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Incredible lithium price spike’ on way as new chemical capacity drives demand, says Brinsden

Former Pilbara chief says history is set to repeat. Plus, Pilbara founder Biddle steps on the helium gas at Greenvale and Spartan gets big price target as gold jumps.
By Barry FitzGerald
Posted on October 19th, 2023
There is no getting away from the fact that the on-going high-stakes corporate machinations in the lithium space are occurring against a backdrop of the plunge in lithium prices.
Obviously, the key players in the recent step up in corporate moves are looking beyond the current lithium price weakness towards the second half of the decade when most agree a serious supply deficit is likely.
Still, there is no doubt that the fall in prices from the spectacular highs of last December (spodumene has more than halved to $US3,100/t and lithium carbonate has cratered from $US81,000/t to $US23,000/t) has knocked the stuffing out of lithium equity values for the time being.
But fear not, no less than Australia’s Mr Lithium – Ken Brinsden – reckons another bout of “incredible price spikes” is in the works.
The former Pilbara Minerals (PLS) boss who took a two-week sabbatical last year before jumping into the non-executive chairman role at Patriot Battery Metals (PMT), delivered the soothing message for rattled lithium sector investors during the week.
“It has probably been a bit of a confusing time for shareholders in the lithium scene because we’ve seen lithium prices come off extreme highs, and as a result, equities being impacted on a commensurate basis,” Brinsden told the South-West Connect Showcase conference in Busselton.
He said China had done an amazing job building the downstream (chemical conversion, batteries) lithium battery supply chain in the past 10 years, but it did not match that up to the requirement for lithium raw materials.
“What they didn’t do was get the mining capacity right. And that is why you have seen pretty incredible spikes in the price of the raw materials,” Brinsden said.
“But the truth is that from now, exactly the same thing is happening in the western world.
“Masses of chemical capacity is going to be built in the western world, or is already under construction, including in North America and Australia. But the same mistake is being made.
“There is a lot more chemical capacity being built than there is underlying raw material capacity. My take is that we will get similar effects emerge as to what happened in the last decade.
“There will be incredible price spikes in the raw materials because it is the raw materials that are going to be short in the world – not the chemical capacity, not the battery making capacity, and not the EV making capacity.”
Brinsden did not address the corporate machinations in the lithium space, headlined in recent days by Gina Rinehart thwarting Albemarle’s $6.6 billion bid for Liontown (LTR) by buying a 19.9% blocking stake.
Between making the Liontown bid and then walking away, Albemarle picked up a 4.9% stake in Patriot. While Patriot views the stake as plugging its world-class Corvette discovery in Quebec into the North American growth in conversion capacity which Albemarle is planning, it is also seen by many to mean Patriot is effectively in play.
But here is the rub. Rinehart is also believed to be on the Patriot register. So Albemarle could well face a Liontown situation all over again, if in fact it has designs on acquiring the $C1.4 billion Patriot, a likely producer at Corvette from 2028.
Brinsden’s former employer, Pilbara Minerals, is also believed to have built a presence on the Patriot share register. The same is said about Chris Ellison’s Mineral Resources (MIN). Then there is the chatter about Rinehart and MinRes having stakes in Pilbara Minerals.
So it seems safe to assume that Albemarle’s failed tilt at Liontown is not the end of the Australian lithium war. It is only building up a head of steam.