You might not be trying to be a smart-alec but you are just making stuff up. The very opposite to what you asserted is the case about the backwardation of lithium. Up till quite recently the assumption has been that lithium is in a bubble and therefore price will shear away relatively soon. Hence the lack of investment funds flowing into the sector to date. But now there is a rising understanding that with OEM's committing half a trillion dollars on electrifying their product range there needs to be a ten fold increase in lithium production in the next 8 years to meet that demand. But without the funds flowing into the sector that gap between demand and supply will remain. In other words, lithium is not in a bubble and there will not be a structural correction down in lithium prices without some seismic change.
Your comment that "supply will start to meet demand in fairly short order" highlights your lack of understanding. To build a lithium mine, whether hard rock or brine, takes at least 5 to 7 years with some taking more than a decade. Also, many of the currently proposed lithium production projects intend to rely on novel direct lithium extraction technologies but there is not a single fully operational DLE project in existing today. In other words we already have a good idea of how much lithium can be produced up to 2027 and we know already that the lithium production levels will be far short of what is currently known to be required in 2027 (based on currently known gigafactories and OEM targets). But seeing how the EV market is growing at about 30% compound annual growth rate and seeing how construction of gigafactories and OEM product cycles can be as little as 2 years we still do not how much more additional expansion will eventuate in 2027.
The obvious way to bring forward lithium production is by choosing the standard hard rock spodumene processing which WA dominates in - WA produces 50% of current global lithium production so WA lithium companies are the masters of this type of mining. So if the OEMs want to bring forward production of additional lithium as quickly as possible the obvious route is by bringing new WA spodumene mines into production as quickly as possible. Lithium is at the dawning of a supercycle and you are recommending Breaker volunteer to be the next Pete Best? Sure, Major Tom and Breaker can continue to play the gentleman gold explorer role but that does not require that they give away their lithium exposure.
BRB Price at posting:
25.5¢ Sentiment: Hold Disclosure: Held
