Ships - I'd already read it on another forum but thanks for posting it here.
A couple of points: can understand the notion of prices getting overextended and then settling back down somewhat. But the question is what will be the high and where will the lithium price eventually settle. The demand for lithium batteries is only starting to get underway, I think it reasonable to assume that the quantity of lithium needed per year will be much more in 5 and 10 years time than now. It is simply a matter of whether the supply of lithium can catch up to the growth in demand as to when the price will top out.
The other point is that Orocobre's Olaroz project is in the lowest quartile of producers for operating costs so just as Rio and BHP could still make fair profits from iron ore when the drop in prices caused more marginal iron ore producers to close down Orocobre is well placed to be securely profitable even if lithium prices correct substantially. They did their figures for stage one of Olaroz assuming a lithium price of US$6500 per tonne and even at that price the project looked good.
ORE Price at posting:
$7.23 Sentiment: Hold Disclosure: Held
