Editor's note: Lithium prices are rising, and the unit cost of electric vehicles may increase by $2,000; PLL has soared by about 240% in a single day due to transactions with Tesla, which companies will be affected this time? >>
Author: Travis
Tesla CEO Elon Musk recently complained on Twitter about the rising cost of lithium, and he even hinted that Tesla may enter the mining industry as a result to help solve the shortage of key raw materials for the production of rechargeable lithium-ion electric vehicle batteries.
"The price of lithium has reached crazy levels!" Musk wrote in a Tweet on April 9, "Lithium itself is not scarce, it is almost everywhere on the earth, but the speed of extraction and refining is very slow." According to a survey by the U.S. Department of the Interior Geographic Survey, lithium resources are available throughout the United States. Lithium batteries are currently the mainstream battery type of electric vehicles, and a large number of tram demand has driven the price of lithium to rise year by year. In addition, lithium prices have risen further as COVID-19 and geopolitical conflicts have disrupted supply chains.
Source: Twitter
The tweet to which Musk responded showed the average price per ton of lithium over the past few years, a figure that has risen sharply since 2021. According to Benchmark Mineral Intelligence, the metal's cost rose by more than 480 percent in the last year.
1, lithium prices have repeatedly risen, industry leaders continue to increase investment
Musk's use of "crazy" to describe lithium prices is not unreasonable. The benchmark lithium price of about $78,000 per tonne is nearly 80 percent higher than at the beginning of the year. The price of the package of battery materials that Barron's tracks has risen by about 60 percent so far this year, which it says will theoretically increase the price of an electric car by about $2,000.
Although most battery materials are purchased at the contract price (commodity quotes are generally spot prices), when the spot price is higher than the contract price, this is a signal that the contract price will go higher. At that time, the revenue of lithium mining companies has reason to increase further, so its stock price may benefit from it.
According to company filings and Barron's calculations, large miners such as Yabao produce lithium at a cost well below $10,000 per tonne. And every company in the lithium industry is accelerating its investment expansion. Wall Street expects Capital Expenditures to reach around $1.4 billion by 2022, more than double what it was a few years ago. The current price of lithium can obviously attract miners to continue to expand production.
2, Musk's tweet, or caused small market value lithium mining stocks to fluctuate sharply?
If Tesla $TSLA does venture into the mining industry, it will obviously have a profound impact on the electric vehicle industry. Will locking in long-term lithium supply become a priority strategy for the industry? Will other automotive companies consider integrating their battery supply chains upwards?
But Barron's said these are long-term problems, and the more immediate problem is that lithium-based stocks — most likely smaller ones — could swing wildly in Monday's trading.
The article points to several companies to watch: Larger and more established companies include Yabao $ALB, Livent $LTHM and Chilean Mining & Chemicals $SQM.
Three smaller companies include Piedmont Lithium $PLL, Lithium Americas $LAC and Sigma Lithium $SGML.
The three larger companies have a combined market capitalization of more than $50 billion, while the three smaller companies have a combined market capitalization of less than $10 billion and are still in different stages of expansion.
It is worth noting that as early as 2020, Tesla signed a lithium mine supply agreement with Piedmont $PLL, one of the above several companies. Piedmont's stock price closed up nearly 240 percent on the day the deal was announced.
Quotes source: Huasheng Securities
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