OPINION: Chile’s plan to partly nationalise its lithium sector could boost prices and divert capital to more friendly lithium hubs, such as Australia.
could be a boost to the rest of the world’s lithium industry, potentially reversing a period of oversupply and diverting capital towards nations with a more attractive investment regime.
Lithium demand, spurred by electric vehicles, is set to grow slower than supply in coming years. Chile’s plan could change that.While the plan will need approval from the Chilean congress and senate, it has been quickly pilloried by veteran miners including“Money is a coward – it runs away at the first sign of trouble,” the founder of Ivanhoe Mines told Bloomberg.
Liberum has been particularly bearish on the lithium market, where prices have dropped 60 per cent from the peak last November. Lithium was fetching more than $US80,000 a tonne but Liberum sees the marginal cost of production at between $US15,000 a tonne and $US20,000 a tonne, and had used that range as an approximate estimate for a floor for the price in the short term.
But if Chile’s production remains stuck at 150,000 tonnes, then Liberum’s predicted oversupply could turn into a ballooning global deficit within 12 months to two years, with a possible deficit of more than 40,000 tonnes by 2027.
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