Short-Term Opportunitities for a Long-Term Trend Lithium in 2024: Facing Challenges
Lithium is a critical material essential to lithium-ion batteries, the dominant battery type used in electric vehicles (EVs). As EV proliferation intensifies, a lithium supply deficit may likely last through the upcoming decades.
According to Benchmark Mineral Intelligence (BMI), the lithium supply shortage is forecasted to begin as soon as 2025. There are currently only 101 lithium mines in the world, and even as more mines and exploration projects come online, the added supply may likely not be able to keep up with demand. China alone is expected to drive a 20% yearly increase over the next decade.3 This is especially evident given that the current unsustainably low lithium prices have led to project curtailments and driven some miners to reduce capital expenditures and investments in future supply. We believe that the lithium price may have bottomed, and higher lithium prices may be necessary to incentivize the required future production.
Is There a Short-Term Opportunity?
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 in 2024. Given the scale of this descent juxtaposed with the stark demand-supply imbalance in the upcoming years, lithium miners may be well positioned going forward. This means that investors who want to add an allocation to lithium miners to their portfolio may have an opportunity to do so at prices significantly lower than 2023.
Source :
https://www.sprott.com/insights/lithium-short-term-opportunities-for-a-long-term-trend/