In 2017 lithium prices were rising and everyone predicted they would continue upward. In 2018, some analysts, including Morgan Stanley and Woods Mackenzie, began to expect lithium prices to fall back.
At least through the first half of 2018, that fallback hasn’t happened. Meanwhile, other analysts like Deutsche Bank still expect strong demand growth.
But for QMC Quantum Minerals and its investors, whether Morgan Stanley is right or wrong will matter very little. At the bearish analysts lowest projections, lithium prices will still remain so high that a good resource which is run well, should surely prove successful.
We have entered a whole new phase in the history of lithium. Previously, the industrial world could get by with modest amounts. The US Geological Survey has kept data on lithium use over the years, and it tells quite a story.
In 2007, lubricating greases and pharmaceuticals added up to more demand for lithium than did lithium consumption in lithium ion batteries. Batteries absorbed about 18% of the lithium supply at the time. Ten years later, that jumped to 39% for batteries.
As many analysts continue to predict, this pace will only accelerate for the next several years.
A few points to support that idea:
- EV's will require massive amounts of lithium compared to historic uses such as camera and hearing aid batteries.The Tesla Model S battery pack, for instance, requires 63 kg of lithium.
- Fleet and municipal buyers are important. Electric bus sales are growing 33% a year. 30 US cities, including Los Angeles, Seattle, San Francisco and Portland municipal governments have agreed to start a partnership to mass-purchase EVs for their public vehicle fleets. That includes passenger cars, police cruisers, street sweepers and trash haulers.
- National energy programs will also drive lithium demand. Britain and France will ban sales of gas-powered cars after 2040; India draws the line at 2030. Norway wants all new cars sold to be EVs by 2025. China continues to work toward a timetable, but it will be aggressive
- SQM a major lithium miner in Chile, predicts demand will grow 80% a year—SQM does not benefit from encouraging new supply, which lends that prediction a lot more credibility.