Morgan Stanley on lithium

A Morgan Stanley report suggested that lithium prices could go down by 45% by 2021 and that 2018 could be the “last year of global market lithium deficit”, with surpluses of lithium anticipated from 2019 onwards.

However in view of other market observers MS failed to account for all the new demand and risks, as well as uncertainty and complexity related to its production and mining process (think weather conditions and extractions from salars).

According to MS report a surplus in the market in 2022 could amount to 190,000 tonnes, resulting in forecasted price of around 7-8000 per MT.

Right after report was published stocks of major lithium producers moved by 3-8% down.

POSCO & Pilbara deal

South Korea’s main steel producer Posco announced its agreement to buy a 4.75 % share in Australian miner Pilbara Minerals for $62.5 million and to purchase up to 240,000 tons of lithium concentrate per annum.

In a move to reduce a supply chain risk for its production of EV batteries.

Posco intends to manufacture around 30,000 tons of lithium products per year beginning in 2020. Posco lithium products will be supplied directly to its affiliate Posco ESM a battery manufacturer and joint venture with China’s Huayou Cobalt.

Zimbabwe’s lithium ambitions

Zimbabwe has the potential to produce 20 percent of the world’s total lithium supply, Zimbabwe’s mines minister said on Wednesday last week. It will aim to achieve 10% market share in the next 4 years.

Meanwhile country’s Vice President Constantino Chiwenga stated that Zimbabwe will impose a 15 percent penalty tax from Jan 1, 2019, on exports of platinum producers who do not build refining facilities in the southern African country, in its urgency to move up the value chain.

SQM optimism

Meanwhile one of the world’s largest lithium producers, SQM, stated global demand for Lithium will continue to grow at a rate of roughly 80% annually in the next five years.

SQM SEO Patricio de Solminihac, expressed that demand will be at a level of at least 50,000 tonnes of lithium per year until 2023 due to increases in sales of electric vehicles and high tech devices.

Czech lithium nationalism

Czech government canceled a deal with European Metals Holdings (Australian company) giving the rights to mine a considerable lithium deposit.

Trade and Industry Minister Tomas Huner had notified the company he considered the deal invalid.

According to ChemInfo Huner had been asked by Prime Minister Andrej Babis to find a way to make the memorandum of understanding, signed last year, not legally binding.

Babis made it clear that he prefers a Czech state-run company to explore the local deposit.

Babis who took office last October, said a memorandum of understanding signed by the previous administration and EMH to cooperate in developing the Cinovec deposit is “null and void”.

European Metals Holdings has an exclusive license to explore for lithium and was seeking approval to open a mine in Cinovec, right on the German border.

European Metals Holdings share price went down from GBP 27.50 to GBP 21.50 from 1st to 2nd March on this news..

In response to Czech government actions European Metals Holdings stated:

“The MOU outlines mutual willingness to explore downstream processing opportunities, Czech academic research into lithium processing, potential future co-operation and discussing and exploring possibilities of future agreements.

“All company rights are derived from the current Czech legal system, notably the geological and mining act, not the MOU.

“Any termination of the MOU would not in any way affect the exploration rights of the company or the company’s tenure over its exploration permits and the company continues to progress the project with ongoing metallurgical testwork, discussions with offtakers and preparations for feasibility drilling underway.”


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