Securing lithium supplies remains a priority as markets shake

Today, Money Morning … transport is going through a revolution … lithium is the key to the energy transition …lithium manufacturers still enjoy high prices … and more …

Charlie Hurd was sitting in a taxi stand in his car in Geelong, waiting to get a ride when an elderly woman approached him.

‘Are you interested in a long journey?She asked.

Thinking what she meant by Melbourne, Charlie hurried to answer. “Yes‘.

But Charlie was very wrong.

‘I want to go to Darwin and backShe told him.

The elderly woman was Miss Ada Bill, a wealthy and adventurous resident of Lorna.

Charlie hesitated.

He had a wife and small children. Such a trip will take time.

Who will take care of his family until he is gone? And not to mention the risks associated with such a trip. Charlie was a World War I veteran but was never in the outback.

On the other hand, it was the 1930s. It was a time of the Great Depression and he could enjoy the money.

‘I need to check with my wifeHe told her.

Three weeks later Charlie, Miss Bill, her friend and their nurse assembled a 1928 Hudson Charlie convertible and set off on a great adventure.

They drove from Geelong through South Australia, passing Udnadatta and then to Alice Springs.

Charlie didn’t have a cell phone or Google Maps. Instead, most of the way he followed the compass to the north.

Then there weren’t even that many roads, just sand dunes, and Charlie had to use tennis nets to cross them.

The travelers were also not dressed in proper attire. In most of the photos Miss Bill is dressed in a fur coat … Charlie in a suit and tie.

Charlie had a rifle with which he hunted and protected the group from predators. They set up camp at night.

There were no mechanics or gas stations. To refuel, they relied on a camel train, a network of camels that transported people, fuel, water and supplies through isolated parts of the country in the interior.

To get fuel, Charlie had to send a telegram a few days in advance. The grid then left the fuel under a tree or at any landmark on the way.

Charlie and his passengers were lucky that the car never broke down.

In 12 weeks, 11,000 km and 550 gallons of gasoline – they just broke the wheel.

I came across this story in Surf Coast Times some time ago when I was driving on the Great Ocean Road. I remember thinking how much transport has changed since then.

The truth is that transportation continues to evolve, and most likely it will look completely different in the next 100 years or so … even in the next 5-10 years!

Transport is going through a revolution

For me, electrification of transport is one of the most interesting stories this year as it continues to grow.

According to the International Energy Agency, two million electric vehicles were sold in the first quarter of 2022, which is 75% more than in the same quarter last year.

And sales will continue to grow as the economy continues to improve along with politics and public support. I mean, if one thing became clearer during the election this weekend, it is that energy transition and electric vehicles are important topics here in Australia.

But one of the most interesting things for me in EV (and in energy transition in general) is that there is a lot of chance of failure in the industry.

For example, take lithium-ion batteries.

Although you may have heard a lot about lithium-ion batteries, there are many types of lithium-ion batteries.

Commonly named after the chemical composition of the cathode or positive side of the battery, some of the most common lithium-ion batteries include lithium-nickel-manganese-cobalt oxide, or NMC for short, lithium iron phosphate (LFP) and lithium-nickel-cobalt-alumina. (NCA).

But a lot of research has been done to develop more efficient batteries, and the technology is constantly evolving.

So while it is not guaranteed that lithium-ion batteries will be the absolute winners when it comes to EV …

Lithium is the key to energy transfer

Although the overall market is tense, securing lithium supplies remains a top priority.

This week’s war over a 54.3% stake in Yajiang Snowway Mining Development, which owns a lithium mine in Sichuan, China, caught a lot of eye … literally.

About a million people watched the five-day online auction, which was attended by 21 participants and 3,448 bids.

The starting price of the auction was 3.35 million yuan, but it went 600 times more, 2 billion yuan (about 422 million dollars).

And although lithium prices may have peaked, lithium producers are still experiencing growth from high prices.

This week, Albemarle raised its sales forecast for 2022 to $ 5.8-6.2 billion, compared to $ 5.2-5.6 billion just three weeks ago!

Chilean lithium miner SQM said its net profit would be $ 796.1 million compared to $ 68 million in the same quarter last year.

And Pilbara minerals‘ [ASX:PLS] The recent spodumene concentrate auction on the Battery Material Exchange platform this week reached $ 5,955 per dry metric tonne compared to $ 5,650 on the previous one.

Of course, at some point the supply will catch up with demand, but it does not seem that everything is growing fast enough.

According to Benchmark Minerals, by 2028 the industry will need $ 7 billion in annual investment, equivalent to $ 42 billion.

But as Simon Moores, managing director of Benchmark Minerals, recently put it:

‘In fact, this goal has already been missed given the timing of the construction of new lithium mines.

‘Taking into account the misfires on new lithium supplies, that $ 42 billion will approach $ 70 billion.‘

So we will need a lot of investment, and lithium prices are likely to stay high for some time as supply tries to catch up with demand.

Until next week,

Selva Freigeda,
For Morning money

Selva is also the editor of of New Energy Investor, a newsletter looking for opportunities in the energy transition. For information on how to subscribe, Click here.