Determining the Price of Minerals

The document outlines a framework for pricing lithium based on OECD transfer pricing principles, detailing the physical characteristics of brine and mineral deposits, production processes, and the role of price-reporting agencies in establishing market benchmarks for battery-grade and technical-grade lithium.

• Lithium is primarily extracted from two commercial sources: brines and minerals (hard rocks). Brine deposits are most prevalent in Bolivia, Argentina, Chile, and the United States, while mineral deposits are dominant in Australia, China, and the Democratic Republic of the Congo.
• The global demand for lithium is heavily driven by the electric vehicle (EV) market, with EV sales reaching 13.7 million in 2023. Lithium represents between 75% and 85% of cathode raw material costs and is essential for all cathode chemistries.
• Lithium chemicals are categorized by grade, with battery-grade lithium requiring higher purity (99.5%) and lower impurity levels than technical-grade lithium (99%). Refining technical grade to battery grade typically costs between USD 1.5 and 2.5 per kg, with a yield loss of 3% to 5%.
• The production of lithium from minerals involves a two-stage process: mining and processing into concentrates (primarily spodumene), followed by refining into chemicals. In contrast, brine production involves evaporation and carbonization to produce lithium carbonate, which can then be converted to lithium hydroxide via the liming route.
• Price discovery for lithium relies on price-reporting agencies (PRAs) such as Argus Media, Asian Metals, Benchmark Mineral Intelligence, Fastmarkets, S&P Global Commodity Insights, and Shanghai Metal Market. These agencies provide spot and contract price assessments, primarily focused on the liquid markets of China, Japan, and Korea.
• For lithium mineral concentrates, the primary price determinant is the lithium oxide (Li2O) content. Prices are typically based on a standard 6% Li2O product and adjusted linearly for actual content, provided it meets a minimum threshold (e.g., 5%).
• Long-term lithium chemical contracts (typically 3 to 7 years) have shifted from fixed pricing to variable pricing linked to indices, often incorporating caps and floors to manage high market volatility.
• The lithium market is characterized by a high level of concentration, with a few dominant producers like Albemarle and Sociedad Quimica y Minera de Chile. This oligopolistic structure, combined with government interventions to secure battery supply chains, may influence future market prices.

APA

Taquiri, J., Lassourd, T., & Viola, A. (2024). Determining the Price of Minerals. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-08/determining-the-price-of-minerals-framework-lithium.pdf

Chicago

Taquiri, Jaqueline, Thomas Lassourd, and Andrew Viola. Determining the Price of Minerals. International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-08/determining-the-price-of-minerals-framework-lithium.pdf.

Wikipedia

{{cite report |last1=Taquiri |first1=Jaqueline |last2=Lassourd |first2=Thomas |last3=Viola |first3=Andrew |title=Determining the Price of Minerals |publisher=International Institute for Sustainable Development |date=2024 |url=https://www.iisd.org/system/files/2024-08/determining-the-price-of-minerals-framework-lithium.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{taquiri2024determining, author = {Taquiri, Jaqueline and Lassourd, Thomas and Viola, Andrew}, title = {{Determining the Price of Minerals}}, institution = {International Institute for Sustainable Development}, year = {2024}, url = {https://www.iisd.org/system/files/2024-08/determining-the-price-of-minerals-framework-lithium.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }