High Voltage: US, EU carmakers staring down the barrel of a 725,000tpa lithium deficit by 2030

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Data from Benchmark’s Lithium Forecast shows a projected annual lithium supply deficit of up to 225,000 tonnes in North America and 500,000 tonnes in Europe by 2030.

They are insane numbers.

Especially as bullish price sentiment within the lithium market continued to develop in August, driven by Chinese downstream companies “who were willing to pay higher prices for what little feedstock was available”, Benchmark Mineral Intelligence says.

But this is just the beginning. Over the longer term, this lack of raw material supply could completely derail Europe’s and North America’s electrification plans.

“In general, there is a lack of understanding of just how much lithium is required to fuel electric vehicle demand going forward,” Benchmark senior analyst Cameron Perks says.

To incentivise the right amount of investment in new mines there is going to have to be a sustained period of higher prices, he says.

“There also has to be some level of education for decision makers on the severity of the shortfall and how much money and time it realistically takes to get a mine into operation and ramped up.”

Vanadium’s stellar 2021 run

The vanadium pentoxide (V2O5) price has posted a stellar performance since the beginning of 2021, with an 80% increase to US$9.6/lb, according to Roskill.

~90% of V2O5 is used to strengthen steel; just ~2% goes into the nascent redox flow battery market.

“During the first seven months of the year, global steel production rose 12.4% y-o-y, with China’s steel output increasing 8.0% y-o-y and the rest of the world 18.5% y-o-y,” Roskill says.

“Unsurprisingly, vanadium demand followed.

“Meanwhile, vanadium supply is expected to increase only moderately in 2021, and mostly coming from some Chinese slag producers.”

Despite the Chinese dropping steel production in the coming months, Roskill believes that vanadium prices will fluctuate within a relatively narrow range until the end of the year but remaining above their long-term forecast.

“While Chinese steel production may drop on a y-o-y basis in the coming months, domestic consumption remains reasonably strong with the main decline coming from steel exports,” it says.

“Inventories [also] appear to be leaner than usual, and stronger demand in the world ex-China combined with continuous supply chain issues could trigger more vanadium purchases from steel mills in coming weeks.”

Strong investor sentiment continues

Only 25 of the 130 ASX battery metals stocks on our list posted a loss last week.

Over the past year, 59 stocks have posted a gain of 100% or more.

Three of them – Vulcan, Sayona and Lake – have posted a gain of 1000% or higher, and there are several more knocking at the door.

Here’s how a basket of ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium are performing>>>

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop:

Small Cap Standouts

PAN ASIA METALS (ASX:PAM) +323%

The explorer went exponential after announcing the acquisition of the ‘Kata Thong’ geothermal lithium project in southern Thailand last Tuesday.

Like punter favourite  Vulcan Energy (ASX:VUL), Pan Asia wants to produce a ‘carbon neutral’ lithium product by pumping deep geothermal brines to surface, using the excess geothermal energy to power its lithium chemical process and maybe even export additional power to the grid.

“The potential for a geothermal style lithium project is strong,” managing director Paul Lock says.

“The underlying geothermal system is similar to that of Cornish Lithium except that at Kata Thong the granite is exposed at surface with nearby geothermal discharges up to 780C at surface and a hotter geothermal system modelled to depths down to 2km,” he says.

“We see this as complementary to the [flagship] ‘Reung Kiet’ lithium project where we anticipate estimating a maiden mineral resource in November and a Scoping Study soon after.”

The ~$27m market cap stock is up ~175% on its October 2020 IPO price of 20c per share.

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