The next topic covers Management's thoughts on Lithium pricing through to 2030 and beyond (keep in mind this was from 23rd August)
Sourced from Update Webinar #1 on 23/8/23
Commentary made by David Dickson - CEO/Managing Director and Scott Munro - SVP Technology Strategy and Risk
What is your outlook for Lithium pricing through to 2030 and beyond?
DD: “In anticipation of doing this I was in fact looking at some of the recent Benchmark and Fastmarkets information and, as I've always said, combining my short tenure in the mining business and Lithium business of less than 12 months, one thing for sure, it is extremely fragmented. The forecasts looking forward are really fragmented. I think what I'm confident of though is that Lithium price is going to start to move up. I look at some of the prices that were used for PFS's some time ago - $14,000/T whereas the most recent PFS I looked at by another developer where they are using $30,000/T. So, things have shifted in that direction.
Looking at some of the information from Benchmark, it is interesting, you look at if EV penetration was to go ahead as planned, Governments want to move on a number of continents and you look at the ambition of the big car manufacturers, potentially then the demand for Lithium by 2030 is over 5MT. Today we produce less than 1MT. If you look at all of the projects that are planned to go ahead, we might get to just over 3MT. That tells me we've got a significant issue coming ahead that's going to upset the whole supply demand balance. So, I think for us we used (in the operational update) $23,750/T as our base case and we ran another case at Spot pricing also, but I think generally the view within Lake Resources is that we anticipate that Lithium pricing is on the up. That's obviously not talking about Spot pricing today.....we're talking about prices from 2027 and 2030 as we go into production. I don't see any other way why it's not - as EV penetration is not going to settle here. We can see it everywhere, at least in the US, you can see it in Europe. Let's hear Scott's views on Lithium pricing.”
SM: “It was interesting, I was in Salta last week for the Symposium and they had all of the major pricing forecast agencies there and Joe Lowry (Mr. Lithium) participating in one of the keynote speeches and it was interesting how everyone was forecasting the supply and demand would be roughly in balance by 2030...and then each one of them said that they think everyone might be a little bit optimistic on the amount of supply that's going to come into the market - because if you look at the number of projects needed to make that balance happen, it's a lot of projects. Most of those projects need to come in Argentina. So, the strange thing about pricing forecasts is you get two benchmarks - one forecast is a surplus and one forecast is a deficit. But they're all forecasting roughly the same price and it's roughly the price that we used in our in our market update ($23,750/T). So, it's interesting that even though one is showing surplus, and one is showing deficit, that they are both coming out with the same number. So, it'll be interesting to see where this thing trends.
It does need an awful lot of projects to come onstream in the next 5-6 years, to actually achieve the balance that everyone is talking about. Again, just anecdotally, you talk to end users of this material, and they casually throw out that they’re going to have 600% growth in 5-6 years. That is a lot of projects. That is a lot of Lithium. Us on the supply side, we'll need to work really well and really hard to make that happen. So that should tell us that we should have a growing demand, strong market and pricing that should be supported.”
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