Demand for lithium chemicals and spodumene concentrate continued to be strong during the quarter with published lithium prices rallying to new record highs.

Electric Vehicle ("EV") sales for the September 2022 quarter experienced robust demand growth across all major regions despite supply chain disruptions, natural disasters and COVID-19 lockdowns. EV sales in China alone were estimated at ~1.9 million units during the quarter, representing a ~107% increase from the PCP. In the eight major markets of Europe, EV sales remained resilient despite rising energy costs and recorded 0.45 million units, 3% up from the PCP. US EV sales for the quarter also grew ~44% year on year ("YoY") at 0.25 million units.

Chinese lithium chemical demand remained robust despite isolated COVID-19 lockdowns and natural disasters. EV battery installation volumes were estimated at ~74 GWh during the quarter compared to ~37 GWh PCP, up 102% YoY.

The US government passed the Inflation Reduction Act ("IRA") during the quarter, providing significant tax incentives in order to stimulate the development of a domestic EV and battery raw materials supply chain. Several large investments have been announced since the bill was passed.

Spot prices for lithium carbonate and hydroxide in China rose 9% and 7% QoQ respectively with both products setting record prices as demand continues to outpace supply. Outside China, spot prices for lithium chemicals also rallied in line with Chinese prices. Spodumene concentrate spot prices once again registered new record highs, posting QoQ gains of 10%, highlighting the continued tightness in the supply chain for upstream lithium units.

Estimated lithium chemical production in China was up by ~ 6% QoQ due to lower than expected production in August 2022 as a result of power rationing in China's Sichuan province.

Combined spodumene concentrate volumes shipped to China from Australia for July and August 2022 were 89% higher compared to the PCP with ramp up of brownfield expansions and the restart of idled capacity continuing. Despite this increase, a significant shortage in spodumene concentrate remains highlighted by record high prices and increase in demand for lower grade lithium products.

Significant investment, funding and offtake agreements from the EV downstream supply chain were announced during the quarter as companies sought to secure long-term lithium supply.

The race to source supply of critical materials such as lithium from USA/FTA partner countries is expected to intensify as auto and battery manufacturers seek to leverage the significant incentives on offer as part of the IRA.