Nemaska Lithium Inc fka NMKEF

[HowardHughs]

Lithium fundamentals are consistently improving while misplaced fear is creating investment bargains.

https://stockhead.com.au/resources/lithium-stocks-101-heres-everything-you-need-to-know/


Lithium stocks: here’s everything you need to know

Lithium – that silvery, white metal – captures the zeitgeist of the new battery age.

This is, because unlike other elements, lithium cannot be replaced as part of the next generation of lithium-ion batteries for electric vehicles and stationary storage.

In this guide we’ll explain the factors that have been driving ASX lithium stocks and what could drive demand – and stock prices — into the future.

Exponential EV sales growth – from 2 million vehicles in 2017 to an estimated 50 million per year by 2030 — is expected to create huge demand for battery-grade lithium.

A shift to higher energy density batteries could also increase lithium demand.

Traditional lithium iron phosphate batteries are about 7 per cent lithium, but the “almost overnight shift” in preference towards nickel-manganese-cobalt (NMC) and nickel-cobalt-aluminium (NCA) batteries increased the requirement of lithium by up to 50 per cent.

“While Chinese ‘spot’ or ‘internal’ prices for lithium carbonate have fallen back dramatically, they represent only a small portion of total lithium carbonate purchases.”

So basically, prices did fall in 2018 but is wasn’t as dramatic as many believe.

And then there’s the price for refined lithium hydroxide, which sold for around $17,000 per tonne – a huge mark-up in comparison.

Is the lithium boom over?

Not even close. It’s only just starting.

Canaccord Genuity mining analyst Reg Spencer says lithium stocks took a beating in 2018 because investors concerned about oversupply didn’t understand the “depth and complexity” of the lithium supply chain.

The supply chain from “mine or brine to market” could take up to a year — and that was before delays and other potential bottlenecks in processing, he said.

“A lot of analyst work that I see models lithium demand in terms of how many EVs are sold in any particular year.

“But when you factor in this 9-to-12 month supply chain lag, the lithium that’s going into the EVs that are getting sold today was actually produced and mined last year.”

Bloomberg estimates the world’s lithium battery-making capacity will more than triple from 175 gigawatt hours to 630GwH by 2022.

Battery metals data leader Benchmark Minerals Intelligence had similar forecasts.

It says there were 42 battery mega factories built or in the pipeline by August this year – up from three in 2015.

In September that number had already increased to 45, and by November 2018 that number was over 50.

By 2028 these mega battery factories — such as the gigafactories being built by Elon Musk’s Tesla — would need 840,000 tonnes per year of lithium.

But these projections are constantly being revised upwards, as the rapid pace of development amazes even the most bullish of analysts.

EVs are in the driver’s seat

“We need to remember there are not many electric vehicles out there yet,” S&P Global Platts analyst Marcel Goldenberg says.

“Electric vehicles are the driver. That’s where the disruption is coming from, and that’s where you will see raw material demand coming from.”

In September 2018, the number of electric vehicles sold throughout the world passed 4 million — and sales are increasing at an exponential rate, say researchers at Bloomberg New Energy Finance.

This is a drop in the bucket compared to recent worldwide car sales of about 88 million cars and light vehicles.

But that could soon change. 2019 marks the start of an expected EV ramp-up for the world’s biggest carmakers.

For example, Volkswagen Group — which owns Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda and Volkswagen — says it plans to spend more than $68.5 billion in the coming five years on EVs, autonomous driving, new mobility services and digitalisation.

Volkswagen sees an EV future as inevitable and wants to “speed up the pace of innovation” from a position of strength and wants to produce one million electric cars per year globally from 2025.

To accomplish this, Volkswagen reckons it needs battery capacity in excess of 150GWh per year through to 2025 just to equip its own electric fleet.

That’s equal to the annual battery cell capacity of more than four Tesla Gigafactories.

…But stationary storage will also play a key role

Stationary storage systems are big batteries often designed to store excess power from the power grid, including from renewable sources, for use during expensive peak demand periods.

It also includes residential and industrial ‘behind the meter’ systems.

By 2028, Benchmark Minerals Intelligence predicts 50 per cent of the burgeoning stationary storage market will be lithium-ion.

But once again, analysts and industry insiders are constantly revising their stationary storage projections upwards as the industry accelerates.

Bloomberg New Energy Finance (BNEF), for example, has significantly increased its forecast for global deployment of behind-the-meter and grid-scale batteries over coming decades.

In 2016, BNEF expected 25GW of installed storage by 2028, and for the market to be worth $US250 billion by 2040.

Last year, it predicted 125GW of batteries would be sold for global energy storage by 2030.

In November 2018 it revised those figures again. Now, global installed battery storage capacity could reach 100GW as early as 2025, with 300GW breached around 2030.

By 2040, BNEF reckons the global energy storage market will grow to a cumulative 942GW, worth about $US620 billion in investment.

(Incredibly, batteries for stationary storage will make up just 7 per cent of total demand by 2040, with EVs taking dominant market share.)