LITHIUM 2021: Industry can learn from E&P mistakes
Published: Tuesday, 21 September 2021
Given the impetus to grow lithium supply, the industry could learn from mistakes made by oil and gas companies during the United States’ energy independence journey, a Cowen analyst said during Fastmarkets' Lithium Supply & Markets conference 2021 in Las Vegas.
"There are significant similarities with pre-shale oil,"
David Deckelbaum, managing director - sustainability and energy
transition, said on Tuesday September 21.
There could be a 20-35% supply shortfall in the lithium
market by 2025, meaning similar steps will need to be taken to
those in making the US energy independent, Deckelbaum said.
This includes more investment in the space, along with
government incentives and support. The latter played a large
role in transitioning the US to what is now the
world’s biggest oil producer from an oil importer
around the 2006-07 timeframe.
The push on renewable energy by President Joe Biden's
administration is a step in the right direction, Deckelbaum
To attract more investors, the lithium industry will need to
avoid the mistakes of oil and gas producers: spending
recklessly and not returning money to shareholders are some of
them. Environmental, social and corporate governance (ESG)
should also be high on lithium producers' lists.
Given evolutions in the ESG space, the lithium industry "has
the benefit of holding themselves to a higher standard" than
exploration and production (E&P) companies typically have,
Showcasing investors' concerns, lithium
companies’ shares are lagging the rising spot
lithium prices, he said.
Other factors hindering investment are China’s
dominance in the space, and the number and lack of
differentiation between different lithium producer companies,
Fastmarkets’ assessment of the lithium
hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot
price, cif China, Japan & Korea was at $20-21 per kilogram
on September 16, more than double the $8.50-9.50-per-kg range
recorded a year ago.