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Thailand faces opportunities and challenges in the lithium industry
Thailand faces opportunities and challenges in the lithium industry, with the discovery of significant reserves but also concerns about the financial viability of mining and processing, environmental impact, and competition in the APAC market.
Thailand has discovered lithium resources but faces challenges such as low financial returns, environmental concerns, and competition in the APAC market. Government support and financial incentives may make lithium mining in Thailand more attractive.
Key Takeaways
- The demand for lithium is rapidly increasing due to the growth of the global electric vehicle and clean energy storage markets, with an estimated requirement of 3.5 million tons by 2030.
- Despite the high demand, an excess supply of lithium has led to a significant drop in prices, reaching as low as $13,000 per ton by the end of 2023, and is expected to remain at low levels through 2026.
- Thailand faces opportunities and challenges in the lithium industry, with the discovery of significant reserves but also concerns about the financial viability of mining and processing, environmental impact, and competition in the APAC market.
Australia is the top producer of lithium mines in the Asia-Pacific market and is making advancements in the processing industry. Meanwhile, Indonesia is aiming to become a hub for electric vehicle production by leading in lithium processing and partnering with companies in lithium resources, battery, and car manufacturing. Indonesia also highlights its nickel and cobalt mineral resources, which are important for battery production alongside lithium.
The importance of lithium has grown due to the increasing demand in the global market, particularly for electric vehicle batteries and clean energy storage systems. However, the excess supply has caused the price of lithium to decrease, presenting both opportunities and challenges for the industry.
Thailand discovered 14.8 million tons of mineral resources earlier this year, including 66,000 tonnes of lithium oxide, which can produce around 164,000 tonnes of lithium carbonate. This discovery presents an opportunity for Thailand’s battery industry, but there are challenges to consider.
In the Asia-Pacific region, key players include Australia, with leading lithium mining, China, focusing on battery production, and Indonesia, aiming to become a hub for electric vehicle manufacturing.
These include the cost-effectiveness of lithium mining and carbonate processing, which currently has low returns. The expected IRR is around 7%, lower than the financing cost of around 8%. Additionally, the low price of lithium carbonate at around USD 13,000 per tonne and ESG issues related to the impact on surrounding communities and the environment need to be studied before making an investment decision. Thailand also faces competition with major competitors in the APAC market.
Investing in lithium mining projects in Thailand may become more attractive due to financial cost-effectiveness, environmental costs, and competition in the international lithium market. Government support measures such as tax and financial support may be necessary if the government aims to create an ecosystem for battery production, if battery manufacturers in Thailand want to strengthen their supply chains, or if rare earths and other precious minerals have been discovered in lithium deposits.
Source (th) : In focus / แหล่งลิเทียมไทย หนึ่งโอกาสกับหลากหลายความท้าทายที่ต้องทบทวน | SCBEIC
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