A major lithium deposit that rises to the level of the world's second-largest has been found in Iran, the country's Ministry of Industry, Mines, and Trade said on Iranian state television on Saturday.
"For the first time in Iran, a lithium reserve has been discovered in Hamedan," the Ministry said, adding that it believes the deposit holds 8.5 million tons of lithium.
Only Chile holds more lithium, with 9.2 million metric tons, according to the U.S. Geological Survey.
Lithium is a critical part of electric vehicle batteries. Lithium carbonate prices soared last year to all-time highs of $86,170 per tonne, but that huge rally seems to be behind us, with prices sinking this month to $52,500 per tonne.
Behind the recent price slump is-to some degree--a slowdown in China's EV demand, in part due to the country putting an end to its EV subsidies. But the larger price pressure comes from an increase in lithium supplies from China, Australia, and Chile-and now, Iran.
"Supply is coming on stream faster than you can say 'boo'.Demand remains strong but prices have been unsustainable for some time now," analyst Dylan Kelly of Ord Minnett told Mining.com. Rystad had previously warned that the global market deficit of lithium would shrink from 76,000 tonnes LCE last year, to somewhere between 20,000 and 30,000 tonnes LCE this year-and that was before Iran's most recent discovery.
Goldman Sachs concurred, forecasting that supply would grow at a faster clip than demand, depressing market prices.
While the analysts seem to agree that the lithium carbonate market is set for continued correction this year, Rystad energy sees the price correction as temporary, with demand still healthy.
The question now is how big of an impact Western sanctions will have on Iran's ability to sell whatever lithium it uncovers.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More