https://unauthorised investment advice/resources/barry-fitzgerald-lithium-sprin...

https://unauthorised investment advice/resources/barry-fitzgerald-lithium-spring-could-be-near

Winter is about to pass and Garimpeiro reckons that so too is what could be called the lithium sector’s winter of discontent.

Lithium prices have stopped falling in a major way and there was a positive reaction during the week in reaction to more moves to slow the pace of new capacity additions and potentially close unprofitable operations.

That should bring forward the market’s return to supply/demand balance.

There have also been musings from industry forecasters that perhaps the bottom has been reached and that the current September quarter will mark a turnaround in the industry’s fortunes.

All reasonable stuff and enough to have caused lithium stocks to lift off their recent lows.

But what got Garimpeiro pumped up on the sector was the recent commentary from Rio Tinto boss Jakob Stausholm on the potential for the company to take advantage of the cyclical low in lithium to acquire additional assets in the sector.

Rio to Rincon

Rio already has a couple of lithium assets – its Rincon brine project in Argentina and the Jadar lithium-boron project in Serbia, with the latter facing long delays because of environmental opposition by some.

But it wants to get bigger, with Stausholm making the point that a more meaningful exposure would serve as a valuable diversification from Rio’s over reliance on iron ore.

He is not worried about current lithium pricing either, not because it serves Rio’s agenda of acquiring assets at knockdown prices, but because the current pricing pain will eventually pass.

Speaking at investor briefings after the release of Rio’s June half results, Stausholm said it doesn’t really matter what the lithium price is in the short term.

“We really have to think about what’s going to be the average price over the next 10, 15, 20 years. I think it’s fairly given that the world will need lithium because you do need lithium for at least high-performance batteries,” he said.

“And the world needs more batteries.”

All that was bullish enough to think yep, the lithium stocks are well worth a look again after spending the year out in the cold. If Rio has dusted off its acquisition asset list in the sector, then perhaps us lesser beings should dust off our ASX lithium watchlists.