AVZ (ASX) Understanding lithium demand

Originally posted by elphamale: ↑

Good morning @Scarpa & @8horse ,

Great post as usual Scarpa, however I believe that both yourself and 8horse are looking at the wrong graph to begin with.

BNEF among other mainstream analysts, are notoriously & inherently conservative when it comes to new technology adoption rates, and I've explained the reasons for this in a previous post under the sub-heading 'Current EV sales forecasts from mainstream analysts are too conservative'
https://hotcopper.com.au/posts/39414154/single

If you look at BNEF's forecasted demand growth for 2019-2021 in their graph it is almost linear, however this is simply not representative of current trends in the real world IMHO.

For example, the June figures for European EV sales have just been reported and BEVs are up by over 100% YoY!!
https://insideevs.com/news/362020/june-2019-bev-sales-doubled-europe/

And although the tipping point for EVs in Europe is still to come (thought previously to be 2022-2025) new evidence suggests that this date will be brought forward to 2020 = next year!!
https://thedriven.io/2019/07/24/ele...s-europe-with-2020-seen-as-new-tipping-point/

View attachment 1674094

And VW now expect EV sales in Australia (one of the last countries likely to fully embrace EVs IMO) to be 50% of all car sales by 2030!!
https://thedriven.io/2019/07/31/vw-expects-50-electric-car-sales-in-australia-by-2030/

Thus may I suggest that you derive your number of required 2mtpa and 5mtpa operations by using the below data from Benchmark Minerals. It is updated every couple of months to reflect current known build outs and the likely global impact over the next 8 years.

View attachment 1673992

One can see that the above graph estimates that the world is on course to achieve 2000 GWh by 2028 ( 2 years earlier than BNEF's ultra conservative forecast). However you can see that Benchmark's own figure has increased by 50% in the space of just 7 months, and doesn't take into account recent developments (July) which I've added below.

View attachment 1674004

https://insideevs.com/news/358947/lg-chem-increase-battery-sales-fivefold-2024/

Based on the above trends, I fully expect 2000GWh to be achieved by 2023-2024, and it won't be just EV driven. And as you can see from the below I am not alone in my thinking.

View attachment 1674025

The only threat to the above battery capacity s-curve forecast that I foresee are the current bottlenecks in the battery supply chain. However I expect massive investment from Automakers, Government, Private Enterprise, Banks / Instos and even Big Oil to kick in and address these issues within 2 years.

So if we take the median forecast (i.e. between Benchmark's current forecast and my July update edit) of 2000GWh by 2026, then the no. of 2mtpa - 5mtpa operations in your spreadsheet will be required 4 years sooner than BNEF's forecast.

Hope this can add some perspective to your discussion.

GLTA

Cheers
Elpha

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Understand where you are coming from and also have seen higher GWh figures in 2025. I was just interested in the graph itself rather than comparing figures I have seen. It all boils down to the rate of EV takeup in the passenger vehicle market as that is the biggest contributor to lithium demand. And then it boils down to the take of household energy storage options in the stationary market as well as the prevalence of sold state batteries and how much market share they take from NCA and NCM battery technologies etc.

It is a lot of speculation and I agree, for example, EV takeup will likely be higher than the figure in the graph I was estimating number of required 5 mtpa mines to meet forecast lithium demand from in 2030.

You can take the 2030 numbers I calculated and plonk them in the year you think 2000 GWh will be achieved. Obviously if that is closer to 2025 the case for AVZ entering market at a 5 mtpa configuration by 2025, compared to a 2mtpa configuration, is further strengthened. And certainly ramp up will occur a lot quicker to 5 mtpa btw.

Furthermore, the greater the shortfall in lithium demand the greater probability the transport solutions in the DRC will be sorted out a lot earlier by the Chinese because apart from lithium, unless solid state lithium batteries take off meaning even more emphasis on lithium in any event still meaning transport solutions in the DRC will be sorted out, you need cobalt, nickel, graphite etc in a battery itself etc etc.

At the end of the day, given the resource AVZ has it is in the best position (as Greenbushes has been as well but the resource of Greenbushes is shrinking I suspect given how long that mine has already been in operation) as to best respond to quantum increases in demand which the graph suggests. If the quantum increase is a lot earlier and larger then the case for AVZ's entry to market further increases.

All IMO IMO IMO