The HC Commodities Podcast

Episode: Lithium’s Hard Year with Caspar Rawles

Host: Paul Chapman | Guest: Caspar Rawles, Benchmark Minerals

Date: July 8, 2025

Episode Overview

This episode explores the tumultuous state of the lithium market in 2024 and 2025. Host Paul Chapman and guest Caspar Rawles (Chief Operating Officer at Benchmark, a leading critical minerals price agency) unpack the dramatic price declines, supply-demand imbalances, and geopolitics now shaping the lithium industry. They discuss the resurgence of different battery chemistries, investments amid low prices, and the launch of new futures contracts intended to help manage risk in this increasingly essential market for electrification and the energy transition.

Key Discussion Points & Insights

1. Lithium’s Challenging Year: Market Backdrop

• 2024 Price Declines: Lithium prices halved, dropping from the “high to mid teens” (over $15,000/ton) at the start of 2024 to current levels of $8,000–$8,500/ton for both lithium carbonate and hydroxide (04:45).
• Oversupply & Moderating Demand: The price crash was driven by overcapacity following years of sky-high prices, leading to accelerated new supply even as EV demand grew only 30% (less than industry expectations) (06:00).
• Macroeconomic Headwinds: Broader issues such as economic slowdowns in China, trade tensions, the war in Ukraine, and waning consumer appetite for large purchases like EVs exacerbated market softness (06:00–08:31).

2. Lithium Carbonate vs. Hydroxide: Chemistry, Pricing, and Market Shifts

• Applications & Chemistry:
  • Carbonate is used in LFP (lithium iron phosphate) batteries—lower energy density, but growing rapidly, especially in China (02:30).
  • Hydroxide is key for higher energy density nickel-based chemistries, popular in Western markets. Hydroxide also has a shelf-life limitation affecting its supply chain flexibility (02:30–04:01).
• Processing Advances: Technological progress (direct conversion from spodumene to hydroxide) flipped the price premium—carbonates often commanded a premium recently, reversing historic norms (04:45).
• Current Price Convergence: The price difference between carbonate and hydroxide has largely evaporated amid tough conditions (04:45).

Quote:
"For, I'd say, the majority of the last 12 to 18 months, most of the time carbonate was at a premium to hydroxide. So, you know, reverse to historic norms. Right now, there's really not a huge amount of difference between the two."
— Caspar Rawles (04:45)

3. Drivers of Oversupply: Where Did the Extra Lithium Come From?

• High Prices Fuel Supply Surge: The $82,000/ton highs (2022–2023) incentivized previously uneconomic resources and new regions (Brazil, Zimbabwe, Namibia, domestic low-grade Chinese resources) to ramp up (08:31).
• Security vs. Economics: Geopolitical risk prompted “friend-shoring”—developing supply from more countries for national security, at the expense of pure market logic. This diversifies, but complicates and often lowers profitability (10:41–12:16).

Quote:
"You have supply coming from different areas and perhaps, you know, in a...perfect world where everyone was a happy trading partner, maybe that supply wouldn't have come online. But it also brings about other challenges..."
— Caspar Rawles (12:16)

4. Technology: Direct Lithium Extraction (DLE) and Its Limits

• DLE’s Slow Progress: Still not commercialized at scale. DLE offers the promise of more efficient extraction from brines, but each brine source is unique, requiring tailored solutions (13:54–14:59).

Quote:
"Still, the challenge with DLE is that it's not a technology you just crack and it works everywhere..."
— Caspar Rawles (13:54)

• No Silver Bullet, But Necessary: DLE is needed for future demand, but can't solve the supply problem alone (15:05).

5. Investment and M&A Activity Amid Price Collapse

• M&A Activity Remains: The downturn is seen as a buying opportunity. Notable deals include Rio Tinto’s purchase of Arcadium and Equinor’s investment in Standard Lithium. New entrants (like Exxon) signal broad, long-term confidence despite near-term “unappealing” pricing (16:07).

Quote:
"This is one of the few markets where you kind of have certainty that demand is going to grow in a very significant way..."
— Caspar Rawles (16:07)

• Production Cuts and Delayed Expansions: As with other commodities, low prices self-correct through new project delays and cancellations (19:36).

6. Demand Side: Slower but Strong Growth, Policy Uncertainty

• Growth Rates Still Robust: 30–35% year-over-year EV demand growth would be “very good” for most commodities, but lower than post-pandemic hype had predicted (17:56).
• Policy Uncertainty Hampers Investment: Shifts in US incentives (e.g., new surcharges, fewer credits), plus economic headwinds, have made automaker planning difficult (19:21).
• ESS Growth: Energy storage is a rapidly growing slice of lithium demand (about 25% of EV market volume), especially as the grid integrates renewables and powers data centers (21:10).

7. Long-Term Outlook: Electrification, Technology, and Geography

• The “When, Not If” Story: Both host and guest agree that electrification is inevitable. The precise timeline is the main uncertainty (22:00).
• Technology: Solid State and Lithium’s Role: Even with shifts to solid-state or next-gen battery chemistries, lithium remains core due to entrenched supply chains and cost advantages (23:12).
• European Battery Setbacks: Northvolt, Britishvolt, and other European battery startups struggle under cost/tech pressures and stiff competition from Chinese and Korean giants, impacting domestic aspirations (24:31–25:10).

Quote:
"Manufacturing these cells is extremely challenging...you have very high volume manufacturing with very low tolerance for imperfections, and very costly imperfections if they happen..."
— Caspar Rawles (25:10)

Futures & Risk Management: Benchmark’s Partnership with ICE

8. Need for Hedging in Lithium Markets

• Automakers Carry the Risk: In today's market, carmakers bear liability for raw material price swings—if lithium spikes, their margins get hit (28:33).
• New Futures Contracts:
  • Benchmark and ICE launch 4 contracts (lithium carbonate, lithium hydroxide, spodumene, and cobalt hydroxide), all cash-settled using Benchmark index prices (29:49).
  • Designed for secure, transparent hedging, especially for Western supply chains.
  • Expectation: By the mid-2030s, 6–7 million tons of lithium could be hedged via these contracts (31:06).

Quote:
"By the mid-2030s, you could see kind of around 6 to 7 million tons of lithium being hedged through these contracts."
— Caspar Rawles (31:06)

9. How Benchmark’s Contracts Differ

• Benchmark methodologies are transaction-based, reflecting actual market prices more closely than legacy indexes. Expected to draw broader adoption, especially from Western companies wary of using Chinese exchanges (31:06).

Additional Topics

10. Lithium Recycling and the Black Mass Market

• Black Mass: Recovered battery scrap is valuable but faces legal (waste labeling) and profitability challenges in a depressed market. Nonetheless, interest is surging, especially in Europe, where self-sufficiency in battery materials is unlikely (33:24).

11. Future Conversations

• Rare earths and additional critical materials are upcoming podcast topics (34:47).

Notable Quotes & Memorable Moments

• On supply and geopolitics:
  “A market that's already opaque is getting perhaps more opaque.” (Caspar Rawles, 12:16)

• On long-term battery industry trajectory:
  “Any kind of reasonable investment horizon, you can be fairly sure lithium will be there." (Caspar Rawles, 24:31)

• On investment timing:
  "People are making some quite shrewd investments at this time to really capitalize when the market tightness does come back. And it will come back and we see higher pricing.” (Caspar Rawles, 16:07)

Timestamps for Key Segments

• Market context and price declines: [02:30–04:45], [06:00–08:31]
• Supply surge and geopolitical dynamics: [08:31–12:16]
• DLE technology discussion: [13:54–14:59]
• M&A and investment during downturn: [16:07]
• Demand growth and policy environment: [17:56–21:10]
• Long-term outlook for lithium and battery technology: [22:00–25:10]
• Benchmark & ICE futures contracts – rationale and details: [28:33–31:06]
• Recycling/black mass market: [33:24]

Tone & Style

• Technical, analytic, and pragmatic, yet approachable; views are nuanced (neither blindly bullish nor bearish) and acknowledge complexity, especially regarding risk management, shifting policies, and the role of sub-markets.
• Candid, with an insider’s perspective on both market optimism and realities.

Conclusion

Despite its “hard year,” the lithium market remains fundamental to the global energy transition. The sector is wrestling with overcapacity after years of boom, policy and technology uncertainty, and growing geopolitical divides. However, investments continue, energy storage is roaring ahead, and new mechanisms for risk management should help stabilize the market for all players. Long-term, lithium’s centrality looks secure—its volatility only a reflection of how important (and competitive) the critical minerals space has now become.

Guest: Caspar Rawles (COO, Benchmark)
Host: Paul Chapman (HC Group)
Podcast: The HC Commodities Podcast
Date: July 8, 2025