China Is Oversupplying Lithium To Eliminate Rivals, U.S. Official Claims

Chinese lithium producers are oversupplying the global market, causing a "predatory" price decline as they attempt to drive out competing projects, a senior US official said during a visit to Portugal, which has substantial lithium reserves, Sergio Goncalves reported for Reuters.

China produces approximately two-thirds of the world’s lithium chemicals, which are mainly used in battery technologies for electric vehicles (EVs).

Jose Fernandez, undersecretary for economic growth, energy, and the environment at the US Department of State, stated during a briefing that China was producing significantly more lithium "than the world needs today, by far."

He added, “That is an intentional response by the People's Republic of China to what we are trying to do" with the Inflation Reduction Act — the largest climate and energy investment package in US history, valued at over $400 billion.

“They engage in predatory pricing... [they] lower the price until competition disappears. That is what is happening.”

China produces approximately two-thirds of the world’s lithium chemicals, which are mainly used in battery technologies for electric vehicles (EVs).

Lithium prices have dropped by more than 80% over the past year, largely due to China's overproduction and a decline in EV demand.

However, the price collapse is also impacting China, as it has led Chinese companies like battery giant CATL to halt production at certain mines. Europe aims to reduce its reliance on imports from China and other countries for lithium and other critical materials necessary for the green transition.