My take on this is scale and future demand. Easily tapped oil lasted a very long time to the point where shale oil became viable. It always comes back to questions of supply and demand. No doubt there is a paradigm shift to the use of lithium as petrol and diesel vehicles are being mandated to be phased out by China, Britain and Europe. Others will come on board because they can't get the product they need at the price they can afford because producers lose economies of scale. Because price multiplied by quantity equals value to the producer. Not only is price a determinant of demand, so is fashion. That means an autonomous shift up in the demand curve to a new equilibrium price. It will be significant.
In terms of supply, like oil, lithium has a few different sources. The determinants of supply are not only price but whether technology can expand production to meet the price or the price of substitute goods such as vanadium and costs of complimentary goods like cobalt, nickel and manganese. Don't worry, the big boys have done the numbers.
Yes, spodumene is like easily tapped oil, but we have other sources of lithium apart from hard rock such as brine and there are several competitors going down that path. If we think how many people are on this planet and how long this stuff has got to last then other forms of hard rock lithium and the opportunity cost of extraction will come into play with scale. CGM footprint in Brazil is huge and don't forget it is tied to Arab tenure too. Their samples to date do have spodumene, and the other hard rock forms are pretty high in lithium suggesting it is indeed economic.
As I have said many times to my grandchildren, people know the price of everything but the value of nothing, just wait a see.
Unfortunately the market takes full advantage of sentiment swings to keep taking their cut. Infant industries such as these have to run the gauntlet, but the tribe holding them captive don't see the allies mustering on the ridge yet.
CGM Price at posting:
1.7¢ Sentiment: Buy Disclosure: Held
