My view is lithium is not similar to iron ore
1. Iron ore has a transparent metal exchange, so spot prices are not opaque, unlike lithium which is subject to 'control' by the Chinese
2. Batteries mainly EV are expected to account for 95% of lithium demand by 2030, making lithium demand particularly beholden and susceptible to the evolution of EV battery chemical technology , we saw how cobalt and nickel becoming increasingly marginalised over recent years
https://x.com/heppel_george/status/1733094743767138536?s=203. Lithium is a critical mineral that has entered geopolitical realm, with US and EU both developing their own local lithium source which would then be first preference integration with their local EV gigafactories. Australia has no EV manufacturing facility so would need to export with distance adding to costs.
4. EV growth especially from China is dependent on cheap supply of lithium/battery minerals and with more supply coming onstream from various other parts of the world, South America, Canada, US, Africa, lithium price would stabilise and unlikely to replicate its previous pricing we saw in 2020-22. Australian lithium would end up being price takers, not price makers.
5. Unlike iron ore which is key to steel making and vital for construction activity in industrialisation, the demand for lithium in the longer term is not just influenced by the growth trajectory of the EV industry which needs to compete against hybrids and ICE (which it would no doubt win), but also by battery make (which may use less of lithium or perhaps even none).
In summary, the demand profile for iron ore is more certain, established and assured and subject to less substitution threat, while supply of iron ore is largely controlled by Australia and Brazil with Simandou (Guinea Africa) coming into picture next year, in contrast the supply of lithium is eventually going to be more regionally driven, with each continent having control of their own supply but Australia disadvantaged by the absence of a local vertically integrated EV facility.
Hence, lithium is no comparison to iron ore in my view. Far from it.
(20min delay)