The US slowed its imports of key battery materials, refined lithium and critical minerals by double-digit percentages in the third quarter compared to a year earlier, while imports of processed lithium rose, according to S&P Global Market Intelligence data.

Raw lithium is first processed and then refined into chemicals that can be used as cathode material and electrolyte solution for batteries. Imports of refined lithium compounds reached 13,421 metric tons in the third quarter, dropping 36.8% year over year. Free trade agreement (FTA) partner Canada provided 64.5% of US imports of refined lithium in the third quarter, followed by China with 17.9%. Quarterly, refined lithium imports increased by 16.9%.

Demand from the electric vehicle sector, a key consumer of lithium, is set for another record year in top markets though expected to be below forecasts, Alice Yu, a senior metals analyst at S&P Global Commodity Insights, wrote in an Oct. 16 presentation covering the September quarter. The US market is expected to be constrained due to prolonged interest rate hikes, while several major automakers have scaled back production plans due in part to affordability concerns among consumers.

"It's more about the economic headwinds than it is about consumer behavior around electric vehicles," Ben Steinberg, executive vice president of the Battery Materials and Technology Coalition trade group, told Commodity Insights. "We have all these announcements about gigafactories in the country, but if you don't have that intermediate processing of lithium, nickel or cobalt, that material is isolated from its next move."

"It's absolutely critical that we build resilient and secure supply chains," Steinberg added.

Critical minerals, which include rare earths, manganese and cobalt, showed the largest year-over-year decline in imports during the third quarter. Imports plummeted by more than a half, or 53.6%, to 162,000 metric tons year over year.

Gabon, the world's third-largest producer of manganese, provided 44% of the US' third-quarter critical mineral imports, followed by China with 10%. The ramp-up of the energy transition has boosted the consumption of manganese and graphite by the EV sector, in addition to rare earths for both EVs and wind turbines. A majority of these critical minerals are also still used for iron- and steelmaking processes.

US imports of processed lithium increased year over year, the only material included in the analysis to do so. Imports increased by 198 metric tons, or 5.6%, year over year to 3,737 metric tons. Processed lithium includes lithium carbonate and lithium hydroxide.

South American allies Chile and Argentina provided the bulk of the US' processed lithium imports. Chile, the world's second-largest lithium producer in 2022 behind Australia, exported 2,557 metric tons to the US, while Argentina, the world's fourth-largest lithium producer, exported 1,140 metric tons to the country.

– Read S&P Global Commodity Insights' last lithium imports report. – Read more on metal sourcing requirements for the US' Inflation Reduction Act.

"Especially for lithium, I'm very bullish that we can meet the needs of US consumers. What we want to limit is exporting the material to China for further processing or for it to be made into cathode active materials in batteries that are then shipped back to us," Steinberg said.

S&P Commodity Insights expects the US to become self-sufficient in lithium supply with its announced capacity additions but, if projects are delayed, the US would need to rely on imports from partners with FTAs. Argentina is not an FTA partner with the US.

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