Lithium - Boom or Bubble?

Mining & Minerals - Evaluations / Lithium, Potash, Halite, & P2O5 Mining Projects

Date posted: 05/29/16

Greg Klein reports that lithium mining and exploration is the hottest commodity in the world, with parabolic prices amid a rush to find new sources of supply. But can lithium sustain this level of enthusiasm? Consider the collapse of uranium in 2007, rare earths in 2011, graphite in 2012 and, in this case, lithium itself between 2009 and 2011. Is this time different? Or should we heed a cautionary tale? We live in very exciting times in terms of how energy is used, generated and stored, and lithium is at the epicentre of that, says Chris Berry. As an analyst with House Mountain Partners and the Disruptive Discoveries Journal, he examines the interplay of technology, emerging economies and commodities, especially energy minerals. The demand story, when you look at the forecasts for electric vehicles and energy storage in particular, is real. It is defensible and it is sound. Yet lessons from the past can not be ignored, he adds. The lithium story in 2009 was almost the same as it is today... Electric vehicles are here. In other words, they were considered ready to compete, he recalls. But that was not the case. In 2009 they could not compete on a cost basis with internal combustion engines. I think the main difference now is the absolute collapse in cost of a lithium-ion battery on a per-kilowatt-hour basis. Now, because lithium-ion battery prices fall by about 14% per year, we are getting to the point where vehicle electrification can take hold. Although battery costs did drop in 2009, on a per-kilowatt-hour basis the average battery was much more expensive than it is today. This time around, batteries continue to get cheaper and they continue to get more powerful at the same time. That is a winning combination. The Tesla Gigafactory will not be the sole battery-building behemoth. At least 12 such factories are expected to come online by 2020, according to Benchmark Mineral Intelligence. Another recent report says Volkswagen is considering a run.