Lithium demand is expected to grow five fold as electric cars come to market. Prices are up and numerous capacity expansion projects are in the works. Earnings are expected to rise.
The Albemarle article makes it clear they are the industry leader. They imply they have pricing power. They intend to keep prices high to encourage development of the additional mining and processing capacity required.
Yes, its a commodity product and supply and demand will drive prices over time. For now more lithium capacity is needed. In the end low cost producer may survive. Not clear who that is at this point.
I’ve been watching these two. I think VALE is the number two producer of Lithium in the world. Also, there are some mining companies getting lithium from some valley outside of Vegas that is easy to get to and cheap to process. ALB may be involved in this operation. I don’t remember…doc
Keep your eye on solid state batteries. SLDP, Toyota, and QS are some of the leaders in the drive to replace lithium and other rare earth metal batteries.
Some are looking at sodium batteries but the atomic wt difference is huge. Lithium will be hard to replace. Lithium iron phosphate LFP is replacing lithium batteries made with nickel and cobalt. LFP is cheaper and more available reduces range.
.1. The lithium price quoted daily is the spot or futures price, not what lithium buyers with long term contracts pay. The price is already down over 20% from the November high
.2. Tesla is not overly worried about the availability as otherwise they would not be making Mega Packs which are huge metal boxes full of batteries.
To be on the safe side they have long term contracts with lithium suppliers, they bought lithium bearing clays in Nevada which Musk says can be exploited using table salt instead of harsh acids, and they are building a lithium refining facility in Texas.
It’s great to have the cash flow to finance all that.
I have a suspicion that Tesla has an ulterior motive for making Megapacks. I suspect that there is enough flexible demand for Megapacks that they can forward order as much lithium, and as many batteries, as necessary to make them. BUT if there is ever a spike in demand for vehicles, and if there is a temporary shortage of elements/batteries, they can simply divert the materials from Megapacks to vehicles and not run out for their main business. Same applies to Powerwalls, they can slow production/delivery of them as desired if the batteries are needed for vehicles.
I did a pretty extensive article on lithium producers on the old board, no longer available. Will have to see if I can find it.
Vale is best known as a producer of iron ore. The Yahoo Finance article on them makes no mention of lithium.
If you are into commodity investing and iron ore is for you, you have many choices starting with Cleveland Cliffs, Nucor, and US Steel. Personally I think iron is one that will be severely impacted if there is a recession. I think lithium will hold up better. Tesla has trimmed staff in anticipation of possible recession. But can you imagine how many EVs Ford, GM, Stellantis, VW, Mercedes, BMW, Volvo, Honda, Toyota, etc have to produce to put one or two in every dealership across the country. I expect them to run flat out during any recession. Lithium demand may dip, but I suspect not very large.
Leading producers of lithium are SQM and Albemarle. Livent is expanding. All three are mostly in Chili and expanding into Argentina. Also production in Australia. China is a major investor. Albemarle is the largest producer in the US but there are some smaller ones and wanna bes. Salton Sea, Great Salt Lake, Quebec, Arkansas. Lots of players. Even Warren Buffett in California.
Thanks for that, I read somewhere about VALE when I bought some calls a few months ago and can’t find the article now. I probably misread it but it did say they would have lithium output of 130 tonnes in 2023…doc
“SQM posted fourth-quarter lithium volumes up 38% year-on-year to 43,000 tonnes, selling at a record average of $59,000 a tonne. A year earlier, lithium sold for just $14,600 a tonne.”
'SQM said it expects to grow its lithium capacity from 210,000 tonnes forecast this year to 265,000 in 2025 as plants in southwestern Australia and China’s Sichuan come online."
