While lithium prices continue to soar as supply struggles to keep up with demand, will this sustain going forward and what can we expect from the consistency of future price trends?
Hedley Widdup, executive director and fund manager of mining investment company Lion Selection Group, expects there could be some undulations to come.
“I can see very clearly the fundamental for lithium going into batteries (and) the need to produce more lithium in order to make more batteries,” he said during a panel discussion at the recent International Mining and Resources Conference (IMARC).
“You also need to mine a lot of other stuff … to go into those batteries and that might very well hold back the consumption of lithium. So let’s not get too far ahead of ourselves in terms of what will be required in 2023, 24, 25.”
Widdup said it’s difficult to smoothly extrapolate the lithium price from where we see it now over the coming years, and that small markets which grow strongly often have a lot of volatility.
The initial question Widdup was asked was whether Elon Musk had pumped up lithium demand to ultimately drive down the lithium price.
Musk has been vocal about lithium’s prospects and the entrepreneurial opportunites that await.
“I’d certainly encourage entrepreneurs out there who are looking for opportunities to get into the lithium business,” Musk said on an investor earnings call in April. “Lithium margins right now are practically software margins.”
He has also been vocal about the opportunities that lie in lithium refining.
“You can’t lose,” he said of lithium refining in Tesla’s second-quarter earnings call.
“It’s licensed to print money.”
Musk has also said that “lithium batteries are the new oil”, which has also done no harm to lithium’s global interest.
Widdup put it candidly.
“Is it in Elon Musk’s interest to see a lot of entrepreneurs get rich for bringing him lithium? No. Is it in his interest to engineer oversupply by really encouraging people? Well, yeah, definitely because he wants a lot of it to make batteries.
“We’ve seen a lot of exploration, there will be development. I think supply will increase quite rapidly to meet that and you might be shocked by how much the demand is volatile … as well.”