Increased investment needed in lithium supply

The global lithium industry needs an investment of around $12bn in the next five years if it is to match supply with rising demand, according to Joe Lowry, president of California-based lithium advisory firm Global Lithium.

Speaking at the Paydirt 2019 Latin America Downunder mining conference in Perth, Lowry — who was previously a senior executive at FMC Lithium — dismissed talk of a lithium chemical oversupply as a myth.

"Overall, the industry faces a lack of financing and needs to inject more than $12bn within five years to have a chance of meeting demand," he said, adding that this requirement is exacerbated by failures in some lithium start-ups, which have discouraged investment in the sector.

"There will not be a significant lithium chemical oversupply anytime soon. While there have been many optimistic supply forecasts, recent results speak for themselves," he said.

"The myth is driven by reports from ‘big bank' analysts and supported by statements by Chilean regulator Corfo after its revised agreements allowing Albemarle and SQM to produce more material from the Atacama brine resource. The reality is that increasing production quickly is not so easy."

"The future of lithium is all about e-mobility and energy storage. E-mobility is a much broader concept than just cars — it covers all forms of transportation from scooters to buses to ferries and, hopefully, even air transportation in the coming years," he said.

The world's four biggest producers — Chile's SQM, US-based Albemarle and China's Ganfeng and Tianqi — are not expected to be able to meet 2025 lithium demand on their own. Several other smaller players are in various stages of developing projects in Western Australia, Latin America, Africa, Europe and North America.

Commenting on the source and nature of lithium deposits, Lowry called for a more balanced debate, saying analysts' predictions of dominance of hard rock lithium were both incorrect and incomplete.

Neither lithium source — hard rock or brine — will dominate the future, Lowry said, adding that all lithium supply is not created equal.

"It will be cathode selection decisions that will drive product choice. Any price issue will be defined more by the actual production cost curve at the time — but expect prices to be much firmer going forward," he added.