Millennial Lithium (TSXV:ML;OTCQB:MLNLF) – The long-term capacity of lithium producers and explorers to keep pace with demand remains doubtful, despite surging investor interest, and the metal’s pivotal role in a global energy revolution.
Veteran analyst Joe Lowry of Global Lithium recently released a chart indicating demand for lithium for the production of lithium-ion batteries will quadruple by 2021 compared to 2015. Lowry, noting that lithium supply is comfortably ahead of demand in 2017, expects that 97 per cent of annual production will be taken up in four years. That portends a scramble for supply and tighter, more volatile markets.
Lithium is not just a transportation story, despite global expectations for an unprecedented surge in electric vehicle production by Tesla and rivals including Volkswagen, BMW, Ford, Toyota, GM and manufacturers in China. Widespread adoption of utility-scale electricity storage batteries will push demand for lithium even higher.
“The bottom line is that supply will have a hard time keeping up with demand well into the next decade and perhaps beyond,” Lowry cautions.
Not every company in lithium space will succeed, he adds, urging investors to focus on those with quality assets and to exercise strong caution about the long-term prospects for junior miners and explorers vying for space in the sector. “Focus on quality assets,” he said.
Canadian companies are among those attracting interest from institutional investors. Earlier this year, Vancouver-based Lithium Americas Corp. announced a $174 million US strategic investment by Ganfeng Lithium, and a $112 million US strategic investment by Bangchak Petroleum.
The company, which is developing assets in Argentina and Nevada, noted in a January 2017 presentation that over the next 20 years, electrification of the global vehicle fleet would require additional annual mining production exceeding 3.1 million tonnes of lithium carbonate equivalent, or LCE. That’s about 15 times projected annual production for 2017.
Lithium Americas chief technical officer, David Deak, noted in the presentation that it would take about 100 gigafactories the size of the one Tesla recently opened in Nevada to make enough batteries needed to electrify the world’s electric vehicle fleet, and support growth of the energy storage market.