Gigafactory Slowdown Means Slower Lithium Demand Growth
Potential lithium producers often try to highlight their investment upside by using charts showing lithium production undershooting future demand. The one thing we know with certainty about the lithium market is that this cannot happen in practice. In reality, some combination of changes to currently expected demand and supply will have to occur to bring about balance, at best, or create a surplus. Companies are generally not addressing what form such an adjustment may take. Tesla, the US electric car manufacturer, hinted at one source of adjustment when it released its quarterly 10Q filing ((VIEW LINK) in the USA on Friday. Tesla is now widely known in the mining industry for its landmark Gigafactory, the largest single new source of lithium demand currently anticipated. Tesla was not commenting on the state of the lithium market itself but, in referring to the Gigafactory, Tesla drew attention to the size and complexity of the undertaking being possible causes of delay and, if realised, reasons to modify the expected trajectory of lithium demand.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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