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German chemicals giant BASF has abandoned plans to invest in lithium mining assets in Chile as a slowdown in electric-vehicle adoption worldwide drags down battery metal prices.

BASF withdrew from initial talks with Wealth Minerals, the Vancouver-based firm that has exploration projects in Chile, the German company said in an email to Bloomberg Tuesday.

A potential arrangement had included possible funding and offtake if Wealth obtained production contracts in Chile. BASF also was exploring the possibility of building a plant in Chile to turn lithium into the cathode that goes into electric-vehicle batteries.

“No collaboration between BASF and Wealth Materials materialized in the end,” BASF wrote. The company didn’t give a reason for ending the talks or mention the proposed cathode plant.

The withdrawal follows BASF’s announcement last week that it scrapped plans for a $2.6-billion nickel-cobalt refinery in Indonesia. Slowing EV sales growth has pushed down prices of key inputs, with lithium at three-year lows after surging to a record in late 2022. BASF now plans to bolster raw-materials supply for European operations via a new battery recycling plant in Germany, due to start operations later this year.

While the German company’s involvement in Chile was at a very early stage, it’s withdrawal is a blow to European authorities’ push for companies to secure deals with key battery metals suppliers.

It’s also a setback for Wealth as it grapples with a strategy being implemented in Chile to open new areas to lithium extraction. One of the company’s projects is in an area deemed of strategic importance, meaning it would have to take on a state-owned company as a majority partner.

Wealth CEO Henk van Alphen declined to comment on BASF’s exit. He said implementation of the government’s lithium strategy has been slow though progress is being made. Authorities next week are scheduled to announce details of firms interested in new contracts in nonstrategic salt flats.