Lithium outlook: low prices, solid fundamentals
Unlike metals such as copper, which humanity has used since the Metal Ages over 7,000 BCE, lithium is a much more recent material. Its industrial use began in the 19th century CE and remained for a long time limited to very specific applications, such as pharmaceuticals or aerospace.
It was only in recent decades, and especially in recent years, that lithium gained global strategic importance. The advent of the energy transition – with electromobility as its flagship – has structurally transformed the market. Reflecting this shift, the price of lithium, historically close to US$ 10,000/t of Lithium Carbonate Equivalent (LCE), soared to over $ 70,000 a ton in 2022.
This boom, driven by a sudden and sustained surge in demand, attracted numerous new suppliers to the market. Traditional mining companies, emerging firms and even oil companies such as Exxon began exploring entry into the lithium supply chain, looking to tap unconventional resources like lithium contained in petroleum brines.
The expectation of extraordinary returns triggered a rush to explore and develop projects, especially in Africa and Australia, where many hard-rock lithium deposits were discovered and advanced. (The most notable case is Manono in the Democratic Republic of Congo, with reserves equivalent to a third of those in the Salar de Atacama.)
This boom led Australia to overtake Chile as the world's largest producer, while installed capacity expanded aggressively worldwide. This phenomenon of overinvestment – extensively documented by agencies such as Cochilco – largely explains the abrupt increase in supply and the subsequent price collapse we see today.
Today, lithium is trading at around US$ 8,700/t LCE. However, as Cochilco notes, this scenario is not sustainable because the industry does not generate profits at these prices. In the short term, it is expected that a significant number of marginal suppliers – those who entered the market when the expected price far exceeded any incentive price—will exit the market. This natural adjustment should help ease the current oversupply and allow for a gradual price recovery.
We estimate that the long-term price of lithium should settle in the range of US$ 12,000 to US$ 16,000/t, which ensures attractive minimum profitability for the industry. This outlook is based on the fact that lithium's structural fundamentals remain strong. The energy transition, especially the growth of electromobility and renewable energy storage, continues to be a robust driver, despite temporary disruptions like trade disputes between major powers.
While we are unlikely to see again the extraordinary prices that exceeded US$ 70,000/t in 2022, the lithium market has room to stabilize at sustainable and profitable levels. A projected range between US$ 12,000 and US$ 16,000/t offers sufficient conditions to enable investment, sustain supply growth and provide long-term certainty for an industry that is strategic to the energy transition.
Patricio Faúndez is country manager for GEM Mining Consulting in Singapore.
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Black notes that a 10-second laser shot may cost only $13, massively undercutting missile interceptor prices. He adds that lasers reduce logistical strain, can quickly retarget and offer deep magazines, but suffer from weather limits, require stable platforms and strain power systems. Although the GAO notes that IPS technology is still in development, nuclear propulsion for cruisers and destroyers could be feasible, as the US Navy previously operated such ships during the Cold War. However, renewed great power competition with China and Russia might prompt the US to revisit that idea. Jordan Spector argues in a July 2025 Proceedings article that reviving nuclear propulsion for cruisers and destroyers offers clear advantages in power and endurance. He states that Generation IV reactors are more economical, require less maintenance and eliminate midlife refueling, supporting high-energy weapons like railguns and lasers for sustained combat operations without losing mobility. Spector notes that nuclear vessels are less vulnerable to logistics interdiction, especially as China's capacity to disrupt fuel supply chains grows. However, he highlights challenges such as port access restrictions, limited nuclear-certified shipyards, significant infrastructure costs and historical expense concerns. The operational need for a large surface combatant such as the DDG(X) may be driven in part by the massive growth of China's People's Liberation Army Navy (PLAN), especially in large surface combatants such as the Type 055 cruiser. According to the US Department of Defense's (DoD) 2024 China Military Power Report (CMPR), the PLAN has significantly expanded its fleet of large surface combatants, reflecting a strategic emphasis on blue-water capability. As of 2023, the report states China fielded over 370 ships, including at least eight Renhai-class (Type 055) cruisers, each displacing approximately 13,000 tons and equipped with 112 VLS cells. The report notes this underscores China's push to project power through a technologically sophisticated fleet. Eric Wertheim, writing in March 2023 for Proceedings, says the Type 055 embodies China's ambition to field high-end blue-water combatants with extensive multi-domain capabilities. The writer notes China's Type 055 displaces up to 13,000 tons and is armed with 112 universal VLS cells capable of deploying HHQ-9B long-range surface-to-air missiles, YJ-18 antiship cruise missiles, YJ-21 hypersonic missiles and potentially antisubmarine or land-attack weapons. He adds that the class integrates the Type 346B AESA radar, towed and hull-mounted sonar suites and variable-depth sonar for layered detection, with shipboard sensors enclosed in a stealth-enhancing integrated mast. Additionally, Wertheim states that the Type 055's other armaments include a 130-millimeter main gun, HHQ-10 point-defense launcher, close-in weapons systems (CIWS) and dual maritime helicopters, giving the platform comprehensive strike, defense and intelligence, surveillance, and reconnaissance (ISR) reach. Given such developments, Brent Sadler mentions in an April 2023 article for The Heritage Foundation that as tensions with China intensify, the DDG(X) program stands as a strategic imperative for maintaining US naval dominance. Sadler underscores that China's shipbuilding surge, coupled with the US's aging fleet, risks capability gaps without timely DDG(X) deployment. He points out that with only two US shipyards producing large surface combatants, early and predictable investment is crucial. He notes that a funded signal today enables Huntington Ingalls and Bath Iron Works to commit to facility upgrades and workforce expansion, mitigating production delays. He adds that integrating a proven acquisition model like the Virginia-class Integrated Product Team (IPT) ensures yard constraints are addressed during design, improving fabrication efficiency. Sadler warns that delayed action risks ceding US naval initiative in a high-stakes theater such as the Pacific. Whether DDG(X) becomes the US Navy's trump card or a billion-dollar trap will hinge on decisions made before the first keel is even laid.
