Lithium prices have tripled since June 2025, sparking a recovery in share prices and mining activity. Are the good times back for the key critical mineral?
In February 2026, the benchmark price of spodumene mined in Australia broke through US$2000 a tonne, up from US$600 last June, following moves by China to curb oversupply.
Sentiment was boosted by the temporary suspension of production at China’s Jianxiawo project, which accounts for around three per cent of global supply, along with moves by Chinese regulators to end discounting by domestic electric vehicle (EV) makers.
‘Lithium prices experienced an explosive rally between mid November 2025 and February 2026, driven by a combination of aggressive supply cuts and a massive surge in demand from the energy storage sector, marking a definitive end to the “lithium winter” of 2023–24,’ says David Dickson, Managing Director of Argentina-focused lithium developer Lake Resources.
‘Analysts at Barrenjoey, Canaccord, Goldman Sachs and Benchmark Mineral Intelligence (BMI) have significantly increased their 2026–30 lithium price forecasts, driven by energy storage system demand growth and a slow supply response due to prolonged China restarts.’
Dickson says lithium demand is now expected to double between 2025 and 2030, ‘driven by the battery energy storage system (BESS) boom, and continued strong EV demand in Asia and Europe’.
While EV sales currently account for more than 70 per cent of lithium demand, analysts point to the growing demand from the energy storage sector. Battery demand from BESS increased by 51 per cent in 2025, compared with 26 per cent growth in demand from the EV sector, according to BMI, with overall lithium-ion battery demand rising by 29 per cent.
The positive sentiment was further boosted by Western Australian lithium miner PLS’s move to include a floor price of US$1000 a tonne in its February 2026 offtake agreement with China’s Canmax Technologies, one of the first such agreements by an Australian producer.
‘It’s a really significant moment for our company and the industry,’ PLS Chief Executive Dale Henderson told the Australian Financial Review (AFR).
‘It’s a strong set of terms that bodes well for our company, but it’s also a marker of confidence in the outlook for the industry. It’s all tied to market pricing, so there’s no ceiling.’
Australia’s hard-rock spodumene producers are reportedly loss-making when prices fall below US$1000 per tonne, with the notable exception of Greenbushes, the world’s largest lithium mine.
Rising prices could encourage the reopening of PLS’s mothballed Ngungaju mine, as well as Mineral Resources’ Bald Hill mine, while Arcadium Lithium, Liontown Resources and Core Lithium are also considering restarts or expansions, according to the AFR.
Australian lithium miners are also active internationally, including Venari Minerals, which is advancing a high-grade, sedimentary lithium project in Nevada amid a US focus on developing its own domestic critical mineral supply chains.
The news, however, has not been entirely positive. On 11 February, US lithium giant Albemarle announced plans to ‘idle’ its $1.5-billion Kemerton lithium hydroxide refinery in Western Australia less than four years after it opened.
The move came despite the offer of tax credits from the federal government starting in July 2027, as well as support under the Albanese Government’s Future Made in Australia policy. Lithium hydroxide prices have also rallied over the past year, rising to US$17,800 a tonne in February 2026 compared to US$8000 in July 2025.
‘Idling operations at Kemerton was a difficult decision. It follows significant actions we have taken over the past 2.5 years to reduce operating costs during an extended period of price volatility in the market,’ Albemarle Chief Executive Kent Masters said in a statement.
Beijing’s grip on the market is evidenced by the fact that 95 per cent of Australian lithium is shipped to China, with the Asian giant also controlling around 70 per cent of the world’s lithium processing capacity.
‘It can be an immense challenge for projects to compete in global supply chains that are concentrated, opaque and subject to market distortion,’ commented Australian Minister for Resources the Hon. Madeleine King.
‘Genuine diversification of global critical minerals supply chains is not just a long-term economic opportunity, but [is also] essential to strengthening global economic security.’
The Albanese government has proposed a critical minerals ‘strategic reserve’, including a guaranteed floor price for minerals such as lithium. Hopes for a broader, Western-led floor price have been encouraged by US President Donald Trump’s creation of a US$12-billion critical minerals stockpile, known as Project Vault.
Amid the price recovery, the Australian Government’s Office of the Chief Economist expects the export value of the nation’s lithium production to reach $6.8 billion in fiscal 2027, up from $6.3 billion in fiscal 2026. Production is seen reaching 553 tonnes in fiscal 2027, up from 461 tonnes in fiscal 2025, with Australia accounting for 36 per cent of global extraction in 2024, according to its December 2025 ‘Resources and Energy Quarterly’.
Cost advantage
Lithium brine producers in South America have historically had a cost advantage over their hard-rock competitors. Australia’s Lake Resources has promoted California-based Lilac Solutions’ sustainable ‘direct lithium extraction’ technology as an alternative, more environmentally friendly method of producing the key critical mineral.
Lake Resources has also been boosted by the significant improvement in US–Argentina relations under Argentine President Javier Milei. Under the US–Argentina critical minerals framework, priority mining projects in Argentina are expected to receive direct US Government support via Project Vault, with Lake Resources’ Kachi project a potential beneficiary.
‘Kachi’s design – leveraging Lilac Solutions’ Gen 5 ion-exchange technology – eliminates evaporation ponds, slashes freshwater use by over 90 per cent, and ensures zero discharge to sensitive ecosystems, aligning with Argentina’s pro-mining reforms under the RIGI regime and the anticipated US–Argentina trade framework for secure critical minerals supply chains,’ Lake Resources said in a 18 December 2025 announcement.
‘Argentina and the United States have become key critical minerals partners, and we look forward to cementing this through our Kachi project, which is poised to become one of the Lithium Triangle’s largest development projects,’ Dickson says.
