Ramp up your inner Jimmy man, or should I say Gerrit. Gerrit was chatting on LinkedIn yesterday regarding some of the EU projects, describing some of them as fantasy, milking the thematic, but I cant find the thread. I agree with him, a lot of on the bandwagon marketing going on out there. While the below post from Gerrit is a little aged, its a good read, the man knows his shite. The post includes links to previous posts, thus recommend reading link 5 & 8 as he suggests

Albemarle's forecast increase – the supply & demand balance spreading beyond its traditional boundaries

Published on March 2, 2021

Gerrit FuellingFollow

Holistic approach to strategic Lithium sourcing

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During the most recent earnings call, Albemarle presented their updated expectations related to Lithium's demand development: 1,140,000 MT of LCEs for 2025 within just the next 4 years. That is an almost 10% increase vs their forecast from December 2019, and a 340,000MT of LCE growth vs a November 2018 forecast (800,000 MT of LCE) or more than 40% higher demand compared to 2 years ago. (see respective 1-4 links below)

The gap between supply and demand is not only increasing; it is also accelerating.

A 140,000 MT LCE/a increase in forecasted demand within just 1 year is equivalent to 4 large Lithium projects, or approx. 2 billion USD financing requirements. This does not include the time required for the realization of projects. To meet the demand for 2025, even less attractive projects must be realized. This will further push Li-carbonate and Li-hydroxide prices.

Do we wonder who is going to be able to supply this volume?

If this number is anything close to reality, the OEMs should start to panic, and so should the cell producers. Unless, of course, they believe in, as Paul Graves called it once, 'voodoo economics'.

Such growth, if being realized, puts enormous pressure not only on Albemarle but all existing suppliers to perform and get their capacity expansions online within the planned timeframe. At the same time, this will add the same pressure on the whole supply chain. And in our opinion, unfortunately, most of the junior miners won't be able to alleviate any of the pressure (see links 5-8 from the author for the reasoning).

The moment of truth, which we forecasted for quite some time now and which we made some of the OEMs aware of is approaching, faster than we expected. The situation will put their investments into EVs to some extent, at least in jeopardy.

We do not believe that a responsible cathode producer will commit volumes beyond secured raw material unless the company believes raw material supply is affluent and not critical. However, some larger producers out there seemed to fall into this "believer" category.

Cell producers should not commit cell numbers to OEMs without validating the raw material supply chain feeding them. This is currently a very weak link, and we do not believe that they have understood the overall situation.

There are indications that in China, some merchant converters relying so far on spot deals for everything, including spodumene, realize that there might not be enough spodumene to feed their conversion plants on a stable basis.

To overcome a deficit in raw materials being caused by underinvesting is a time-consuming effort.

The author has worked 28 years in the Lithium business (Chemetall/Rockwood Lithium: President Asia) and is associated with Advanced Inorganic@Ventures

1. https://seekingalpha.com/article/4407143-albemarle-corporation-alb-ceo-kent-masters-on-q4-2020-results-earnings-call-transcript
2. https://investors.albemarle.com/static-files/0d19ce5d-a3e4-4f4d-846c-8ad989dce8fa
3. https://investors.albemarle.com/static-files/47253ade-0e4b-4eec-aeb3-a9d6893f3a6c
4. https://investors.albemarle.com/static-files/8241b82b-1a58-4cc3-8a31-f2138ae0279b
5. https://www.linkedin.com/pulse/ev-production-lithium-supply-going-match-gerrit-fuelling
6. https://www.linkedin.com/pulse/availability-raw-materials-evs-given-gerrit-fuelling
7. https://www.linkedin.com/pulse/availability-raw-materials-evs-given-part-ii-gerrit-fuelling
8. https://www.linkedin.com/posts/gerrit-fuelling-a73a4555_evs-face-a-serious-disruption-of-lithium-activity-6583248668231520256-LwrX