LISBON, Oct 8 (Reuters) – Chinese lithium producers are flooding the global market with the critical metal and causing a “predatory” price drop as they seek to eliminate competing projects, a senior U.S. official said on a visit to Portugal that has ample lithium reserves.<\/p>\n\n\n\n
Jose Fernandez, under secretary for economic growth, energy and the environment at the U.S. Department of State, told a briefing late on Monday that China was producing much more lithium “than the world needs today, by far”.<\/p>\n\n\n\n
“That is an intentional response by the People’s Republic of China to what we are trying to do” with the Inflation Reduction Act – the largest climate and energy investment package in U.S. history valued at over $400 billion, Fernandez said, adding:<\/p>\n\n\n\n
“They engage in predatory pricing… (they) lower the price until competition disappears. That is what is happening.”<\/p>\n\n\n\n
China accounts for about two-thirds of the world’s lithium chemical output, which is mainly used in battery technologies including for electric cars. Prices of lithium have fallen more than 80% in the past year largely due to overproduction from China and a drop in demand for electric vehicles.<\/p>\n\n\n\n
However, the price collapse is also affecting China as it has forced Chinese companies like battery giant CATL\u00a0(300750.SZ),<\/a>\u00a0to suspend production at certain mines.<\/p>\n\n\n\n