Where Will All That Lithium Come From?

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Meanwhile, lithium prices have traveled sideways recently. So the shares of lithium miners, developers and explorers have suffered a correction. As they often like to do, speculators are temporarily rushing out of a market simply because it’s no longer going up, up, up. They’re probably piling into Bitcoin.

Folks, nothing goes straight up (not even Bitcoin). A cooling off in the lithium market is just what the doctor ordered. 

Look at these charts:

Click image for larger view

The chart on the left shows the prices of lithium hydroxide and lithium carbonate in Asia. Asia is the major buyer of lithium. Since the metal doesn’t trade on an exchange (yet), we have to use transactions in Asia to track it. You can see that 2016 and ’17 were rocket rides for the metal.

Again, nothing goes straight up.

On the right is a chart showing how lithium was consumed in 2016, the latest data reported. You can see that half of all global lithium consumption was used in energy storage. That’s all the batteries that go into electric vehicles (EVs), phones, grid storage, and other electronics. Importantly, while 50% of all lithium went to energy storage, that’s up from 30% just two years earlier. This makes for a tight market.

And going forward, what is the surge in energy storage going to do to lithium? I’ll tell you. Demand for lithium is projected to mushroom over 300% within eight years.

Where will all that lithium come from?

Indeed, the tight market is going to continue to squeak into 2018, according to Benchmark Minerals and other experts. Even as new mines come online. The mines simply can’t come online fast enough. It takes many years to find and develop a deposit. And there are risks all along the way.

So, what does this tell us about the recent pullback in the Global X Lithium & Battery Technology ETF (NYSE: LIT)? You know, the fund that holds a basket of companies that are all leveraged to lithium in all sorts of ways?

It tells us that pullback is a buying opportunity. We may not be at THE bottom. Year-end is not only the Christmas season … it’s shenanigans season for metals of all types. Funds and investors big and small rebalance, take tax losses or gains and so on. The metals markets, being small, can get pushed around.

But the bottom is close. The future for lithium is clear. And that is full throttle down when the next rally comes.

All the best,
Sean Brodrick

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Comments 6

  1. Our Outlook for 2018: Stocks, gold, oil and more. – Retirement Cheat Sheet January 3, 2018

    […] written many columns about this. Here, here, here and here, for starters. And it’s important to note that all estimates of the growth of the EV […]


  2. Will December 8, 2017

    I for one, take exception to the idea that there is an imminent shortage of lithium. Although demand is growing and the excess between future supply and demand for lithium is closing, it is still a while before supply will exceed demand for lithium.

    The picture for lithium is not comparable to other energy metals regarding both shortage and aspects to increase supply. For one thing, many other energy metals are mined as a byproduct and not from stand alone mines. This complicates the picture to increase their supply because exploration and development for small or stand alone deposits got left out.

    We know that demands for all energy metals are growing; but all energy metals are not created equal.


    • Will December 8, 2017

      Correction to last sentence of first paragraph to read – “… it is still a while before demand will exceed supply for lithium.”


    • Fred December 8, 2017

      I agree with you that a lithium supply shortage is not imminent, But for a different reason. It is still expensive to mine and lithium is found in limited areas making energy independence for many country’s elusive. This is why scientists are already looking for alternatives to lithium, such as salt, to reduce costs. The sodium ion battery may not replace lithium ion batteries completely but as Lithium becomes more expensive, sodium will make inroads. A good example could be China which has a fresh drinking water supply problem. They could build desalination plants for water and use the by-product for batteries to store solar energy.


  3. James December 7, 2017

    We are in for a gold tranche. There might even be a return to the gold bullion standard. Inverse etfs is what to get into. Also to get into is leveraged etfs, unleveraged etfs, mining stock, futures and options. We have both call options and put options. If we have a put option it means we are putting someone else in charge. When buying gold go with Kinross and Iamgold, these are booming at the moment.


  4. Jack hoke December 7, 2017

    Can’t Remember how many times I’ve heard in the past few years “get ready golds ready take off”