Lithium’s moment in the sun is evoking more than a few memories of the iron ore boom — and we all remember how that ended.
Lithium stocks have been on a tear over the past year, culminating on Monday with the $800 million merger of lithium mining duo Galaxy Minerals and General Mining.
The price of lithium has been surging amid forecasts for a continued rise in demand for the lithium-ion batteries used in electric vehicles and home energy storage systems. Structurally, there are some notable similarities in the lithium market to what we saw in iron ore over the past decade.
Just like iron ore, lithium is abundant. Already there are enough identified resources in place around the world to meet demand for something like 500 years.
Just like iron ore, the lithium market is dominated by a handful of major producers who control almost all the market. In the case of lithium the roles of iron ore majors Rio Tinto, BHP Billiton and Vale are played by Talison, SQM, Albemarle and FMC, who together account for almost 90 per cent of world production.
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