Lithium: Resource Majors Pile Into Sector Despite Price Collapse

One of the most pointed debates surrounding the electric vehicle (EV) industry is whether lithium, a key element of the cathode in most EV batteries, will be in shortage or perhaps in excess supply five to ten years from now. At that time, lithium consumption promises to be multiples of current levels, and the sufficiency of supply has obvious implications for both the future price of lithium and the general affordability of EVs.

Recent comments made by the International Energy Agency (IEA) represent a good summary of the position of lithium price bulls. The IEA believes that despite significant planned increases in lithium output, the EV industry may face shortages of lithium (and cobalt) if substantial additional investments in the production of those critical metals are not made.

The scientific journal Joule, on the other hand, is more sanguine about sufficient future lithium availability. Joule believes that many lithium-bearing regions have yet to be explored or discovered and notes that advances in exploration technology will make extraction easier. To that end, the scientific publication is optimistic that alternative sources of lithium, including in seawater, may in time prove to be economic. In addition, new battery technologies like solid state or lithium-air batteries may have much higher energy densities than current technologies.

Fears of excess supply were a principal reason for the ~70% collapse in lithium carbonate prices from November 2022 through late April 2023. Prices have since retraced about a third of that decline because of renewed optimism for battery demand predicated particularly on robust sales in China, generally improved market sentiment, and lower inventories in the global supply chain.

Spot lithium carbonate price in Chinese yuan per tonne. One US dollar = 7.257 Chinese yuan. Source: Trading Economics.

Recent news flow, particularly the flow of dollars, seems to favor the bullish view on future lithium prices. Indeed, over just the June 28-30 period, four major companies either announced or are rumored to be close to announcing plans to invest substantial capital in lithium properties.

  • On June 28, Exxon Mobil Corporation (NYSE: XOM) agreed to develop more than 6,000 acres of lithium-rich, salty brine deposits in Arkansas with TETRA Technologies, Inc. (NYSE: TTI), a producer of chemicals for water treatment and recycling.
  • On June 29, Bolivia signed agreements with Rosatom, a Russian state-owned company and China’s Citic Guoan Group to develop its largely untapped lithium resources. Rosatom and Citic Guoan expect to invest a total of US$1.4 billion in this effort.
  • On June 30, Bloomberg reported that commodity giant Glencore plc (LSE: GLEN) is close to providing funding for an Argentinean lithium project which is being developed by the French miner ERAMET S.A. (OTC: ERMAY) and China’s Tsingshan Holding Group. In return, Glencore is expected to sign an offtake agreement for the lithium produced.

Such interest from major players within the resource sector suggests that the metal is viewed as having a bullish outlook from those who are best known for providing the raw materials that run the economy.


Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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