Making Sense of the Lithium Craze - Cool Heads Required
It’s the mining and exploration world’s hottest commodity, with parabolic price rises amid a rush to find new sources of supply. Junior companies are joining the lithium club by seemingly the dozen almost every week. And of course every company is mentioning the word ‘Tesla’ in their presentations. The key question in all of this is how long can the lithium mania continue? We’ve been here before many time with other commodities - the uranium price collapse of 2007, rare earths in 2011, graphite in 2012 and lithium itself between 2009 and 2011 - and of course iron ore. Many ASX juniors are using the lithium boom as a means to top-up desperately low cash reserves. Whilst the lithium story is real, true investors need to reflect upon the prospects of anything tangible ever eventuating from most companies’ published hype. I have attached a PDF of my recent note to my readers, which outlines my views on where the lithium market currently is.
Gavin has been a senior resources analyst following the mining and energy sectors for the past 25 years, working with Intersuisse and Fat Prophets. He is also the Executive Director, Mining & Metals with Independent Investment Research (IIR).