Mali hosts two lithium mines, Goulamina and Bougouni, which are primarily controlled by Chinese firms that channel their output through local subsidiaries. Exports from Kodal Minerals’ Bougouni mine remain suspended as authorities seek to ensure sales align with market prices, a stance analysts say is justified given the sector’s complexities. In an interview with Ecofin Agency, Adam Megginson of Benchmark Mineral Intelligence highlights the opaque nature of lithium pricing, explaining how reference indices, offtake agreements, and transfer pricing practices often disadvantage host states and obscure the true value of strategic minerals.

Agence Ecofin: Can you explain how lithium prices are set and what role a firm like Benchmark plays in the lithium market?

Adam Megginson: It’s quite a particular universe in which Benchmark operates. We are what is called a “price reporting agency” and our role is essentially to bring more transparency to the market. Unlike a supermarket or commodities like gold, whose price is well known, the lithium market is much more opaque. It is more difficult to read the trends and to know what the “fair price” should be. The role of reporting agencies like ours is therefore to bring clarity and transparency so that everyone understands at what price transactions are made. We are not the only price reporting agency, but each agency has its own specializations, some stronger in agriculture, precious metals, others in oil and gas. We, for example, are strongest in battery raw materials, like lithium.

“The role of reporting agencies like ours is therefore to bring clarity and transparency so that everyone understands at what price transactions are made”.

AE: How is market data collected by these agencies and assessed for price indices?

AM: Concretely, we talk with market participants: buyers, sellers, traders, to know at what prices they conclude their transactions. And we publish this information in reports that come out every day or every week. This helps other actors in the supply chain to understand what lithium prices are. At Benchmark, we favor data from verified transactions rather than sentiment or speculation. We think this is more accurate and useful.

All these data points are compiled to establish a weekly report. By sharing price information with us, we can share our market overview with our contacts. For example, a producer in Mali can understand the impact of Chinese EV demand or the tariff situation in North America on prices. We can give them this overview and in exchange, we collect their view and add it to our overall picture of the market.

AE: Which indices do companies generally refer to when setting prices and negotiating offtake agreements, the purchase and sale contracts?

AM: As the lithium market is still largely dominated by China, which will be responsible for two thirds of lithium chemical supply in 2025, most transactions take place there. What participants prefer to do in regions where liquidity is lower, that is to say where there are fewer trades [such as in Africa, Editor’s note], is to refer to a price coming from a more liquid market, like the Australian spodumene price. We, for instance, publish an Australian spodumene price and negotiations are often made with a discount against this price.

“We have studied the possibility of launching a specific index for Africa, but there are not yet enough regular and representative transactions”.

This makes it possible to take into account the variability or sometimes lower quality of African ore, while remaining connected to a liquid and global reference index. We have studied the possibility of launching a specific index for Africa, but there are not yet enough regular and representative transactions. That will come, it’s only a matter of time. Historically, offtake agreements are long contracts at fixed prices. But with recent price volatility, the trend is now toward contracts indexed to published reference prices like the ones Benchmark publishes, with discounts applied depending on quality, logistics or location. These contracts can also include penalty clauses if the concentrate delivered is of lower quality than promised.

AE: The issue of fair price mentioned earlier has been raised in Mali in recent months. According to Bernard Aylward, CEO of Kodal Minerals, the authorities have not yet granted an export permit to his company, several months after the mine began production. The reason: the government’s desire to ensure that lithium is sold at market prices. How can Bamako achieve this?

AM: For African products, most of the lithium sold is either raw spodumene or petalite, or spodumene concentrate after a flotation or dense matter separation process. The more concentrated the product, the more expensive it is, because it is cheaper to transport and easier for the buyer to process. Today, there is no refining capacity in Africa, but some countries want to get there. Zimbabwe has already imposed an obligation to concentrate the raw material before export, and a refining obligation is due to come into force in 2027. But building this capacity will take time.

In the meantime, obtaining the best possible price means guaranteeing consistent quality and reliability. It’s no use if one month you export concentrate at 3.5%, the next at 5%, and the next at 4%. Buyers want consistency, and they are willing to pay more for the product to be consistent and for deliveries to be regular. In Mali, an additional problem arises because Kodal holds 49% of the project and sells its production to its majority partner, Hainan Mining (51%). The Malian authorities must therefore deal with transfer pricing, where the Chinese subsidiary resells material to itself. In these cases, the declared price can be lower than market price. And it is quite difficult to prevent this.

"The Malian authorities must therefore deal with transfer pricing, where the Chinese subsidiary resells material to itself"

One solution is to refer to market prices and say: “I know you say that your product is worth $200 per tonne, but we see that the Benchmark index is currently at $1,000 per tonne. Even with a discount of 20% because the lithium is less concentrated, it still shows that the transfer price is not accurate.” In these cases, governments must then refer to price indices to recalculate royalties and other public revenues linked to the price.

AE: To what extent are African lithium sales linked to reference indices compared to other price-setting mechanisms?

AM: Many of the capacity expansions in Africa have been led by Chinese companies that are using transfer pricing rather than market pricing. This makes it more difficult to track. Transfer pricing does not tell you much about the value of the material, because it essentially corresponds to what is most advantageous for the financial reporting of the company.

“Many of the capacity expansions in Africa have been led by Chinese companies that are using transfer pricing rather than market pricing. This makes it more difficult to track”.

So, a large part of the price negotiations for African lithium sales is currently less linked to reference indices, because of transfer pricing, but also because buyers consider that it is not sufficiently comparable to the material or sales conditions of other regions. In Australia, for example, spodumene is usually traded at between 5.5-6% concentration.

AE: Under these conditions, what factors can African lithium producers influence to act on lithium prices and the market in general?

AM: I think two factors will be decisive: infrastructure and access to capital. For the first point, this means not only railways, ports or future refineries, but also the electricity grid. The competitiveness of African lithium, in terms of both price and quality, will depend on this infrastructure. Africa is already the region where production is growing the fastest: according to the Benchmark Lithium Forecast, it represents 16% of global supply and ranks fourth behind Oceania, South America and China. But it is still perceived as a riskier investment area, particularly because of past cases where governments have seized profitable mines, which deters investors. Finally, another challenge lies in the location of energy infrastructure, which tend to be concentrated in capitals and bigger cities, while the deposits are elsewhere. This gap creates a bottleneck for the development of the sector.

"...The development of local refining could strengthen the bargaining power of African producers, because their supply would be directly comparable to the references traded on international markets".

But the development of local refining could strengthen the bargaining power of African producers, because their supply would be directly comparable to the references traded on international markets. As long as exports concern raw ore (direct shipping ore – DSO), buyers can invoke its high processing cost or variable quality to impose low prices, which puts producers in the position of simple “price takers.” On the other hand, a standardized spodumene concentrate can already be compared with Australian prices, widely used as a reference. And if Africa manages to go further, producing refined battery chemicals, it will be able to diversify its outlets and reduce its dependence on China. The challenge remains significant, but local processing is the key for the continent to increase its weight in price formation.

Interview by Emiliano Tossou