Lithium Prices to Bottom Out in 2025 as Supply Growth Slows

Lithium

Lithium Prices Decline Sharply from 2022 Highs

The global lithium market is set for a critical shift in 2025 as price declines trigger supply reductions and stronger demand emerges. Market analysts predict that lithium prices will bottom out in 2025, driven by slower supply growth and recovering downstream sectors.

As of January 20, 2024, Chinese domestic prices for 99.5% grade lithium carbonate—a key raw material for electric vehicle (EV) batteries—were assessed at ¥77,500–78,500 per ton ($10,594–10,731 per ton) ex-works. This represents an 86% drop from the all-time high of ¥561,000–576,000 per ton in November 2022. The sustained price downturn has already forced some lithium producers to cut or halt production. Analysts forecast that Chinese lithium carbonate prices will stabilize between ¥70,000–100,000 per ton by the end of 2025 if supply constraints persist.

Strengthening Demand to Support Lithium Prices

Despite the recent price slump, global lithium demand is expected to grow significantly across multiple industries in 2024 and beyond. China, the world’s largest battery producer, reported a 42% increase in newly installed power battery volumes, reaching 548.4 GWh in 2024. Notably, lithium iron phosphate (LFP) batteries dominated the sector, accounting for 74.6% of total production.

China's LFP battery material production also surged, reaching 2.3 million tons in 2024, marking a 53% year-on-year increase. Industry participants expect output to expand further to 3–3.5 million tons in 2025, reinforcing China’s dominant role in the global lithium-ion battery supply chain.

EV and AI Growth to Drive Lithium Consumption

The electric vehicle (EV) market remains a key catalyst for lithium demand. China’s new energy vehicle (NEV) sales are projected to exceed 16 million units by 2025, fueled by continued government incentives and policy support.

Beyond EVs, the consumer electronics sector is also contributing to rising lithium demand. Global smartphone shipments increased by 6.4% to 1.24 billion units in 2024, according to market research firm International Data Corporation (IDC). IDC forecasts that smartphone sales will maintain an upward trajectory in 2025, particularly as artificial intelligence (AI) smartphone shipments surged to 170 million units in 2024, more than double the previous year’s total.

Outlook: Market Balancing Expected in 2025

While lithium prices have declined significantly since late 2022, supply-side contractions and robust demand growth across EVs, battery storage, and AI-driven devices will likely stabilize the market. Analysts anticipate a price floor in 2025, marking a potential recovery phase for lithium producers and investors.

Frontier Rare Earths Secures Funding and Offtake Support for Zandkopsdrift

Frontier Rare Earths

Frontier Rare Earths Zandkopsdrift project has moved into a more serious development phase. The company secured a $20mn investment from South Africa’s Industrial Development Corporation. It also signed a strategic technology and offtake agreement with Carester. As a result, Frontier Rare Earths Zandkopsdrift project now has stronger financial and commercial backing.

This matters because the project targets high-value magnet rare earths that remain strategically important for global supply chains. Zandkopsdrift is expected to produce NdPr oxide, dysprosium oxide, and terbium oxide over its first 25 years. These materials are critical for permanent magnets and advanced industrial applications. Therefore, Frontier Rare Earths Zandkopsdrift project is gaining relevance beyond South Africa alone.

The project also stands out because it includes battery-grade manganese as a by-product. Frontier said manganese revenues could cover as much as 90pc of rare earth production costs. That gives the project a potentially stronger cost structure than many stand-alone rare earth developments. Consequently, battery-grade manganese could become a major economic advantage.

Funding and Offtake Agreements Strengthen Project Credibility

The new funding package gives Frontier more room to advance the project with greater confidence. The IDC investment will support the definitive feasibility study and corporate development work. That means the company can now move forward with a more credible development path. As a result, financing risk has become easier to manage in the near term.

The offtake structure also adds strategic depth. Carester signed a seven-year agreement for mixed heavy rare earth carbonate from the project. Frontier will also use Carester’s solvent extraction technology to produce high-purity NdPr oxide and mixed heavy rare earth carbonate. Therefore, the project is gaining both technical support and a downstream commercial route.

The IDC’s involvement adds another layer of policy relevance. The agency also holds an option for offtake of up to 10pc of production for downstream processing in South Africa. That aligns the project with national industrialisation goals. Meanwhile, it strengthens the domestic policy case for project support.

South Africa Rare Earth Project Gains International Strategic Weight

This South Africa rare earth project is now attracting international strategic recognition. The European Union has designated Zandkopsdrift as a Strategic Project under its Critical Raw Materials Act. That status increases the project’s visibility in western supply diversification efforts. As a result, Frontier Rare Earths Zandkopsdrift project now sits within a broader geopolitical materials story.

The production timeline also gives the market a clear target. Frontier aims to begin production in 2030. The company said the project is fully permitted and that infrastructure planning is complete. Therefore, the focus now shifts from concept validation toward execution and financing progress.

The combination of magnet rare earths and battery-grade manganese gives the project a differentiated profile. Many rare earth projects struggle with cost intensity and processing complexity. However, Zandkopsdrift may benefit from a more balanced revenue model. Consequently, this South Africa rare earth project could become more competitive than many junior peers.

The Metalnomist Commentary

This announcement matters because it combines funding, technology, and offtake in one step. That is exactly what many rare earth projects fail to secure early enough. If Frontier executes well, Zandkopsdrift could become one of the more credible new non-Chinese magnet rare earth projects in the next supply cycle.

Taiwan’s TSMC Reports Robust Q3 Revenue Growth Driven by AI and Smartphone Demand

TSMC

Taiwan Semiconductor Manufacturing Company (TSMC) reported a stellar third-quarter performance for 2024, as surging demand for artificial intelligence (AI) chips and smartphones propelled its revenue to $23.5 billion. This represents a 13% quarter-on-quarter growth from $20.8 billion and an impressive 36% increase year-on-year from $17.3 billion. The company's results exceeded its prior guidance of $22.4-$23.2 billion, solidifying its position as a key player in the semiconductor industry.

Advanced Technologies Drive Growth

Demand for TSMC’s cutting-edge technologies underpinned this growth. The company's 3-nanometer (3nm) process technology contributed 20% of Q3 revenues, up from 15% in Q2. Although the contribution from the 5nm process fell slightly to 32% from 35%, the steady performance of 7nm wafers, which accounted for 17% of revenues, indicates consistent demand for mature nodes.

High-performance computing (HPC) remained the largest revenue driver, comprising 51% of total revenue, while smartphones accounted for 34%. The Internet of Things (IoT) contributed 7%, and the automotive sector added 5%.

AI and Smartphones Lead Market Momentum

The rollout of AI applications and the launch of new flagship smartphones, including Apple's iPhone 16, were significant catalysts. According to data from the International Data Corporation (IDC), global mobile phone shipments rose 4% year-on-year in Q3, reaching 316 million units. Growth in Chinese smartphone brands, such as Huawei and Xiaomi, further bolstered this trend.

Future Outlook and Materials Innovation

TSMC projects its Q4 revenue to climb to $26.1-$26.9 billion, driven by sustained demand for AI and smartphones. AI advancements are expected to spur the adoption of compound semiconductors like gallium nitride (GaN) and gallium arsenide (GaAs), materials that are more energy-efficient than traditional silicon. These innovations could redefine energy efficiency standards in semiconductor manufacturing.

TSMC's strong third-quarter performance highlights its dominance in the global semiconductor market and its ability to meet evolving technological demands, reinforcing its role as a critical supplier for the AI and mobile computing revolutions.