The Lithium Factor

Tesla, Apple and Uber Push Lithium Prices Even Higher

By James Stafford - Oct 17, 2016, 4:05 PM CDT
After more than tripling in price this year, Lithium is no longer that dull commodity we take for granted in our consumer electronics: It’s the commodity powering the next, undeniable energy revolution. The tight supply picture emerging as electric cars, mega-batteries and massive energy storage solutions become the cornerstones of our lives could be on the edge of turning new lithium explorers into the next barons.
Lithium now appears to be at a crucial moment in time: The moment when profits in the industry begin to elevate market valuations, and when consolidation starts to boost gains for all those junior explorers who have been scooping up land in the world’s lithium sweet spots.
“This is a market that will not slow down and wait for anyone,” Iain Scarr, VP of Exploration and Development for Millennial Lithium Corp --a developer with key acreage in Lithium-rich Argentina told Oilprice.com.
ADVERTISEMENT
The Next Lithium Move—Up We Go
Lithium demand is rising fast, but those that understand the product lifecycle and development stages see that we are on the cusp of something much bigger. As more and more countries cross the electric vehicle chasm, demand will explode. This is not even considering grid storage, which is set to outstrip electric vehicle demand, and the rising use of consumer electronics.
The lithium ion battery market is forecast to expand to $46.2 billion through 2023, which represents an 11% average annual growth rate. No wonder Warren Buffet is investing heavily in lithium, especially in view of the shortage that banks and market researchers are expecting. Further down the supply chain, the Berkshire Hathaway-backed BYD has become China’s single largest electric car manufacturer.
Europe is working towards mandating electric vehicles by law. The Netherlands has already laid down the law: All cars on the road have to be electric by 2025 and Germany has followed closely in their tracks. China is again a powerhouse here, so investors should be keeping a close on developments there because this is a key driver of the “white gasoline” explosion.
China’s Tianqi Lithium Industries is gearing up to build a US$306-million plant in Australia, to open already in 2018.
And the battery ‘gigafactories’ are lining up. Tesla’s has already opened in Nevada, and 11 more are in play. The battery supply chain is exploding, and the math is brilliant: It means that lithium battery production capacity is set to triple by 2020.

(Click to enlarge)

(Click to enlarge)
“Lithium will be the biggest disrupter on the energy market. And the big winners will be those that have the funds, expertise and capacity to ramp-up production as quickly as possible,” says Millennial’s Scarr.
The Pricing Game
We are also at a very crucial moment in time for the next round of lithium contracts, with some very interesting debates about how tight supply actually is, and where prices might be going.