Compelling opportunity, page-2799

Everbright Securities forecast spodumene concentrate price could reach USD$2,300/ton.

As of August 18, the average price of spodumene concentrate was US$875/ton.

Everbright Securities: Lithium ore VS iron ore is better.
Everbright Securities08-16



Spodumene is a high-quality lithium resource

Lithium resources include salt lakes, mica, and spodumene. Among them, spodumene has the strongest element content and the least impurity content. In the foreseeable 3-5 years, spodumene will be replaced by other lithium resources in high-nickel ternary materials. The possibility that high-nickel ternary materials are mainly used to produce high-end new energy vehicles is expected to further increase the proportion of global high-end new energy vehicle production in the next 3-5 years. This also means that spodumene The increase in demand will exceed the average level of lithium resources.

Spodumene and iron ore are important minerals in two eras respectively

About 60% of the terminal demand for iron ore is real estateHe Infrastructure, during 2000-2019, fixed asset investment drives China’s GDP to grow by 460%, and the real estate infrastructure industry chain has ushered in a boom in commodities. One of the most beneficial minerals is iron ore; among many materials, The terminal demand for lithium is concentrated in new energy vehicles, which will reach 54% in 2020. Driven by a good product experience and a dual-carbon policy, spodumene will usher in great development in the era of new energy vehicles.

The supply structure of spodumene is very similar to that of iron ore

(1) In the country distribution of production and reserves, lithium resources are more concentrated than iron ore: In 2020, Australia and South America (Chile, Argentina, Brazil) will contribute 75% of global lithium resource reserves and 80% of production, and contribute to global iron 48% of mineral resource reserves and 55% of production; (2) In terms of concentration, the global production CR4 of lithium resources and iron ore is between 44%-47%; (3) Exploration of spodumene and iron ore The mining cycle is relatively long.

The growth in demand for spodumene far exceeds that of iron ore two decades ago

(1) During the period 2000-2019, global and Chinese iron ore demand increased by 123% and 518%, respectively. The newly started area of Chinese real estate , an important terminal downstream of iron ore, increased by 668%. During 2020-2039, lithium resources The global new energy vehicle output is expected to increase by 20 times; (2) In terms of alternatives, iron ore was basically not affected by scrap during 2000-2019; and spodumene is widely used due to its good product consistency. For high-end new energy vehicles, with the increasing volume of high-end new energy vehicles and high-nickel ternary batteries in the future, we estimate that the proportion of spodumene in the production of lithium resources is expected to increase from 51% in 2020 to 56% in 2025; (3) ) In 2019, China's external dependence on lithium resources and iron ore was 74% and 80%, respectively, which are relatively close in general.

The cost curve of lithium ore is steeper, and it is not ruled out that the price of spodumene concentrate will rise to US$2,300/ton in the future.

(1) The cost curve of lithium ore is steeper, and the same increase in demand can bring a greater increase in the price of spodumene. (2) According to the cost curve of iron ore and the situation of supply and demand, it is not ruled out that the price of spodumene concentrate will rise to US$2,300/ton in the future, which is a 179% increase from the price on August 4, 2021.