7th March 2023 - Lithium

Lithium prices have soared almost 10 fold over the past two years as the growth lithium-ion battery production outpaced the available supply of the crucial raw material. With new supply coming on stream, both from existing mine expansions and from the first of a wave of new developments like Sigma Lithium in Brazil, and with Chinese EV demand having been weaker than expected in early 2023, the price is now easing. With EVs forming a significant plank of the initial global drive to lower carbon emissions, the rate at which demand rises will be linked to the success of EV roll out and all the implications this has for expanding power generation and grid capacity. New supply of lithium is highly dependent on the delivery of some large mining projects on time, something which is rare in the world of mining. In the mix, Western Governments want reduced dependence on China. This is a microcosm of many investment conundrums which arise from the challenge of energy transition. Graeme Bencke and Paul Jourdan discussed how this might play out over the new few years.