and battery raw materials industry is clearly in a state of transition. While there is legitimate optimism surrounding technological advancements and long-term demand, the near-term environment remains difficult. Financing is tight, project timelines are slipping, and Western players risk falling further behind if they fail to respond strategically to China's sustained investment and supply chain dominance.  

The companies best positioned for the eventual recovery will likely be those that maintain strategic discipline, continue to invest in credible technology pathways, and navigate the downturn without overextending. Market recovery is expected to begin gradually in 2026, with more substantial upside later in the decade—assuming demand catches up and oversupply unwinds. However, this path remains subject to major external factors, particularly China's next moves, which could alter the landscape significantly. 

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