Lithium prices could rise more than 60% to $20,000 per ton, Clive Ashworth, chief executive of private exploration and mining services firm GeoXplore Corp., said at a mining conference this month.
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After hitting a record high of around $80,000 per metric ton in China in 2022, lithium carbonate prices have fallen deeply amid muted expectations on global demand for electric vehicles. Prices have recently hovered around $12,500.
This price is too low to support mine production and will hit $15,000-$20,000 per ton in the next two years, Ashworth told Benzinga on the sidelines of a recent Benchmark Mineral Intelligence battery metals conference in Washington, D.C. $12,500 to $20,000 would be a 62.5% gain.
In a November 2023 blog post, Morningstar analyst Seth Goldstein said he views $20,000 as the marginal cost of production based on total holding costs.
Low prices aren’t ideal for producers, whose margins shrink as prices fall, or for explorers, who are less likely to get financing for drilling in lower-price environments.
But low prices are not entirely bad for the industry as a whole, as they can lead to the elimination of weak companies.
“They cut out the straw,” he said.
Ashworth is no stranger to the lithium market. His company has optioned lithium properties in Nevada Pure Energy Minerals Ltd. (OTC:PEMIF) e ACME Lithium Inc. (OTC:ACLHF).
GeoXplor’s business model involves finding properties that could be developed into producing mines, leasing them, and then optioning the claims to junior mining companies that will conduct more intensive exploration, which may include the use of GeoXplor’s services.
This model – which involves traveling to a property with portable equipment to assess its potential – means the company must lease properties that contain minerals that will be required in the future.
“As explorers, we need to get ahead of raw materials,” he said.
One product Ashworth has his eye on is vanadium. It’s often used in stainless steel, but it’s also an ingredient in an emerging type of battery technology that Ashworth believes could take off.
While there are technologies that will eventually begin to compete with lithium in some applications, Ashworth said he sees lithium demand remaining strong for decades.
“Lithium is here to stay, at least for the next 20 or 30 years,” he said. “We are at the beginning of a new era. It is the end of fossil fuels.”
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Image created using artificial intelligence via Midjourney
