Lithium bulls need to chill out – by Neil Hume (Financial Times – September 10, 2019)

Quick to develop supply will keep a lid on prices

Battery metal bulls suddenly have more to cheer about. This week saw the flashy launch of VW’s ID. 3, a mass-market hatchback that symbolises the potential market for the lithium that powers its battery. Last week, China’s Contemporary Amperex Technology (CATL) bought an 8.5 per cent stake in Australian lithium miner Pilbara Minerals.

The investment by China’s biggest battery producer — and supplier to carmakers including VW, Toyota and Volvo — was seen as a vote of confidence for the sector, which supporters say will be a big beneficiary from decarbonisation and the mass adoption of electric vehicles.

“While there has been commentary talking down the current state of lithium markets, it has belied the significant interest we have continued to see from the strategic players,” said Ken Brinsden, managing director of Pilbara.

It is developing Pilgangoora, one of the world’s biggest new lithium projects, located in Western Australia’s Pilbara region. So does CATL’s investment in Pilbara — part of a $60m wider fundraising — signal the end of what one analyst has described as the “big lithium short”?

The deal follows a brutal year for the lithium industry. Lithium carbonate for delivery into Asia has fallen from more than $18,000 a tonne in May 2018 to around $10,000 a tonne today, according to S&P Global Platts.

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