• Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Blog Home
  • Topics
    • Keystone Press Releases
    • Politics and Government
    • Legislation
    • Nevada News
    • Tourism & Gaming
    • Rural Nevada
    • Business
    • Opinion
  • Membership
  • Contact Us
  • About Keystone Nevada

Keystone Nevada Korner

Welcome to The Keystone Korner The Official Blog of Keystone Nevada

Home » Lithium Prices Soar, Turbocharged by Electric-Vehicle Demand and Scant Supply

Lithium Prices Soar, Turbocharged by Electric-Vehicle Demand and Scant Supply

December 16, 2021 by Pauline Lee

The lithium price surge is setting off a scramble for supply and fueling fears about long-term battery metals shortages 

By Amrith Ramkumar, The Wall Street Journal, December 13, 2021

Lithium prices are rising at their fastest pace in years, setting off a race to secure supplies and fueling worries about long-term shortages of a vital ingredient in the rechargeable batteries that power everything from electric vehicles to smartphones. 

An index of lithium prices from research firm and price provider Benchmark Mineral Intelligence doubled between May and November and is up some 240% for the year. The index is at its highest level in data going back five years. 

Driving the run up are bets on continued scarcity. Demand is multiplying as Tesla Inc. and other auto makers ramp up sales of electric vehicles. Supply, meanwhile, has been constrained by limited investment in new projects following a recent bear market and supply-chain bottlenecks. Producers often face environmental opposition and cumbersome permitting processes when trying to extract the silvery-white metal.

While there is plenty of lithium in the world, converting it into battery-grade chemicals is a long, expensive ordeal. With traders and corporate buyers riding momentum, prices are prone to big moves in both directions. 

“It’s like being in a hot real-estate market,” said Jon Evans, CEO of Lithium Americas Corp. , a startup working to produce lithium in Nevada that also co-owns a project in Argentina with a Chinese partner. “There’s a mad scramble.” 

Lithium Americas hasn’t produced any lithium but has a market value of roughly $4 billion after a recent share-price surge. 

The rally is stoking fears about battery manufacturers and auto makers obtaining enough material to meet electric-vehicle demand. Many companies also are coping with higher prices for other raw materials and key parts such as computer chips. 

Even though commodities are a tiny part of total vehicle cost, they could contribute to rising average prices for lithium-ion battery packs, according to research firm BloombergNEF. That would be the first such increase in at least a decade. Years of tumbling battery costs have made electric vehicles more competitive with gasoline powered cars.

High lithium prices are a boon for the small group of companies including Albemarle Corp. that dominate global supply and have reported resurgent sales recently.

Many others are rushing to tap into the excitement, sparking share-price gains that mirror the climb in shares of Tesla and electric-vehicle stocks. The Global X Lithium & Battery Tech ETF has risen more than 40% this year, while shares of some lithium producers are up about 70% or more. 

Shares of lithium companies are the main avenue for investors to wager on prices because there is no active futures market like there is for more heavily traded commodities such as oil. 

Most lithium comes from countries such as Australia and Chile. There are two main sources: a salty brine that is pumped out of the ground and spodumene, a mineral contained in hard rocks. After extraction, chemical processes are used to make battery-grade lithium compounds. 

China is the world leader in lithium chemical processing and battery production, a concern for U.S. policy makers and companies hoping to create a domestic supply chain but struggling to compete with China’s low costs and industry expertise. 

Environmental opposition and permitting delays also are obstacles for companies, including Lithium Americas in Nevada and Piedmont Lithium Inc., a North Carolina-based producer. Environmental fears are limiting supply in commodities from oil to copper, helping buoy prices across the board.

The challenge for lithium producers is that it takes many years and heavy investment to get projects off the ground, creating mismatches between quickly growing supply and demand. Prices soared in 2017 and 2018, only to fall rapidly after companies ramped up output.

Some analysts expect a similar pattern to play out this time, but only if producers increase capacity and sentiment cools off. 

“There’s enough lithium out there. The issue is the investment required to get there,” said Eric Norris, president of Albemarle’s lithium unit, on the company’s earnings call last month. 

Deal making in the sector is on the rise. Koch Strategic Platforms, part of billionaire Charles Koch’s conglomerate Koch Industries Inc., earlier this month invested $100 million in Standard Lithium Ltd. , a company that is working with a German firm to produce lithium chemicals in Arkansas. Koch Strategic Platforms has made several similar investments in startups and the battery supply chain. 

In November, Mr. Evans’s company Lithium Americas outbid Chinese battery maker Contemporary Amperex Technology Co. —known as CATL—to reach a deal to acquire an Argentina-focused lithium producer for about $400 million. 

Mining giant Rio Tinto PLC this summer pledged more than $2 billion to develop a lithium project in Serbia, but thousands of protesters in the European nation recently took to the streets to oppose the government potentially allowing the company’s extraction efforts that could harm the environment. 

It was the latest example of environmental opposition possibly delaying permitting and production of a commodity that could help decarbonize the economy, analysts said. 

“We have to strike a balance between overall global environmental benefits and local impacts,” a Rio Tinto spokesman said in a statement. “We will not trade one over the other.” 

Some analysts see the flood of money piling into the sector eventually pushing supply up and cooling the rally. Citigroup analysts project demand will outpace supply this year and next year before production tops consumption through 2025. 

But red-hot sentiment could still fuel price gains well into next year, some analysts say. 

“It’s more about the perceptions that market players have, not the real shortages of the material,” said Lukasz Bednarski, principal research analyst at IHS Markit focused on lithium. He expects a price correction at some point next year.

Write to Amrith Ramkumar at [email protected]

Filed Under: Nevada News Tagged With: lithium, lithium investment, lithium producers, mining

Primary Sidebar

Connect with Us

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
Bootleg Bistro
Bootleg Bistro Ad
SLLC_Keystone_Blog-Ad_300x500_10%-Off-Repairs_05.19.21
CIOServices Ad 300x500-100
BRH Keystone Ad JPEG
Willow_Manor
Keystone Corporation Nevada

News Topics

  • Keystone Press Releases
  • Politics and Government
  • Legislation
  • Nevada News
  • Tourism & Gaming
  • Rural Nevada
  • Business
  • Opinion

Rural Nevada

30 new projects in Pahrump: Arby’s, Chipotle, Midas Muffler, 3 convenient stores & more

March 29, 2023 By Courtney Holland

By Robin Hebrock, Pahrump Valley Times, March 28, 2023 Business is booming in the Pahrump Valley, with dozens of new companies looking to bring … [Read More...] about 30 new projects in Pahrump: Arby’s, Chipotle, Midas Muffler, 3 convenient stores & more

UPS and AVK America plan to expand in Douglas County

March 19, 2023 By Courtney Holland

Staff Reports for The Record Courier, March 17, 2023 United Parcel Service plans to build a new 168,000 square foot building in Douglas County, … [Read More...] about UPS and AVK America plan to expand in Douglas County

Redwood Materials gets $2 billion federal loan for mega battery facility near Reno

February 12, 2023 By Pauline Lee

by Jason Hidalgo, Reno Gazette-Journal, February 9, 2023 Redwood Materials just secured a commitment from the federal government for a $2 billion … [Read More...] about Redwood Materials gets $2 billion federal loan for mega battery facility near Reno

LETTER: Voting by conscience or from pocketbook?

January 31, 2023 By vrobison

Not everyone enjoys or is interested in politics, but given the number of retirees in the Moapa and Virgin Valleys, I would imagine there is … [Read More...] about LETTER: Voting by conscience or from pocketbook?

Opinion

OPINION: NEVADA VIEWS: Government over the taxpayers

March 26, 2023 By Courtney Holland

By Robert Fellner, The Las Vegas Review Journal, March 25, 2023 The legislative proposal to raise Nevadans’ property taxes highlights why … [Read More...] about OPINION: NEVADA VIEWS: Government over the taxpayers

Hypocrite Biden blocks mineral mining his clean-energy goals require

March 24, 2023 By Pauline Lee

by Carrie Sheffield, New York Post, March 22, 2023 President Joe Biden claims he wants America to lead in “clean energy” production, but he’s again … [Read More...] about Hypocrite Biden blocks mineral mining his clean-energy goals require

OPINION: The ‘Green Amendment’ is well-intended — but that’s not enough

March 19, 2023 By Courtney Holland

By David Colborne, The Nevada Independent, March 19th, 2023 Supporters of AJR3, also known as the “Green Amendment,” want to protect Nevada’s … [Read More...] about OPINION: The ‘Green Amendment’ is well-intended — but that’s not enough

Tags

Adam Laxalt am post Build Back Better Business Business Columns Casinos & Gaming Catherine Cortez Masto Clark County Clark County School District Conventions COVID Department of Employment Training and Rehabilitation (DETR) Editorials Education employment Gov. Joe Lombardo Gov. Steve Sisolak Governor's Office of Economic Development (GOED) Housing inflation Inside Gaming Joe Lombardo las vegas Local Local Las Vegas Local Nevada lvcva mc-business mc-local mc-news mc-opinion mc-sports Nevada News NPRI Opinion Opinion Columns PAID Politics and Government Real Estate Insider Roe v. Wade Sports The Strip tourism Victor Joecks

Footer

Copyright © 2023 · Keystone Corporation - All Rights Reserved · Log in
Privacy Policy
By accessing this site, you are agreeing to our Terms of Use

The views, opinions and conclusions expressed by the authors of any article or post on the Keystone Korner are those of the author and do not necessarily reflect the opinions of Keystone Corporation or its officers and board members. Moreover, any reference to a person, party, product or entity does not constitute an endorsement or recommendation by Keystone Corporation or its officers and board members.