The situation of rapidly increasing demand and sharply...

The situation of rapidly increasing demand and sharply decreasing price is very strange and unusual. Its not a situation that can last for long because its not sustainable. Weird events like this can however happen and will continue to happen. Because is so unusual, many retail investors just don't understand it. The market is pricing as if a sustained period of low prices will exist, possibly because the previous low cycle was a multi-year period. I just can't see how that is particularly likely given the projected demand growth that is being projected. Concurrent to this, negative supply adjustments are occurring. This combination should rebalance the market more quickly than many suspect.

Having a look at the Goldman no-adjustment LCE demand increases, the demand increases across 2019 to 2023 were: +70; +159; +147; +185. The 2024 to 2027 increases projected are +238; +282; +316 & +283. Each of the next 4 years are projected to have demand growth exceeding any previous year in history. The percentage growth rates may be slowing but in absolute terms annual demand is increasing at faster rates than ever before. To meet this demand the market needs a supply response like two to three new Pilgangora scale projects coming online each and every year. They also all need to commission without issues which is a rarity in lithium. Those with lithium mining experience like several in GT1 know that just isn't going to happen. While difficult, they now the best option is to get GT1 projects FID ready. Pricing conditions will change and being FID ready is their best option so when those pricing conditions swing, they can get the project commenced. What GT1 management know is the sort of conversations being had with OEM's and the interest that exists in what they plan to supply.

Viewed from a vehicle production perspective, the GS estimate is that EV production will increase by 4.1m vehicles in 2024 and by another 4.8m vehicles in 2025. A single years growth exceeds the entire world EV production in 2020. Between 2023 and 2025 there is projected to be EV demand growth that approximates the entire world EV supply in 2022. Yep there are new projects coming online but not enough to create a sustained multi-year over supply. The number of projects that had a FID in 2023 or appear likely to FID in 2024 is small and below what is needed to keep supply growing at pace.