Flat Lithium Sector Shows Early Signs Of Re-Charge

By Barry Fitzgerald | More Articles by Barry Fitzgerald

After falling sharply over the past six months, there is fresh hope that lithium prices could be set for a comeback as demand from the EV market surges.

The Western Australian hard-rock lithium brigade got beaten up something shocking last year as contracted prices for 6% spodumene weakened from more than $US1,000t in the September quarter to $USUS930/t in the December quarter.

Prices – based on quarterly pricing for the Mt Marion project kindly posted by Mineral Resources (MIN) – have fallen further for the current March quarter to $US791/t, which when stacked up against forecast production costs and a friendly US70c exchange rate, is still not all that bad.

But the real twist here is that the WA lithium stocks without particular issues – and there a couple out there – have been on a bit of a tear since mid-December. Lead examples are Pilbara Minerals (PLS) and Kidman (KDR) which are up by 27% and 30% respectively in the period.

While the share price bounce has been off beaten-down levels, it does go to the idea that there is good reason to think that the big thematic that drove lithium and stock prices wild between early 2016 and late 2017 is startling to bubble again.

The thematic was that the world would struggle to supply the lithium battery needs (which apart from lithium, takes in graphite, cobalt, nickel, manganese, tin and so on) of the revolution in electric vehicles and the storage of renewable energy. Read more +

Barry Fitzgerald

About Barry Fitzgerald

Barry Fitzgerald has covered the resources industry for 30 years. His column highlights the issues, opportunities and challenges for small and mid-cap resources stocks - most recently penned his column for The Australian newspaper and before that, The Age.

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