Chinese electric vehicle manufacturer BYD has withdrawn its plans to invest in a lithium cathode materials plant in Chile due to a sustained drop in global lithium prices, according to a report by Reuters citing Chilean authorities.
BYD’s decision comes alongside that of Chinese metals firm Tsingshan, which also pulled the plug on a $233 million project aimed at producing 120,000 tons of lithium iron phosphate (LFP) per year. Both companies had been granted access to preferential lithium pricing through Chile’s economic development agency, Corfo, as part of an initiative to attract foreign investment.
“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 had initially planned a $290 million facility to produce 50,000 tons of LFP cathode materials annually. However, Chile’s national assets ministry confirmed that BYD submitted its intent to withdraw from the project as early as January.
Lithium prices surged in recent years with the rapid expansion of the EV sector, peaking in China at RMB 590,000 ($81,560) per ton in November 2022. But since then, prices have plummeted, with battery-grade lithium carbonate currently trading below RMB 70,000 per ton.
The steep decline has placed pressure on upstream projects dependent on high lithium prices to ensure profitability. Lithium carbonate and iron phosphate are key ingredients for producing LFP cathodes, a widely used battery chemistry in electric vehicles.
BYD was awarded a lithium extraction contract in Chile in 2022 and received preferential pricing for lithium carbonate in April 2023, which was intended to support the now-cancelled investment.
