Iron ore Vs Lithium: 1. Main demand driven by China (China NEV...

Iron ore Vs Lithium:

1. Main demand driven by China (China NEV sales account ~2/3 of the global market);

2. China highly depends on import (iron ore: >80% import dependence; lithium currently over 70%);

3. China domestic iron ore projects are low grade, high cost (~US$69/t); similarly, although China has abundant brine deposits and some lepidolite and hard rock projects, most brine ones are high impurity, spent hundreds of billions dollars, current production is far less than their plan; new lepidolite projects (2 massive new projects from CATL and Gotion are very low grade at 0.27% Li2O, all in production cost is well above currently China spot price, no way they will come to market at a large scale).

4. China mass adoption of EV is 2 years ahead of the government plan, penetration rate is already above 30%. China annual new car sales are expected to reach 40m units (current 30m including around 4m exported).

Currently lithium price cycle is similar to iron ore price cycle 2015/2016, imo.