‘Lithium supply always disappoints’ – Cannacord analyst questions Goldman Sachs’ bearish report

Cannacord mining analyst Reg Spencer has provided a retort to a claim made in a recent Goldman Sachs report that the current bull market in the battery metals space has come to an end.

Prices for lithium, nickel and cobalt have rocketed since the beginning of last year, with lithium in particular surging by 280% in 2021 and another 127% in the first quarter of 2022, according to a Benchmark Mineral Intelligence index.

However, investment bank Goldman Sachs earlier this week predicted falling prices over the next two years after a surge in investor capital tied to the long-term electric vehicle demand story has led to an oversupply in battery metals.

This is not the case, according to Cannacord’s Spencer: “That oversupply in the market that Goldman Sachs is referring to is in lithium production from China lepidolite sources which is lower grade, difficult to process and more expensive to process in comparison to spodumene,” he said.

“I’ve been covering this sector for seven years and I can tell you supply always disappoints, especially from unconventional sources such as lepidolite that Goldman Sachs is referring to in their research report.

“Lithium projects are always behind schedule, always, and to say that the world’s supply issues are going to be resolved in three years from unconventional resources, which means higher costs to produce and extract…I think is wrong.”

Spencer did note a fall in the lithium equities market, with big Australian players such as Pilbara Minerals, Allkem and Galan Lithium all suffering price drops. “This is an equities market correction, if you have a look at the fundamentals of the lithium industry, they are still very strong,” he maintained.

@RGNonline