A battery charger sign for electric cars in Wolfsburg, Germany. Picture: KAI PFAFFENBACH/ REUTERS
Now, the surging demand is shaking up the way that lithium is bought and sold. Many supply deals have become dramatically shorter — with floating prices linked to the spot market — while exchanges from Chicago to Singapore are experimenting with new futures contracts. One of the concerns in the lithium market is that the extreme supply shortages create a risk that prices rise so high, or metal becomes so difficult to access, that carmakers have to stop buying.
While the world needs more and more lithium, investment in new supply has not kept pace with rising demand. Trafigura’s focus so far has been on tying up deals with early-stage mining and refining projects. Traxys, another early mover into the industry, is taking a similar approach, scouring the globe for new sources of supply and helping to nudge them into production. The aim is to make money increasing the overall flow to carmakers, said Facada.
And so it begins.
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