re:Lithium demand surge, page-786

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bdell

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25/11/18

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Originally posted by SF@HC ↑

Originally posted by bdell
SQM is the second largest lithium producer in the world.
If you’re invested in lithium stocks, the news was pleasing. Nothing the bears said would happen appeared in these numbers.
In fact, it was the complete opposite.
Lithium stocks finished the day up yesterday. That’s no mean feat in this market. The ASX is not really a fun place to be right now.
The switch to electric vehicles and renewable energy is a secular trend. It’s not going to stop. It will be a wave to ride for the next decade.
So even though lithium stocks have been weak in the last few quarters, you can hold them in confidence when a short-term factor comes into play.
Recently, that was the fear of an oversupplied market.
SQM’s results just put a bullet into the head of the lithium bear case…
Lithium prices elevated, demand strong
You don’t have to believe me. It’s right there in the latest numbers – and against the expectations of SQM’s management.
In August, SQM forecast lithium pricing to fall 10% in the second half of the year. It attributed this to the rise of Australian mine supply.
Now that we have their latest results to hand, what do we see?
Lithium demand from electric cars has kept the price elevated and SQM expects it to stay that way for the remainder of the year.
Part of that is because SQM has produced less lithium as of now than the equivalent time period last year. Several other projects have not yet come to fruition either.
There are a lot of lithium projects out there in the world. But you can never assume all these will become working mines.
There are a lot of hurdles for a mining project to come into life. Think of the approvals, financing and qualified staff every single one has to find.
I’ve made the case since last year that the lithium stocks to own at the moment are the producing projects that can cash in on strong prices now.
SQM’s latest results suggest that’s on track. Now, it’s up to the stocks in question to hit their production targets and keep their costs under control.
SQM’s management said it was ‘positively’ surprised by the demand growth in lithium coming from electric cars.
f
rom ProfitWatch
There are a lot of lithium projects out there in the world. But you can never assume all these will become working mines.

This is a very important point you make bdell. If you look at the mining sector in general, only 10% of projects become working mines, regardless of what they are mining. In relation to Li projects, IMO the % of projects becoming working mines could be as low as 2%, given the lack of finance available from the major instos and banks. The major banks will lend to gold, iron ore, gas projects but not Li. Therefore and as you say, exposure to producing Li mines seems to be the way to go.

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Spot on SF !
"SQM’s management said it was ‘positively’ surprised by the demand growth in lithium coming from electric cars." - quite an understatement from what I can see

PLS Price at posting: 83.5¢ Sentiment: Buy Disclosure: Held
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re:Lithium demand surge, page-786

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re:Lithium demand surge, page-786

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