(Bloomberg) -- German chemicals maker BASF SE 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 Ltd., the Vancouver-based firm that has exploration projects in Chile, the German company said in an email to Bloomberg late Tuesday. Wealth shares slumped as much as 31% on Wednesday, the biggest intraday decline in three years. 

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, part of a push to grow revenue beyond BASF’s broad suite of plastics and chemical products. 

“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.

BASF shares rose 0.6% in early Frankfurt trading, adding to gains for 7.4% over the past year to value Germany’s biggest chemical maker at €40 billion ($43 billion).

The withdrawal follows BASF’s announcement last week that it scrapped a joint plan with Eramet SA 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.

The bumpy shift to EVs has triggered carmakers to row back on ambitious model rollout plans, prompting battery-cell makers like Northvolt AB to go slow on multi-billion projects. That’s leading to cancellations further up the supply chain from suppliers such as BASF and Umicore SA. 

While the German company’s involvement in Chile was at a very early stage, its withdrawal is a blow to European authorities’ push for companies to secure deals with key battery metals suppliers. That effort is becoming harder as Asian suppliers push ahead with cheaper batteries nascent European manufacturers can’t match. 

BASF’s decision is 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 Chief Executive Officer 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.

(Updates with Wealth share drop in second paragraph)

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