After historic fall, lithium sector sees recovery and bets on new cycle

After two years of falling prices and frustration with part of the promises of the so-called "Lithium Valley", mining companies and consultancies once again spoke of optimism in the north of Minas Gerais.

In Salinas, during Lithium Business, an event focused on the lithium chain, the dominant tone was that the worst moment in the market is behind us, even though the sector rules out, for now, a return to the exceptional prices recorded at the height of the euphoria of 2022.

The reading is that the market has entered a new phase. Less explosive than that seen at the height of the global race for batteries, but more favorable than the scenario observed in 2024 and 2025, when the combination of excess supply, high inventories and a slowdown in part demand brought down prices and put projects on hold.

For companies in the sector, the current level is already enough to resume studies, unlock investments and put projects back on the table. Caution, however, remains. Lithium remains a young commodity, highly volatile and still very dependent on Chinese dynamics, both on the demand side and price formation.

"Well, pessimism has diminished," Marisa Cesar, director of Corporate Affairs and Sustainability at PLS, a mining company with lithium assets in Australia and Brazil, told CNN.

"Obviously, when the price started to rise, the first reaction was to think: will this be sustainable? Because the drop was very sudden. But we cannot forget that we are talking about a very young mineral, a new commodity that still has a lot of volatility", said Marisa.

According to data from Argus Media, a commodity pricing agency, battery-grade lithium carbonate, with a minimum purity of 99.5%, was priced at US$21.55 per kilogram on the CIF China market on July 7. Lithium concentrate, in the case of spodumene with a content between 5% and 5.5%, was at US$2,075 per ton, also on the CIF China market. The CIF China reference indicates the price of the product delivered to the Chinese market, already considering international shipping and insurance.

The values are far from the peak seen in the 2022 cycle, but they represent a relevant recovery in relation to the worst moment in the market. For mining companies, the difference is important: current prices do not recreate the euphoric environment that marked the first wave of lithium, but they help to make more competitive projects viable, especially in the mining and ore concentration stage.

Marisa states that, for the initial phase of the chain - from mineral exploration to the first processing, with the production of concentrate -, the current price can already be considered sufficient. The assessment changes, however, when the discussion moves to refining, chemical conversion and value addition in the country.

"When we talk mainly about mineral exploration and the first part of the processing, where the concentrate is reached, I can say yes", he said. "Now, when we talk about the value chain and mineral transformation, a deeper analysis is needed. The calculation does not depend solely on the value of the ore."

The speech summarizes one of the main lithium dilemmas in Brazil. The country has reserves, projects and a mineral province that has gained international visibility, especially in the Jequitinhonha Valley and in the north of Minas. But it still largely occupies the initial stage of the chain, with the production of spodumene concentrate.

The conversion into lithium carbonate or hydroxide, products used directly in the battery chain, remains concentrated in China, where there is excess installed capacity and an already consolidated industrial chain. In practice, this discourages some investors from financing refining projects outside of China, because the competition occurs against a structure that already has scale, technology, suppliers and a consumer market. Given this scenario, the sector calls for public policies that help reduce risks and create conditions for Brazil to move beyond mining, with more processing and added value in the national territory.

Price recovery
For Pedro Consoli, responsible for lithium pricing in South America at Argus Media, the recent change in prices has clear explanations, such as the reduction in available supply on the market and higher-than-expected growth in demand for stationary energy storage systems, known by the acronym BESS, for Battery Energy Storage Systems.

"In 2025, the price of lithium compounds reached a historic low. It was a very difficult time for the market, because many projects and feasibility studies had been carried out based on higher prices," said Consoli. "The price reached that level because there was a supply surplus. There was more lithium available than demand."

According to him, the movement began to change in the second half of last year, when part of the supply was withdrawn from the market in different regions of the world. At the same time, demand for stationary batteries advanced at a stronger pace than expected.

"There was an unexpected growth in stationary energy storage systems. It was something much faster than the market predicted and of a larger size too", he said.

The demand data presented by Argus Media reinforces this structural change. In 2019, electric vehicles accounted for 36.2% of global lithium demand, while stationary storage systems accounted for just 2.8%. In 2025, the share of electric vehicles reached 55.4%, while stationary storage increased to 24.5%.

This movement helps change the narrative of the sector. Over the past few years, lithium has been treated almost exclusively as an electric car commodity. Now, the expansion of batteries for power grids, renewable energy, data centers and energy security creates a second front of demand. For mining companies, this reduces part of their dependence on the automotive market and can provide more support for prices.

The recovery, however, does not eliminate volatility. Consoli states that the recent peak occurred in May and that prices have already partially retreated since then, with part of the supply returning to the market. Even so, Argus expects to maintain a level considered healthy in the coming months.

In the case of spodumene, the main product exported by hard rock miners, the current price is seen as sufficient to sustain high margins in competitive operations. According to Consoli, Brazilian spodumene miners are able to operate, at their current level, with significant margins.

"It's a price that makes new projects viable and allows old plans to be taken off the shelf and put on paper again," he said. "But, in Brazil, it's not just money. There are many factors: foreign investor confidence, licensing and the market's own volatility."

New cycle
This is one of the main precautions for the new cycle. Even with better prices, the resumption of investments depends on the return of confidence from buyers, banks and investors. Lithium remains a smaller and more volatile market than traditional commodities like iron ore and copper.

The global dispute also weighs heavily. The lithium chain is still heavily influenced by China, which concentrates a significant part of the refining and manufacturing of batteries. This means that inventory movements, industrial production, subsidies, trade policy and Chinese demand can quickly alter the market balance.

For Brazil, the scenario opens a window, but does not guarantee automatic success. The north of Minas Gerais has gained visibility in recent years as a new global lithium frontier, with projects in Salinas, Araçuaí, Itinga and other municipalities in the Jequitinhonha Valley. The region has attracted foreign companies, investors and government attention, but it still needs to prove that it can transform geological potential into consistent production, infrastructure and local development.

After the boom and bust, lithium enters a phase of greater selectivity. Projects with good geology, competitive cost, advanced licensing and access to capital tend to stand out. The rest can remain on paper, even with better prices.

The predominant assessment in Salinas is that the worst is behind us. But the sector also recognizes that the new phase will be different from the euphoria of 2022. Lithium has once again excited companies and investors, but now it needs to prove that it can sustain a more mature cycle, with less promise and more delivery.

*The reporter traveled at the invitation of PLS.

Source: CNN