Albemarle, the world’s largest lithium producer, plans to hold more auctions for the metal used in electric vehicle batteries to boost price transparency and promote a better understanding of the opaque market, an executive said on Tuesday.
The move is one of the most aggressive by an industry leader to clear up the widespread confusion about how lithium is priced. It would also help better underpin supply contracts with automakers hungry for fresh and consistent supply.
“What we’re trying to do is build trust,” Eric Norris, head of Albemarle’s energy storage business, told Reuters on the sidelines of the Fastmarkets Lithium Supply and Battery Raw Materials Conference in Las Vegas.
While lithium has surged in popularity the past decade, confusing futures pricing from market leader China has made it unclear what a realistic global reference point for price should be. The struggle became especially acute after Chinese prices plunged last year and dragged down shares of Albemarle and other Western lithium producers.
In response to the price uncertainty, Albemarle auctioned some of its Australian lithium supplies in March, a practice it now plans to replicate globally, Norris said. The company plans to provide its auction data to Fastmarkets and other pricing agencies to formulate into publicly available prices, noting that many of its long-term contracts are linked to such data.
Albemarle has no plans to bid to develop Chile’s other lithium-rich salars, or salt flats, steps that rivals are taking. “We haven’t fully even begun to tap the potential of what we have in the Atacama,” Norris said.
With the recent drop in lithium prices, Norris said industry consolidation may be appropriate, but Albemarle’s priority is on internal organic investments rather than acquisitions.