by about 15 per cent, putting demand at 1.8 million tonnes in 2025 and at 3.7 million tonnes in 2030, up from 0.8 million tonnes in 2022.The Biden administration’s Inflation Reduction Act, which includes big incentives for renewable energy, including batteries, has contributed to Albemarle’s new demand estimate.
Albemarle’s new lithium demand estimate is considered bullish by some commentators. Respected research house Benchmark Intelligence has a base case for demand of 2.4 million tonnes in 2030.But chief executive Simon Moores points out that even at this more modest level of demand, supply is likely to remain short, given Benchmark’s base case for supply in 2030 is 2.1 million tonnes.
But Moores describes the 54 per cent gap between Benchmark’s base case for supply and Albemarle’s bullish view of demand as “the difference between automotive EV dreams and the reality of what the industry can likely achieve”.Indeed, the difficulties in closing the supply gap have been highlighted and appear to be growing. While analysts expect supply of lithium to increase by between 20 per cent and 40 per cent this year, miners already are struggling to meet their production plans.
In December, Pilbara Minerals increased the budget for one of its expansion projects by 36 per cent. Allkem recently announced a delay with its Sal De Vida project in Argentina. And last week, Mineral Resources announced delays to the expansion of its Mount Marion project in WA, which has been pushed back six months.Mineral Resources haven’t stopped the company’s shares from testing record levels“Supply response will lag demand, resulting in a market deficit and elevated lithium prices.
It is not ‘news’. The supply issues have been understood by most, media excepted, for some years. Media is just waking up.
Early days? Bullish price rises lead to more people mining the stuff, leads to falling prices. Markets doing what Markets do?
ArgosyMinerals PilbaraMinerals Lithium Miners 🚀🌖