Determining the Price of Minerals

This report provides a technical transfer pricing framework for lithium, designed to help developing countries accurately tax lithium exports. It details the differences between brine and mineral extraction, analyzes the global supply chain dominated by a few key producers and the Chinese refining market, and explains how to use price-reporting agency indices to determine fair market value based on product grade and specifications.

• Lithium is primarily used for the production of lithium-ion batteries, which power electric and hybrid vehicles, portable electronics, and renewable energy grid storage. In electric vehicles, lithium is a component of all cathode chemistries and has historically represented between 75% and 85% of the cathode raw material cost.
• Commercial lithium extraction occurs from two main deposit types: brines and minerals (hard rocks). Brine deposits are most prevalent in Bolivia, Argentina, the United States, and Chile, while mineral deposits are most common in Australia, China, and the Democratic Republic of the Congo.
• The production process for lithium differs by source: brines are processed into lithium chloride and then lithium carbonate, which can be further converted to lithium hydroxide. Mineral extraction involves mining and processing into concentrates (primarily spodumene), which are then refined into either lithium carbonate or lithium hydroxide.
• Global lithium production is highly concentrated. In 2023, six producers accounted for two-thirds of the global lithium carbonate equivalent (LCE) supply. Major producers include Sociedad Quimica y Minera de Chile, Albemarle, and Tianqi.
• The price of lithium chemicals (carbonate and hydroxide) is primarily determined by their specifications and grade (battery vs. technical/industrial). For these chemicals, pricing is binary: if a product meets the contract specifications, the exact purity percentage above the minimum does not result in a price premium.
• For lithium mineral concentrates, the price is primarily driven by the lithium oxide (Li2O) content. The industry standard is a 6% Li2O product; prices for shipments with different concentrations are typically adjusted proportionally in a linear manner, provided they remain above a minimum threshold (e.g., 5%).
• Several price-reporting agencies (PRAs) provide the benchmarks used for lithium pricing, including Argus Media, Asian Metals, Benchmark Mineral Intelligence (BMI), Fastmarkets, S&P Global Commodity Insights (Platts), and Shanghai Metals Market (SMM). These agencies use various methodologies based on market transactions, bids, and offers.
• Market structure and government intervention can influence lithium prices. The industry has been characterized by an oligopoly of producers, and the strategic nature of the battery supply chain, combined with government efforts to secure supplies, may impact future pricing.
• When using price assessments for tax purposes, administrations must account for transportation costs. Because the most reliable market assessments are based in East Asia (China, Japan, and Korea) using CIF or EXW terms, adjustments are needed to reflect the cost of transport from the exporting country's border (FOB) to the delivery point.

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} }