Germany-based BASF has decided to ditch its investment plans in Chile's lithium sector, reported Bloomberg News.

The move comes as the global slowdown in electric vehicle (EV) adoption has led to a decrease in demand for battery metals, resulting in a drop in lithium prices.

BASF had been in preliminary discussions with Wealth Minerals, a Canadian company with lithium exploration projects in Chile, about potential funding and offtake agreements.

The German chemical giant had also been considering the construction of a facility in Chile to process lithium into cathodes for EV batteries.  

This was part of BASF's strategy to expand its revenue streams beyond its traditional chemical and plastic products.

BASF's decision is a setback for Wealth, which is trying to open up new lithium extraction areas in Chile.

One of Wealth's projects is in a strategic area, requiring a state-owned company as the majority partner.

Last week, BASF and Eramet cancelled a joint investment in a $2.6bn (€2.42bn) nickel-cobalt refining complex in Weda Bay, Indonesia, due to slower sales growth for EVs in the South East Asian nation.

At that time, BASF Catalysts division president Dr Daniel Schönfelder said: “A secure, responsible and sustainable supply of critical raw materials for the production of precursor cathode active materials, which may also originate from Indonesia, remains crucial for the future development of our battery materials business.”

Currently, BASF is looking to strengthen its raw material supply chain in Europe with a new battery recycling plant in Germany. This facility is expected to commence operations later in the year.