Rally in Super Commodity Strained by Race to Fuel Tesla – by Jesse Riseborough, Thomas Biesheuvel and Joe Deaux (Bloomberg News – August 19, 2016)


Even the mining industry’s super commodity of the future may be unable to avoid the Achilles’ heel of all mineral producers — a recurring habit of busting a boom with too much supply.

As miners of everything from copper to iron ore wrestled with losses driven by global surpluses, prices soared for lithium, the light-weight metal used in rechargeable batteries. It’s easy to see why. Booming demand outpaced production thanks to the faster-than-expected growth in global electric-vehicle sales and the aggressive expansion plans of Elon Musk’s Tesla Motors Inc.

But a lot more lithium is on the way. The four largest producers — Rockwood Holdings Inc., Soc. Quimica & Minera de Chile SA, Albermarle Corp. and FMC Corp. — control as much as 90 percent of the market.

With prices surging, those companies may now look to increase output, while a host of newcomers are racing to get into the business of producing lithium, which can be extracted from mines or by evaporating brine in salt ponds.

“We expect to see the peak in prices coming pretty soon,” said Robert Baylis, a lithium market analyst and managing director at London-based Roskill Information Services, who predicts prices will peak in the second quarter of 2017. “Normally these things don’t tend to last too long. You get a supply reaction in lithium. There’s more material coming on the market.”

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