SANTIAGO - Opaque pricing for lithium, the powerhouse metal fueling the electric vehicle revolution, is expected to be top of mind this week as the industry’s leaders gather in Santiago, with calls rising for more transparency to attract much-needed expansion funding.
“The fact that there isn’t a benchmark price means that some of the banks haven’t been keen to get involved because they can’t hedge their price risk,” said William Adams, an analyst at Fastmarkets, which is hosting the Santiago conference and vying to be a pricing provider for the LME contract. While spot prices in China have dropped double digits since January due to uncertainty around the country’s electric vehicle subsidies, such prices reflect only a portion of global demand.
Livent Corp, which operates in Argentina, cut its 2019 forecast and warned that demand was slipping for a version of lithium it produces in China, and would sell product elsewhere.“Investors are valuing the industry based on the worst they’re hearing from only a handful of companies, because they don’t have a benchmark price to base analysis around,” said Ernie Ortiz, president of Lithium Royalty Corp, an affiliate of Waratah Capital Advisors, which buys lithium royalty rights.
The lithium industry’s largest players are inking fresh expansion deals as a result. Albemarle last fall signed a $1.15 billion joint venture agreement with Mineral Resource Ltd to own and operate the Wodgina lithium mine in Western Australia, a deal that expands Albemarle’s prowess with Asian customers.
But smaller and mid-tier players are finding it difficult to procure funding as potential financiers balk without a tradable lithium price, which would let them hedge their investment.
Just wait until every fucking car needs lots of it.. the flaw in the green utopia of electric cars
Commodities. How do they work?