Koby Kushner: Lithium Just Getting Started, Here's How I'm Positioning

TL;DR

Lithium is still in the early stages of a long-term growth cycle because demand is rising faster than supply. Prices had cooled about 30 percent from their peak, yet Benchmark Mineral Intelligence’s forecast called for an average of 74 new lithium mines to meet 2035 demand. Kushner explains why costly new supply could keep prices elevated and how he evaluates investments, making the details worth reading.

Transcript

thank you I'm Charlotte McLeod with the investing News Network and here today with me is Colby Kushner mining Analyst at Red Cloud Securities thank you so much for joining me great to see you thanks for having me Charlotte really nice to have you here and our conversation today is going to be about lithium which we know can be a little bit of a com... Read More

Key Insights

• ❓ The supply-demand dynamics of the lithium market favor continued price elevation and potential investment opportunities.
• 👶 Lithium exploration, especially for new discoveries, presents a significant opportunity for investors.
• 🚨 Direct lithium extraction (DLE) is an emerging approach that could disrupt the traditional lithium production process.
• 🧑‍🏭 Lithium prices vary based on factors such as product type, purity levels, and location.
• 💚 The electric vehicle industry and green energy transition are major drivers of lithium demand.
• 🍉 Short-term economic factors like recessions do not significantly impact long-term lithium demand.
• 🤪 Automakers are increasingly looking to secure lithium supply and are going further down the supply chain, creating potential opportunities for investors.

Questions & Answers

Q: Why does Koby Kushner believe lithium is just getting started?

Kushner takes a 10-year view and believes lithium demand is generally growing faster than supply. New mines take much longer to develop than new battery capacity, so projected supply-demand curves continue to widen.

Q: How many new lithium mines may be needed to meet future demand?

Kushner cites a Benchmark Mineral Intelligence forecast calling for an average of 74 new lithium mines to meet 2035 demand. He uses that figure to illustrate the scale of the expected supply challenge.

Q: Why is lithium supply struggling to keep pace with demand?

Investment began with electric vehicles, followed by batteries and lithium chemicals, while the underlying mineral resource came last. Because bringing a new mine online takes much longer than adding battery capacity, supply has difficulty catching up.

Q: Could lithium prices remain elevated even if they return to the cost curve?

Yes, according to Kushner, because new production may come from more expensive sources such as lepidolite. Those higher extraction costs raise the cost curve, so prices could decline toward it and still remain elevated.

Q: Why is there no single global lithium price?

Kushner says lithium is not yet a uniform commodity with one worldwide price. Hydroxide and carbonate can command different prices, while battery-grade and technical-grade products, purity levels, and sales locations also affect pricing.

Q: How does Koby Kushner suggest investors handle lithium price assumptions?

He advises against relying on current spot prices and recommends using a simple long-term assumption above historic highs. He also suggests favoring investments that still work if lithium prices fall to half their current level, treating any additional upside as extra.

Q: What is the main driver of lithium demand?

Electric vehicles are identified as the main driver of lithium demand, alongside the broader green energy transition. Kushner does not expect lithium demand to disappear because lithium offers light weight and superior energy density for batteries.

Q: How do recessions affect the long-term lithium outlook?

Kushner views recessions as short-term events compared with what could be a new industrial revolution. For that reason, he gives less weight to temporary recession concerns when assessing lithium’s long-term demand trend.

Summary & Key Takeaways

• Lithium supply is currently struggling to meet demand, with the supply-demand curves projected to widen further by the 2030s.

• Prices have experienced volatility but are expected to remain elevated due to increasing production costs and a shift towards more expensive sources like lepidolite.

• Lithium is not yet a commodity, with different lithium chemicals fetching different prices based on factors such as product type, purity levels, and location.