Gerardo Del Real,
Editor
Feb. 17, 2023
Despite Goldman Sachs’ – and others’ – very incorrect bearish lithium price forecast, which is premised on a situation where there is magically an oversupply of lithium, lithium prices have remained resilient and I will continue to profit from that resiliency.
The CEO of the world’s largest lithium miner – Albemarle (NYSE: ALB) – recently called, not just for prices to remain high at current levels, but for the potential for prices to jump another 40% over the 2022 highs where prices doubled.
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Prices are up nearly nine-fold in the past three years and the scenario I’ve laid out over the past several years where automakers are happy to write large checks in exchange for a secure supply of lithium which enables their shift into the EV space has come true.
On Tuesday January 31, 2023, General Motors said it plans to invest $650 million into Lithium Americas to secure access to its lithium. It's the biggest investment an automaker has ever made to secure sources of the raw materials that go into batteries but I guarantee it won't be the last.
“Lithium pricing needs to remain elevated in order to support the incentives required to take on those investment risks,” Eric Norris, head of Albemarle’s Energy Storage division, said during a recent presentation. “The market is tighter than it was last year. There’s significant supply coming on, but the demand growth is more significant.”
Norris stated global lithium demand should hit 3.7 million tonnes by 2030, with Albemarle alone expecting to supply about 600,000 tonnes by that time.
Multibillion-dollar businesses that need lithium supply to survive are about to unleash a very, very profitable bidding war for exceptional assets and are going to pay handsomely for the privilege of being able to buy all the supply producers can offer.
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View PublicationsHeck of a business model if you’re a producer or have a significant discovery on your hands.
We’re going to see a similar setup in the uranium, gold and copper space within the next twelve months and we’re going to continue to position aggressively for that.
Gerardo Del Real
Editor, Daily Profit Cycle