BYD withdraws plans to build lithium plant in Chile as lithium prices plunge

BYD and Tsingshan are backing out of multimillion-dollar plans to build lithium cathode plants in Chile, according to Reuters.

Both projects have been hit by plummeting lithium prices.

A prolonged drop in lithium prices has forced BYD (HKG: 1211, OTCMKTS: BYDDY) to withdraw plans to invest in Chile, the world's second-largest lithium producer.

BYD and Chinese metals group Tsingshan are backing out of multimillion-dollar plans to build lithium cathode plants in Chile, Reuters said in a report today, citing Chile's economic development agency.

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BYD filed an intent to withdraw its plans in January, the report said, citing Chile's national assets ministry.

Tsingshan told Reuters that the company had withdrawn plans for a $233 million project to produce 120,000 tons of lithium iron phosphate (LFP) per year.

Chile's economic development agency Corfo said both projects had been hit by plunging lithium prices, according to Reuters.

The agency had tapped BYD and Tsingshan for a preferential lithium price deal as part of its efforts to spur investment in Chile, the report noted.

"The companies selected by Corfo have been affected in their investment decisions by the global market conditions, which have shown a sharp drop in prices," Corfo said in a statement, according to Reuters.

BYD said last year that plans for a planned $290 million plant, which was expected to produce 50,000 tons of LFP for cathode materials annually, would be delayed, the report noted.

Lithium prices saw a crazy rise in China three years ago, with the rapid growth of the electric vehicle (EV) industry.

The price of battery-grade lithium carbonate rose to RMB 590,000 ($81,560) per ton in China in November 2022, up about 14 times from RMB 41,000 per ton in June 2020.

However, after that, the price of lithium carbonate saw a prolonged decline, with battery-grade lithium carbonate now priced below RMB 70,000 per ton in China.

Lithium carbonate and iron phosphate are the main raw materials for LFP.

BYD was awarded a lithium mining contract in Chile in January 2022, and in April 2023 it was awarded preferential prices for lithium carbonate in the country.

The project planned to produce 50,000 tons of LFP cathode material per year in Chile, using lithium carbonate as a raw material, with an estimated investment of at least $290 million, according to a statement at the time.

($1 = RMB 7.2345)