Rodney Hooper: Lithium Prices, New Supply and Lessons Learned | Summary and Q&A

TL;DR

The lithium market performance has been volatile, with unexpected deficits and price fluctuations, but a demand pick-up and potential energy storage demand could lead to higher prices in the future.

Key Insights

• 😀 The lithium market faced unexpected deficits last year, but demand has picked up in 2023, particularly in China.
• ✋ Downstream buyers are cautious about high lithium prices.
• 🍂 Prices have fallen and are now rebounding, indicating stability.
• 🥺 Energy storage demand and a potential recovery in EV demand could lead to higher prices.
• 🧑‍🏭 Economic factors like inflation and a recession could impact the lithium market.
• 😘 OEMs face challenges and risks when investing in mining companies, particularly for low-carbon projects.
• 🌍 Africa shows potential as a lithium supply source but requires careful evaluation of political stability and infrastructure.
• 🌏 Canada has promising lithium deposits but may have longer timelines for production compared to Australia.
• 📁 Direct lithium extraction (DLE) is an opportunity but should be valued as optionality, considering realistic timelines and costs.

Transcript

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Questions & Answers

Q: What factors have contributed to the volatility in the lithium market performance?

The market was caught off guard by unexpected deficits last year, followed by a weakness in China's EV sales at the beginning of this year. However, a demand pick-up and buyer resistance to high prices have brought stability to the market.

Q: What can be expected for lithium prices for the rest of 2023?

Prices have fallen and are now rebounding. It is predicted that prices will remain stable around $4,000 per ton, driven by the price of Spider-Man, the feedstock for lithium chemical production. However, there is potential for slightly higher prices towards the year-end, depending on the recovery of EV demand and the energy storage sector.

Q: What factors could derail the predicted structural supply shortage of lithium?

High inflation and a recession could potentially derail the predicted supply shortage. If EV prices remain high and unaffordable to a large market, it could limit the growth of EV adoption and affect the demand for lithium.

Q: What are the risks and challenges of OEMs partnering and investing in mining companies?

OEMs investing in new technology plays for low-carbon or net-zero carbon projects may face cost and production timeline blowouts. It's important to consider conventional flow sheets for early-stage lithium production, as they offer more reliable and cost-effective options. OEMs need to balance their investments to ensure a competitive and affordable supply of EVs.

Summary & Key Takeaways

• The lithium market experienced a greater deficit than expected last year, but demand has started to pick up in 2023, especially in China.

• Downstream buyers are pushing back on lithium prices above $50, making it a stable region for the moment.

• Prices fell from November to April but are now rebounding, and there is potential for higher prices towards the year-end if there is a recovery in EV and energy storage demand.