Australian lithium hopefuls are watching the battery metals market with great interest, as a supply crunch looms and prices rise.
Trading Economics, which provides lithium pricing based on spot prices for battery-grade lithium carbonate traded in China, has the metal sitting at ¥67,500 per tonne, which represents a 45 per cent gain since the start of the calendar year.
A silver-white light metal, lithium hydroxide is used in batteries for EVs and is produced from a chemical reaction between lithium carbonate and calcium hydroxide, hence the price focus on lithium carbonate.
Global commodities analyst S&P Global Platts is of the view that lithium prices will rise further in 2021, as demand for batteries from China grows.
Survey says lithium on the up
A survey conducted by S&P Global Platts has found that the vast majority of those in the sector believe lithium is experiencing a significant upswing.
Some 96 per cent of respondents expect China's demand for lithium metals to rise further in 2021, the report said, with stimulus measures expected to boost demand for EVs.
A whopping 91 per cent and 78 per cent of market participants believe China's battery-grade lithium carbonate and hydroxide prices will be higher this year than last.
There are expectations that the lithium carbonate price could go beyond ¥80,000 per tonne, levels not seen since mid-2018.
The other factor in the lithium market is spodumene, a mineral that is an important source of lithium.
More than half (57 per cent) of respondents believed spodumene supply would remain tight due to expanding lithium carbonate and hydroxide capacity, S&P Global Platts said, which would in turn bolster Chinese lithium metals prices.
It’s not just China, of course. Further to this, a GlobalData report says global demand for lithium will rise to 117,400 tonnes by 2024.
Piedmont Lithium Ltd (ASX:PLL) (NASDAQ:PLL) (OTCMKTS:PDDTF) CEO Keith Phillips told S&P Global Platts earlier this year that the global demand could lead to a supply crunch by 2025.
Aussie hopefuls in the fold
Piedmont hopes to help meet this demand through its namesake project in North Carolina, USA, and is also buoyed by the US Government’s increasing support for a domestic EV industry.
It recently appointed experienced mining company executive Todd Hannigan as non-executive director, who will bring increased focus on battery metals and advanced manufacturing materials, as the company progresses its Piedmont Lithium Project.
Others with US projects and keen viewers of US developments are Anson Resources Ltd (ASX:ASN) and ioneer Ltd (ASX:INR) (OTCMKTS:GSCCF) (FRA:4G1).
There are a number of other ASX-listed lithium explorers buoyed by recent lithium market strength, including Core Lithium Ltd (ASX:CXO), Infinity Lithium Corporation Ltd (ASX:INF), Lake Resources NL (ASX:LKE) (OTC:LLKKF) and European Lithium Ltd (ASX:EUR) (FRA:PF8) (VSE:ELI).
In the past week, Infinity Lithium secured $15 million in a well-supported placement as it looks to advance its San José Lithium Project in Spain and its integrated supply strategy in Europe.
A feasibility study for San José is expected to be released in the fourth quarter of 2021 and will incorporate outcomes from the test-work program funded by the placement.
Core Lithium is making solid progress in its aim to become Australia’s next lithium producer through the development of its flagship Finniss Project in the Northern Territory and is also buoyed by gold results along the entire 1.6-kilometre Far East belt at its Bynoe Gold Project.
ioneer, which has a project in Nevada, views the new Biden Administration in the US as a catalyst for not only its business, but wider US vehicle electrification. It expects the US Bureau of Land Management’s final Record of Decision (ROD), which allows the company to commence construction, to be made in the fourth quarter of 2021.
European Lithium is preparing to begin resource extension drilling at its Wolfsberg Lithium Project in Austria, while Lake Resources is on the cusp of developing its Kachi Project in Argentina and will use technology to produce a ‘cleaner’ product.
- Daniel Paproth