The Czech Republic is letting the train pass. The price of lithium is falling, mining may not pay off soon

For more than a decade, the Czech Republic’s hopes for filling the state coffers have been pinned on lithium. Thanks to the massive deposit at Cínovec in the Ore Mountains, the Czech Republic was to become one of the key players on the European and world market with this rare raw material necessary for the production of batteries for electronics and electric cars. However, with the advent of new technologies and the turbulent development of prices, this dream can quickly turn into disillusionment.

Plans for domestic lithium mining have been intensively discussed in the Czech Republic since around 2017, when it became a political issue. Soon after, lithium prices began to rise rapidly, fueled by growing demand for lithium-ion batteries. As mentioned by the Technet server, the Czech authorities saw in the mining of lithium in Cínovec an opportunity to reduce dependence on the import of this strategic raw material and to secure jobs in related industries. According to estimates, 1.5% of the world’s lithium reserves can be found in Cínovec.

Since then, however, plans to start mining have moved forward only slowly. Virtually the only progress has been sampling, while actual mining has not started and will not happen until at least the end of 2026. And meanwhile, the situation on the global lithium market has changed significantly.

Around 2022, lithium prices reached record highs of over $70,000 per ton (see price trend chart). But immediately followed their steep fall. Increasing mining capacity around the world and the opening of new projects in Argentina, Brazil and Africa were to blame. Currently, lithium prices have returned to 2018 levels, around $14,000 per tonne. According to analysts from Benchmark Mineral Intelligence, the global lithium market will reach a state of insufficient supply before 2028. However, other scenarios are possible until then, led by the arrival of new battery technologies.

Technological progress will not wait for us

Of course, this volatility and the uncertain outlook for the future also undermine the economic advantage of mining in the Ore Mountains. Especially with the advent of new, competitive sodium-based battery technologies, which although achieve a lower energy density, but excel in fast charging, long life and use abundant materials, it can easily happen that the Czech Republic will lose its unique chance to replenish the state coffers. Mining may not pay off at all.

Don’t miss: The Czech Republic’s dream of fabulous wealth is fading away: A gigantic lithium deposit in the USA will put the Czech Cínovec in its pocket.

There is a real risk that investments in lithium mining in the Czech Republic will not be as profitable as originally anticipated in the medium term. Lithium may become a much less desirable commodity in a few years. The Czech authorities should therefore very carefully reconsider their ambitious plans to mine the entire deposit at Cínovec and build a downstream industry around this technology. Hoping that the Czech dream of lithium will one day come true may soon be more of a pipe dream.

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