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Lithium

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waterbottle said:
Here's to hoping Canadian suppliers will get a benefit....
Click to expand...
It should also be interesting to see how lithium stocks on the ASX react over the mid/long term.

After their strong performance this week, can the news help them sustain a rally, or will gains be capped due to a potential decrease in US dependency on importing minerals for battery tech?
 
One person who has been warning of a lithium shortage for a while is Joe Lowry, a somewhat cantankerous expert who regularly draws mining bigwigs and analysts to his podcast. Known in mining circles as “Mr Lithium”, the North Carolina resident has been in the business for decades.

Since striking out on his own in 2012, Mr Lowry has been a consultant to mining companies and an investor. He owns shares of companies including Tesla and Lithium Americas.

Here’s a summary of a recent conversation with Lowry on the EV battery supply chain:

Q: You wrote a paper at the end of 2019 saying demand for lithium would outstrip supply. It looks like lithium prices have started to reflect that. What do you see?

A: In the next two years, even though there will be significant growth in supply, it will be less than demand, so the gap will just continue to grow.

It’s simple maths. It’s like, the bus in front of me is going 50 miles per hour, I’m going 45 mph, but I’m saying I’m gonna catch it in 2025.

I believe there will be a day in the future when lithium is in oversupply, but it won’t be in this decade.

Q: Why will it take so long?

A: You can build a battery factory in two years, but it takes up to a decade to bring on a lithium project.

It’s not a commodity; it’s a specialty chemical. Lithium is often compared with iron ore or other major commodities, and it behaves nothing like that. The auto industry is just finally figuring that out. Lithium qualification for an auto company can take over a year.

Q: Why?

A: It has to go through cycle testing. If you’re going to put something into a car that could ignite if the chemistry is wrong, you kind of want to know.

Q: Is the auto industry prepared for that long lead time?

A: I take everybody’s gigawatt-hour projections and take them back to the lithium required to do it, and most of them are so far over what the lithium industry can supply. I don’t believe demand is going to be destroyed. Ultimately, I believe it’s just deferred.

The additional production this year will be less than 150,000 tons. So then, it’s who gets the material? Whose EV models don’t get made?

In a 2050 scenario, there’s time for everything to happen that needs to happen. But in 2030, it just isn’t going to happen. Just look at the mess we’re in from a lithium supply standpoint with less than 10% EV penetration.

Lowry’s predictions chime with other assessments. BloombergNEF forecasts prices of lithium carbonate and hydroxide – the main lithium chemicals used in battery production – will be higher still by 2030 as a result of projected supply deficits.

Metal supply scarcity poses a more immediate challenge to car makers. Battery prices are expected to rise slightly this year, ending a long run of declines. That will delay the point at which EVs achieve price parity with combustion engine cars, potentially by as much as two years, to 2026, according to BNEF.

Washington Post
 
Shares in lithium miners in Australia and the US have fallen steeply.
  • Pilbara Minerals -17.46 per cent to $2.4
  • Sayona Mining -11.36 per cent to 19.5¢
  • Liontown Resources -20.5% to $1.125
  • Core Lithium -17.2% to $1.15
The falls come after US investment bank Goldman Sachs warned of a “sharp correction” in the price of lithium, with the metal averaging under $US54,000 a ton this year, down from a spot price of over $US60,000. It will fall further to an average of just over $US16,000 in 2023, the Wall Street bank said.

Goldman Sachs said the price of three key battery metals – cobalt, lithium and nickel – will drop over the next two years after investors wanting exposure to the green-energy transition piled in too quickly....
 
but depends on the politics and who is in power, especiaally in Latin America.

As rivals turn screws on mining, Argentina puts out welcome mat

Government turns to capital-control loopholes and tax breaks, eyeing export boost as neighbours look to raise mine taxes.
www.batimes.com.ar
 
Today's selloff is unlikely to be due to the GS report. I'll accept that there will be more supply going into the market in a years time and prices will drift lower as more lithium is produced.

Today's selloff is pure panic selling. Possibly a hedge or commodity fund blowing up? I'll be closely watching the US Li producer ALB tonight.
 
It wasn't just GS. Credit Suisse called a similar top on Lithium and have a Neutral call now on PLS and AKE.
Report came out on Tuesday.
 
All the institutions got their buy orders filled at amazing prices. They needed sellside liquidity to buy into!

Now to take the sector to the moon!
 
I was doing some intensive meditation today and missed all the movement on Lithium, the XAO and matters financial.

I wonder what is the next boom sector?

Or is it still Lithium?

From wonder into wonder existence opens. Lao Tzu
Click to expand...

gg
 
Hard to say what drove this move. Ganfeng and other Chinese battery makers own significant portions of these miners (including some overseas). Some are attributing this to a Chinese car manufacturer acquiring 6 lithium mines in Africa.
There is some truth to the Goldman Sachs report - higher prices will obviously encourage more miners to enter the industry and therefore reduce the price, although I doubt we'd have enough miners entering in the next 1-2 years to make a substantial impact particularly when there is now a worldwide target for EVs to outsell ICEs by 2030...
The other consideration is that this downward move may be part of a market-wide retreat. 10 year bond yields now approach 3% again. Speculative growth stocks likely to continue to suffer in this climate, particularly when they have no other means for returning value to investors by way of dividends.
 
My guess is, unless they come up with a completely new higher energy density battery than the lithium based ones, the demand will be huge there are a hell of a lot of cars to be replaced and add to that home and grid storage.
Best of luck expecting a glut of resources in the near future and by the time the glut arrives if it ever does, the old batteries will be dying and the population and demand will have increased, sounds like a Sydney house price scenario to me, where there obviously is never enough of the product to satisfy demand.
What the car manufacturers are worried about IMO is, how to build E.V's cheap enough that people will buy them, even if it is regulated vehicle manufacturers work on high turnover, not high margins.
From the manufacturers perspective, it really doesn't matter if the Govt's regulate ICE cars out, if the plebs can't afford to buy the E.V, the manufacturer can't sell either.
 

Agreed, I was being facetious
I'm still a believer in Lithium remaining in high demand for many years to came, mostly because the demand side of the equation has not yet been quantified and is essentially unlimited at this stage (see: green transition) whilst the supply is finite and difficult to obtain given it's a refined product as opposed to its counter-part commodities.
Having said that, lithium miners are leaves in the wind, susceptible to market forces. Either batten down the hatches or get ready to pick up some scraps as speculative stocks don't look like they'll be able to weather the QT storm.
 
I am only interested in lithium stocks that can value add, pure miners IMO are not my bag.
 
waterbottle said:
I'd be interested to hear which miners would qualify as 'value'
Click to expand...
One that comes to mind is TUL (not as yet a miner) with potential lithium exposure/scope (numerous assay results pending as we speak from MIN joint venture)
 
sptrawler said:
The only lithium stocks I have is IGO and WES.
Click to expand...

The only other long term play I see adding to this value proposition is AKE. I see most of the Li explorers like the uranium plays in the mid 2000s. You might make some money (maybe lots) in the short term, but you need to be in production to be a longer term value play, IMO.
 
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