Savannah Resources Ord Shs SAVNF

Lithium: Short-Term Opportunities for a Long-Term Trend

[ScandiumPower]

The returns of lithium miners are largely negative for the year, but the long-term outlook suggests this may be a bump in the road for an emerging sector with significant upside potential. Lithium is a critical mineral essential to lithium-ion batteries, the predominant battery type favored by electric vehicles (EVs). As the proliferation of EVs intensifies, a lithium supply deficit may likely be expected through most of the next two to three decades.

Automakers are concerned about the availability of a mineral essential to their ability to manufacture EVs. As a result, Tesla, VW Group, General Motors, Stellantis, BMW and Mercedes-Benz are creating long-term offtake agreements with producers to buy lithium that will be mined in the future, while General Motors and Stellantis are investing directly in lithium mining.

While timing the market is never a good strategy, there may be a short-term opportunity at hand. Despite the long-term investment outlook for lithium miners, many producers of this critical mineral have seen their stock prices drop considerably this year. This may be an opportunity for investors who want to add an allocation to lithium miners to their portfolio to do so at prices significantly lower than they were at the start of 2023.

We believe we’re in the early stages of a lithium bull market. It is our belief that pure-play lithium miners—companies that are upstream in the supply chain—may benefit most from the increased demand for this critical battery metal. Pure-play miners are companies that specialize in mining lithium and devote most of their operations to exploring and/or mining this critical mineral. As lithium suppliers, miners' prospects are not dependent on which EV or battery manufacturers succeed; rather, they may benefit from increases in demand and the price of lithium in general.


https://www.nasdaq.com/articles/lithium-short-term-opportunities-for-a-long-term-trend