Again, events like this do not support the thesis that there will be oversupply in the market. Protests, production shortfalls, corporate failures all impact supply capacity. Paired alongside increasing demand from end-users, my opinion is that the supply/demand gap remains and will stay in place until there is some rationalization. Now also throw in the fact that lithium prices (spodumene, carbonate and hydroxide) have dropped, could be that a selection of exploration/development companies are no longer viable…again impacting long term supply. How long is it going to take the market and/or end-users to have that “A-ha!” moment? How long for “western” end-users to actually realize that if they don’t move now that they will be pushed out by the Chinese and Russian companies who are already moving into the space? Hopefully faster than they are moving now!
Continued protests in Chile could affect the ability of lithium producers to supply the metal to market. An increase in electricity and public transport prices has triggered mass protests over the past two weeks, with mining labor unions and indigenous communities also protesting against stagnating wages and water-regulation policies. Communities have blocked SQM’s lithium operations in the Atacama Desert and other protesters have reportedly ruptured pipes transporting brine and fresh water. Protests have also briefly affected Albemarle. SQM has not confirmed any disruption to production, but continued political unrest could have a negative impact. SQM accounts for almost 14% of global lithium capacity and 41% of production in Latin America. In addition to direct disruption to facilities, protests are also impacting access to highways and shipping ports. In the short-term, BloombergNEF expects the impact to the global supply-demand balance to be limited.