By now I’m sure you’ve heard a thousand times how lithium demand will be skyrocketting as soon as Tesla’s (NASDAQ: TSLA) Gigafactory starts its production of lithium batteries.
But it’s not just Tesla looking for new supplies. Duke Energy (NYSE: DUK), among other energy companies in the U.S., is changing its energy storage equipment. Recently, the trend has begun to replace large quantities of lead-acid batteries with lithium-ion batteries in order for utilities to save money and run their grid systems more efficiently.
Steve Kesler, chief executive of European Lithium says, “Every manufacturer in Europe is bringing out electric and hybrid vehicles.”
The worldwide demand for lithium is growing fast — maybe too fast.
Canadian research house Stormcrow Capital has found that for lithium production to keep up with demand, a new mine will have to be opened every year.
Demand is now expected to more than double by 2025.
Tesla’s Gigafactory alone will need more lithium hydroxide per year than the world is currently producing. And as we stated in a previous report, the company will give priority to suppliers and producers with North American holdings first.
In light of this sudden bursting demand, the price of lithium has risen 35% in just a year. In early 2014, $7,000 per tonne of lithium was the norm. By May this year, after the Gigafactory announcement, it was $8,000. And now according to Stormcrow its current price of $9,500 per tonne will keep climbing with demand.
Tesla is likely to provide up-front capital to those who can offer certainty of supply in return. As we recently reported, it’s the small companies with assets in several countries including the U.S. who will have the advantage in the booming lithium market.
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Until next time,
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