Junior explorers have rejected investment bank Macquarie’s claim that the lithium market is “sleepwalking into a tsunami of oversupply”.

Macquarie’s wealth management division made the comments in a note titled “Lithium: Welcome to Thunderdome” sent to investors last week.

The note was in reference to the poor performance of lithium stocks this year.

Although 60 per cent of the 100-or-so ASX companies with lithium exposure have made gains over the past 12 months, three-quarters have gone backwards over the past six months.

>> Scroll down for a list of ASX stocks with lithium exposure, courtesy of leading ASX data provider MakCorp

The reversal was largely due to expectations of a lot of product hitting the market.

But that hasn’t happened, Argosy Minerals (ASX:AGY) managing director Jerko Zuvela told delegates at the Diggers & Dealers Mining Forum in Kalgoorlie on Monday.

“Not only hasn’t it happened so far, there are ongoing issues with chemical conversion due to environmental issues, construction issues and so forth,” he said.

Macquarie sees mine supply growing at an annual rate of 37 per cent until 2022, and brine production rising around 12 per cent each year over the same period.

But it expects demand to grow at only 14 per cent each year (27 per cent in the battery sector alone).

“I think the market is quite easily manipulated,” Mr Zuvela told Stockhead on the first day of the conference.

“We’ve seen brokers in the past like Morgan Stanley say the same sort of bad news. But really what we’re seeing … is the lithium chemicals end-use product is in short supply. There’s not enough of it and you can’t produce it fast enough.”

Argosy’s share price rocketed nearly 70 per cent to an intra-day high of 30.5c on Monday after it revealed it can produce battery-grade lithium carbonate.

The company says it can get 99.6 per cent pure lithium carbonate from its 500-tonne-a-year stage one plant at its Rincon lithium project in Argentina.

Lithium carbonate is used to make cathode material for lithium-ion batteries.

Supply is unable to keep up with the rapid increase in demand because it’s not that easy to bring spodumene mines online and existing brine producers aren’t ramping up production, according to Mr Zuvela.

“So really what we’re seeing is the spot price market in China coming back a bit and that’s putting the fear into brokers that they think the markets are oversupplied,” he explained.

“But it’s a totally different market – the Chinese spot market versus the international market. What we’ve seen is the international price [free on board] South America rise steadily over the last six or nine months.”

‘Constipated’ supply chain

At the same time, the supply chain is “constipated”, Lithium Australia (ASX:LIT) boss Adrian Griffin told Stockhead.

“You’ve got to look at the tsunami of demand and see how it balances,” he said.

“Quite frankly the demand curve is rising so rapidly that it’s very difficult to see supply catch up.”

Lithium Australia is set to be the first Australian company to do everything from mine lithium to make batteries all under one roof.

The company has just finished the construction of a new pilot plant in Sydney and begun commissioning the plant using waste material taken from mines in the Kalgoorlie region.

It will turn that material into cathode powder and make batteries.

The cathode is used to conduct electricity flows out of a battery or device.

The forecast is that lithium demand will more than triple between now and 2025, Global Geoscience (ASX:GSC) managing director Bernard Rowe told Stockhead.

“It does look like there could be some short-term oversupply,” he said.

“We’re about a 250,000-tonne market now, but by the time you get to 2025 it’s easily 700,000 or 800,000 tonnes. Once we get to needing more than a million tonnes of lithium carbonate a year I think a lot of those oversupply arguments go away.”

Global Geoscience has one of the largest lithium and boron resources in North America.

A mining study found recently that the Rhyolite Ridge project in Nevada could be a 3 million to 4 million tonne per annum operation with an estimated life of 30 years based on the current resource.

Here’s a list of ASX stocks with exposure to lithium courtesy of leading ASX data provider MakCorp:

ASX codeCompanySix-month price change12-month price changePrice Aug 6 (intraday)Market Cap
DMIDEMPSEY MINERALS2.111111111115.666666666670.2825.71M
GWRGWR GROUP1.06251.538461538460.16541.66M
AVLAUSTRALIAN VANAD0.8108108108113.466666666670.06795.30M
DEGDE GREY MINING0.80952380952440.1972.55M
AGOATLAS IRON0.720.8695652173910.043390.71M
TARTARUGA MINERALS0.7073170731711.545454545450.1418.41M
IECINTRA ENERGY COR0.4444444444440.30.0135.04M
BSMBASS METALS0.3888888888891.50.02563.86M
HWKHAWKSTONE MINING0.3751.357142857140.03310.40M
VMCVENUS METALS COR0.350.2272727272730.13511.77M
WKTWALKABOUT RESOUR0.2903225806450.6216216216220.1232.51M
ENTENTERPRISE METAL0.266666666667-0.1739130434780.0197.29M
LCDLATITUDE CONSOLI0.240.93750.0318.53M
AREARGONAUT RESOURC0.2380952380952.250.02641.97M
PLLPIEDMONT LITHIUM0.20.5652173913040.18100.66M
PLSPILBARA MINERALS0.143751.346153846150.9151.57B
ADNANDROMEDA METALS0.14285714285710.0087.17M
KSNKINGSTON RESOURC0.1428571428570.60.02428.13M
AEEAURA ENERGY0.1-0.120.02222.46M
KORKORAB RESOURCES0.07692307692310.5555555555560.0288.49M
ZNCZENITH MINERALS0.05882352941180.8947368421050.1838.30M
AGYARGOSY MINERALS0.05555555555562.56250.285165.33M
MZZMATADOR MINING0.03333333333330.3478260869570.3116.70M
DGRDGR GLOBAL0.0238095238095-0.3629629629630.08652.73M
RIORIO TINTO0.02160943921520.16141672946577.06123.50B
AOUAUROCH MINERALS0.0102040816327-0.4176470588240.0999.88M
ZEUZEUS RESOURCES L00.2727272727270.0142.52M
VXRVENTUREX RESOURC01.166666666670.01339.58M
PIOPIONEER RESOURCE00.2941176470590.02233.39M
EUREUROPEAN LITHIUM03.756097560980.195106.42M
MINMINERAL RESOURCE-0.01038575667660.25849056603816.6753.09B
TAWTAWANA RESOURCES-0.01265822784810.6455696202530.39222.56M
GXYGALAXY RESOURCES-0.01388888888890.422.841.12B
POSPOSEIDON NICKEL-0.02325581395350.750.04245.70M
SEISPECIALITY METAL-0.04545454545451.333333333330.02112.21M
BAUBAUXITE RESOURCE-0.05-0.1971830985920.05712.01M
PM1PURE MINERALS-0.0714285714286-0.350.0134.09M
CAZCAZALY RESOURCES-0.0731707317073-0.07317073170730.0388.75M
CXOCORE EXPLORATION-0.0819672131148-0.1764705882350.05634.21M
SI6SIX SIGMA METALS-0.0833333333333-0.08333333333330.0115.03M
KAIKAIROS MINERALS-0.08571428571430.8823529411760.03227.65M
AJMALTURA MINING-0.090.5166666666670.273500.46M
MZNMARINDI METALS L-0.10.1250.00916.02M
TRTTODD RIVER RESOU-0.107142857143-0.03846153846150.1259.24M
ORNORION MINERALS L-0.1162790697670.7272727272730.03856.30M
SYASAYONA MINING-0.1252.230769230770.04272.05M
DEVDEVEX RESOURCES-0.1250.40.0076.62M
SRKSTRIKE RESOURCES-0.1290322580650.2272727272730.0547.99M
GSCGLOBAL GEOSCIENC-0.1384615384620.3023255813950.28418.81M
EMHEUROPEAN METALS-0.154639175258-0.4810126582280.4158.00M
LKELAKE RESOURCES-0.1666666666671.56410256410.131.43M
MLSMETALS AUSTRALIA-0.1666666666670.250.0059.36M
ARMAURORA MINERALS-0.175-0.2666666666670.0333.85M
LTRLIONTOWN RESOURC-0.18181818181820.02729.81M
KDRKIDMAN RESOURCES-0.1858407079651.41.38563.38M
NLINOVO LITIO-0.2222222222220.050.04214.91M
TKMTREK METALS-0.24-0.2692307692310.0195.93M
NVANOVA MINERALS-0.2424242424242.571428571430.02519.89M
MQRMARQUEE RESOURCE-0.250.4210526315790.2711.33M
PSMPENINSULA MINES-0.25-0.550.0096.36M
VMSVENTURE MINERALS-0.25806451612900.02311.93M
LPILITHIUM POWER IN-0.2716049382720.01724137931030.29578.21M
THRTHOR MINING-CDI-0.2741935483871.81250.04529.38M
SCISILVER CITY MINE-0.2888888888890.6842105263160.0327.38M
CHKCOHIBA MINERALS-0.3-0.3636363636360.0073.91M
BMTBERKUT MINERALS-0.310344827586-
CMCCHINA MAGNESIUM-0.3103448275860.3333333333330.026.30M
LITLITHIUM AUSTRALI-0.3125-0.1538461538460.1147.91M
KTAKRAKATOA RESOURC-0.318181818182-0.2105263157890.033.53M
BOABOADICEA RESOURC-0.3181818181820.20.156.61M
SUHSOUTHERN HEMISPH-0.333333333333-0.1428571428570.065.11M
LRSLATIN RESOURCES-0.3333333333330.50.00616.70M
DHRDARK HORSE RESOU-0.3529411764712.666666666670.01119.23M
TKLTRAKA RESOURCES-0.3773584905660.8333333333330.03310.60M
4CEFORCE COMMODITIE-0.410958904110.1315789473680.04317.72M
CFECAPE LAMBERT RES-0.4117647058820.1538461538460.0331.36M
ASNANSON RESOURCES-0.4358974358978.166666666670.1153.03M
AMDARROW MINERALS L-0.457142857143-0.3448275862070.0196.14M
PSCPROSPECT RESOURC-0.461538461538-0.06666666666670.02855.47M
INFINFINITY LITHIUM-0.466666666667-0.6210526315790.07214.62M
MOXMONAX MINING-0.5-0.40.0032.17M
CULCULLEN RES-0.500.0012.60M
CGMCOUGAR METALS NL-0.5-0.4285714285710.0044.66M
AVZAVZ MINERALS-0.5208333333330.3068181818180.115226.62M
CASCRUSADER RESOURC-0.573770491803-0.7833333333330.02613.06M
PNNPEPINNINI LITHIU-0.58064516129-0.3157894736840.0137.57M
N27NORTHERN COBALT-0.584415584416-
GPPGREENPOWER ENERG-0.615384615385-0.6666666666670.0057.28M
RLCREEDY LAGOON-0.638888888889-0.3157894736840.0135.22M
CADCAENEUS MINERALS-0.666666666667-0.6666666666670.00112.89M
MTHMITHRIL RESOURCE-0.675675675676-0.70.0122.40M
WMLWOOMERA MINING L-0.905-0.9050.09511.16M


Stockhead is proud to use Mak Corp as a provider of great value, accurate and reliable data on ASX-listed mining stocks. For more information head to Mak Corp’s website.

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This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.