The Oregon Group Predicts Lithium Demand set for 20 years of Rapid Growth

Rhea-AI Summary

A new report forecasts twenty years of rapid growth in the supply of lithium, driven by the dominant demand segment of electric batteries and vehicles. This growth is attributed to a significant price correction in 2023, geopolitical tensions, environmental concerns, and government permitting issues. Established lithium producers like Albemarle (NYSE:ALB) and Pilbara Minerals (ASX: PLS) stand to benefit, along with ETFs linked to the price of lithium. The report also highlights exciting investment entry points, particularly in Africa, and predicts that lithium will continue to be the dominant technology for electric batteries despite new research on next-generation technology.

Insights

Market Research Analyst

The projection of rapid growth in lithium supply over the next twenty years signifies a pivotal shift for industries reliant on lithium, especially the electric vehicle (EV) sector. The report's emphasis on the simultaneous growth in demand and supply constraints presents a nuanced market environment. Lithium's price correction in 2023 and the stalling of new projects due to financial feasibility concerns underscore the delicate balance between supply and demand. Investors should be cognizant of the fact that while established producers may have the advantage of scale and experience, the market's volatility could influence the stability of these advantages.

Furthermore, the geopolitical and environmental factors mentioned add layers of complexity to the lithium market. These can affect not just the cost of lithium but also the pace at which new supplies can be brought online. For instance, environmental concerns and government permitting issues can result in delays or increased costs for project development, which in turn could affect the stock prices of companies involved in lithium production.

Financial Analyst

From a financial perspective, the report indicates potential for significant appreciation in the value of companies within the lithium market, such as Albemarle and Pilbara Minerals, as well as related ETFs like Horizons Global Lithium Producers Index ETF. This suggests that investors might expect bullish trends for these stocks in a market with rising lithium prices. However, it is important to consider the risks associated with such investments, including price volatility and the potential for rapid technological advancements that could disrupt the current lithium-ion battery dominance.

Investments in developing lithium plays in regions like Africa, where companies like Premier African Minerals and Li3 Lithium Corp are positioned, could offer high-reward opportunities but come with higher risks due to potential political instability, regulatory challenges and infrastructure issues.

Energy Sector Analyst

Lithium's role as the 'new gasoline,' as per the prediction by Goldman Sachs, indicates a transformative period in the energy sector. The high energy density, lightweight and efficient charge retention of lithium-ion batteries affirm their continued dominance in the EV market. Despite advancements in alternative battery technologies, lithium-ion's established supply chain and performance characteristics suggest it will maintain a significant market share in the near to mid-term.

Investors and stakeholders should monitor developments in next-generation battery technology, as any breakthrough could shift the competitive landscape. However, the current market dynamics suggest that lithium will remain a critical component of EV batteries, with implications for related industries such as renewable energy storage, portable electronics and power grid management.

TORONTO, Jan. 17, 2024 /PRNewswire/ - The supply of lithium, essential for electric vehicles, is expected to face twenty years of rapid growth, according to a new report. The Oregon Group forecasts lithium's dominant demand segment — electric batteries and vehicles (EVs) — is also it's fastest growing, a dynamic rarely encountered even in bull markets.

Lithium's dominant demand segment — electric batteries and vehicles — is also it's fastest growing.

The report examines how the lithium market has seen a significant price correction in 2023, stalling new lithium projects and limiting supply expansion needed to meet the expected increase in demand for the next generation of EVs. Price volatility is also compounded by global geopolitical tensions, local community environmental concerns, as well as government permitting issues.

Established lithium producers face a unique set of challenges that offers an opportunity for exciting investment entry points, particularly, in Africa.

This growth will benefit a number of players in the lithium market. Existing producers such as Albemarle (NYSE:ALB) and Pilbara Minerals (ASX: PLS), as well as ETFs closely linked to the price of lithium, such as Horizons Global Lithium Producers Index ETF (TSE:HLIT), will see their value increase in a higher priced market. Developing plays, for example in Zimbabwe, with Premier African Minerals (AIM:PREM) and Li3 Lithium Corp (TSX.V:LiLi) are also well positioned.

Fulfilling a prediction made by Goldman Sachs in 2015, lithium has already become the new gasoline for 15.5% of new cars sold globally in H1 2023, according to BloombergNEF, because of it's higher energy density, lighter weight, longer charge retention and an absence of charge memory. And, despite new research on next generation electric battery technology, the reality is that lithium ion will continue to be the dominant technology for many years.

To learn more about the lithium market, key trends, and players, you can access The Oregon Group's new report, entitled "Inside the Accelerating Global Race for Lithium" by visiting our dedicated website section for the lithium market report.

About The Oregon Group

The Oregon Group is an investment research company founded by independent capital markets experts, Anthony Milewski and Justin Cochrane. The company is focused on a variety of key investment trends related to commodities and energy transition.

For more information, please visit theoregongroup.com

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SOURCE The Oregon Group

FAQ

What is the forecast for the supply of lithium?

The forecast suggests twenty years of rapid growth in the supply of lithium.

What is driving the growth in the supply of lithium?

The growth is driven by the dominant demand segment of electric batteries and vehicles.

Which companies stand to benefit from the growth in the lithium market?

Established producers like Albemarle (NYSE:ALB) and Pilbara Minerals (ASX: PLS) are expected to benefit, along with ETFs linked to the price of lithium.

Where are the exciting investment entry points highlighted in the report?

The report highlights exciting investment entry points, particularly in Africa.

What is the dominant technology for electric batteries according to the report?

The report predicts that lithium will continue to be the dominant technology for electric batteries despite new research on next-generation technology.