Eye on Lithium: What oversupply? CBA analyst says electric vehicle supply chain still screaming for more lithium
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All your ASX lithium news for Tuesday, June 21.
A few weeks back Goldman Sachs, and then Credit Suisse – both well respected investment banks – released reports forecasting imminent oversupply in the lithium space.
Lithium stocks were hammered. In the ensuing weeks, however, industry experts and fellow investment banks have come out to counter these claims.
Among them was Benchmark Mineral Intelligence who gave four reasons why Goldman Sachs is wrong, and why the lithium market will remain in structural shortage until 2025.
And now CBA director mining and energy economist Vivek Dhar has added his forecasts to the debate.
On the conflicting views, Dhar says if you look at other research houses like Wood Mackenzie, they say we’ll need roughly 30-40% more lithium supply by 2030.
“If you look at what you need to hit 1.5 °, you actually jump up your uncommitted new supply by 2030 closer to 150% – so the level of pressure on lithium supply is huge,” he said.
“And to say that we’re going to have a hiccup when the EV supply chain is just screaming for more materials, it’s hard for me to see how that stacks up.”
Dhar pointed to the fact that major EV players like Tesla and BYD have looked at buying upstream, so there’s a link now between downstream and ensuring upstream supply.
“I think that the idea that we’re going to move away from lithium because the demand side falls away is very challenging to see in this environment,” Dhar said.
“Prices are very strong, and it will likely moderate because we’ll hit a point where it just becomes unprofitable, but I think the first thing that will change is the battery chemistries,” Dhar said.
He expects rising lithium prices – along with nickel and cobalt – will be the catalyst to evolve the type of battery chemistries used.
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A total of 57 stocks were in the green today, 44 flatlined and 27 were in the red.
Near term miner Core says it remains on track to ship first spodumene concentrate from the Finniss project in the NT by the end of CY 2022 – subject to the successful ramp-up of the Grants open pit, DMS plant and crusher and no further COVID-19 or weather-related delays.
The company says the mining rate has increased at the Grants Stage 1 open pit – which will be the initial source of ore for the DMS plant until BP33 and other mines are bought online – and construction activities for the DMS plant has commenced.
Core also expects to complete a reserve and resource upgrade for the project in the coming weeks.