Lithium is one the lightest and most electro-conductive elements of the periodic table, making it ideally suited for Electric Vehicles (EV), which we expect will be one of the most disruptive technologies over the next decade.
Lithium demand is expected to increase over 10x into 2030, against committed new supply growth of ~2.5x, exposing a potential large supply/demand deficit. This creates conditions for buoyant prices, with upside risk a distinct possibility over the short to medium term. Australia is well placed to contribute to lithium supply growth over the coming decade.
With optimism elevated around the EV demand outlook, there may be better tactical entry points into Australian lithium producers. However, for investors willing to take a long-term view on the lithium thematic, we think the pure play producers, Pilbara Minerals (PLS), merged Orocobre (ORE)/Galaxy Resources (GXY), looking the most prospective.
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John is a leading investment strategist with 20 years experience.