Good News & Bad News, page-312

"All good @rainbowdaisy happy to chat with you. It's encouraging me to do further research on Pilbara and I am pleased with what I have found. Thank you!"

Of interest this commentary (partial extract) was what appeared on my NABtrade board today :

"Pilbara Minerals (PLS) – The miner is capitalising on its status as the largest hard rock lithium operation in the world. In response to the upward trajectory of the lithium market Pilbara Minerals has recently witnessed a material increase in potential buyers for its spodumene concentrates, with several chemical producers either entering the market for the first time or existing producers with expansions under way. Higher lithium prices in 2021 and higher spodumene sales should lead to earnings growth. Recent share price weakness provides a buying opportunity. SPEC BUY."

(Three other Aussie Lithium producers were also mentioned).

In the body of the commentary - this partial extract :

"Lithium is important because it has one of the highest energy densities of any battery technology. It is crucial in limiting the size of the battery. Because the periodic table’s lightest metal is less than 10% of the cost of producing batteries, if its price goes up, batteries will still be economic. Lithium also stands out because of the amount of processing involved in reaching the purity requirement for batteries. These barriers of entry are highly supportive of the lithium price and of existing producers such as those listed above.

The primary driver of battery demand is electric vehicles, for which lithium-ion batteries are the enabling technology.

A catalyst for EVs to increase their market share is price parity with internal combustion vehicles, which is forecast to be reached by the mid-2020s. There are segments that should achieve parity earlier (large cars in Europe by 2022) while others later (small cars in India and Japan after 2030).

Factors hastening EV take-up include new European Union CO2 emissions targets in 2025; a range of cheaper EV models to coincide with this change. Car maker Jaguar will go all electric in 2025, Volvo in 2030 with General Motors by 2035.

In 2021, lithium demand for all applications is expected to be approximately 350k tonnes. This is going to sky rocket when you consider that there were close to 2.5 million electric cars sold in 2020. If you then extrapolate from research done by the likes of Wood Mackenzie and BloombergNEF, the demand for lithium is going to climb very quickly.

Says Peter: “In 2021 lithium demand for all applications is expected to be 350k tonnes. Assuming global sales of 54 million EVs in 2040, lithium demand solely from EVs in 2040 would be 2.3 million tonnes, implying a minimum seven fold increase in just 20 years! This isn’t including other applications such as grid batteries and commercial vehicles.”

Battery gigafactories, the large scale producers of lithium-ion batteries, give the EV transformation proverbial legs. Only 10 years ago there were only one or two. A handful emerged in 2017. Fast forward to today and 180 are built or under construction, which will produce 500 giga watt hours per year. It only goes up from here. Planned production to 2030 by major battery and automotive groups point to a six-fold increase in capacity to around 3,000 GWh.

The lithium required to fuel this incredible surge in battery production is the equivalent of around 50 Orocobres in 10 years or 120 if you are looking 20 years out. Think about that!"