Lithium - Betting on the Impossible

John Robertson


There’s not a snowball’s chance in hell that lithium market forecasts will be realised. My reasons for saying this (and why uranium may offer better investment returns than lithium) are here: (VIEW LINK) The charts in company presentations typically show lithium use running well ahead of the amount being produced. This is simply impossible. It cannot happen. So, the question investors need to ask before joining the rush is “Which of three feasible scenarios is actually going to happen?”. I've outlined them in my linked commentary. The argument in favour of a sustained gap between lithium production costs and prices is as valid as the arguments in favour of $150/tonne iron ore and $110/bbl crude oil. Risks are different near a cyclical trough. The chance of another 50% lithium-driven return could be far less than the chance of a 100% return from uranium that still leaves stock prices 80% below where they were at the beginning of 2011. Investors need to weigh the relative risks and opportunities in a cyclically weak market unable to attract sufficient new money to sustain momentum.

John Robertson
John Robertson

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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