Lithium in a Commodity Supercycle Conventional commodity booms typically follow a rather fast boom and bust cycle as the cure for deficits is high prices, thereby encouraging new supply.
However, every once in a while we get a commodity supercycle. That’s where the demand wave is so big that it takes as long as a decade for supply to eventually catch up or for demand to subside. New mines can take 5-10 years to come online, yet a new EV and battery factory can be built in 1-2 years. In the case of lithium, many EV metals experts agree we have only just entered a lithium supercycle. The market needs about 9 new mines or expansion of existing mines, just to catch up with demand. This will be needed – and will grow larger – each year. The scary part is that in a good year electric car demand can grow at 100%pa, as we saw with a 108% increase in 2021, which sent the lithium market into deficit. These days the demand is there but the supply is not, hence the global EV waiting list is now in the order of 3 million vehicles.
A lithium deficit can only mean lithium prices stay ‘stronger for longer’ this decade