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Lithium Mining and Covid 19

What is the possible impacts to Lithium Mining with the Delta Variant and possible Lambda Variant


By Rob McCammon


Follow me on Twitter @RobMcCammon1

Another story about Covid 19? Not quite, but kind of. We have heard about this for nearly two years now. A virus of mysterious beginnings that was possibly a bat that was eaten or a lab experiment gone wrong. In the end, this article does not want to delve too deeply into the origins of the virus (as a matter fact let's call that part of the conversation done), this is about the critical industry we discuss here often, Lithium Mining.


At this point, even with numerous people not wanting to hear another word on this, we are seeing a surge in cases and deaths. With this, the virus keeps mutating and the vaccines could become less affective. This in turn will slow an economy.


Lithium mining is different right? A bit, but not enough. You see, 2019 was a very slow year in Lithium pricing terms. The depressed prices inhibited capacity growth, which is just now recovering. It's a simple this to that scenario. Lower prices for Lithium Hydroxide or Lithium Carbonate means less investment in further production.


Take five minutes to look at any Lithium company prospectus and you see nearly the same chart. 'Demand by 2030' will outstrip supply. This is repeated over and over, but a mere two years ago, this argument was not enough to get capital investment going.


So?

Well, a slow down economically could drive Lithium prices back down, which will again taper off the supply of investment capital, repeating the 2019-2020 cycle. Since then, more capacity has been brought on line, but the mining sector has seen the feast/famine cycles before.


Hard rock and solar evaporation mining are both impacted here. They are permit intensive and for solar, the creation of ponds and the drying of brine is an 8-10 month process. This means years of delays of brining additional assets on line. Look at how much legal outlay Lithium Americas (LAC) and Piedmont Lithium (PLL) have done. Not to mention 3 minutes of recorded Morgan Freedman. These are capital outlays that make investors nervous.


If... the investment of capacity expansion dries up again then the need of later in the decade will be magnified. So... short term reactions can have long term impacts. Thereby driving Lithium prices very high by the end of the decade.


The time to invest is sometimes counter intuitive. You don't feel 2026-2030, you feel right damn now! Not advice here. More or less what I feel, and I read on this stuff every day.


Long and short of all this mess.

Another Covid downturn could dry up capital investment. Be aware of that. IF that happens then the short supply of Lithium mid century and beyond will suddenly be exacerbated. This is just a possibility so I think it is best to be aware.


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