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(Bloomberg) – Ganfeng Lithium Co., the lithium supplier expanding a wave of acquisitions, says a tightening in the battery metal market may push prices back to an all-time high.

The world’s third-largest producer of lithium chemicals, used in electric vehicle batteries for grid-scale energy storage, positions to capitalize as market extends a rebound after a more than two-year recession that ended in September.

“The industry is growing rapidly and we have very optimistic forecasts for lithium consumption,” Vice President Wang Xiaoshen said in an interview. “I cannot rule out the possibility that lithium prices will rebound to 2018 levels.”

Lithium prices surged from 2015 to mid-2018, as growing demand from electric automakers outstripped the available supply from a small network of mining and refining companies. A subsequent rush to add new sources of raw materials, primarily from Australian mines and South American brine operations, then caused the metal to plummet.

Steps taken by the industry to halt development of new projects in the midst of this sale have resulted in a short-term tightening in the lithium market, and Wang said it will take time for expansions to revive and new operations. provide a new supply. That could see a deficit at the end of this year or in 2022, he said.

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At the same time, the demand for battery-powered vehicles and storage systems for renewable energy is increasing rapidly. “We will intensify our efforts on exploring lithium resources to meet market needs,” Wang said.

Jiangxi-based Ganfeng, which raised $ 628 million in a stock offering this month, recently made new investments in projects in Mexico and Mali, adding to stakes in mining operations. and brine in places like Argentina, Australia and China.

Shares in Hong Kong have climbed more than 3% and are up 25% this year.

Read more: Ganfeng tops 2021 spending with Mexico Acquisition: BNEF

Accelerating sales of electric cars and government stimulus programs to encourage greener energy adoption are adding to the positive outlook for lithium. Demand for lithium-ion batteries is expected to increase tenfold by 2030, according to BloombergNEF.

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“The prices of lithium chemicals will still have room to increase by the end of the year, the demand for electric vehicle batteries and energy storage is still strong,” said Xiaoyi Liu, analyst at the Shanghai Metals Market.

High spot prices in China reflect tight supply, high demand and low inventories, Morgan Stanley said. Small converters are already running out of raw materials, and rising prices are expected to lead to a gradual restart of mining in Australia in the second half of the year, the bank said in a note.

Still, there are risks of a repeat of the sector’s fall in 2018, according to Wang. Prices could pull back if miners initiate procurement projects too quickly or if the pace of electric vehicle sales slows, he said in Monday’s interview.

While the lithium market will remain tight for the next two years, beyond that, “lithium producers will need to manage supply growth in a sustainable manner to avoid a further fall in prices like in 2018,” the authors said. BNEF analysts Kwasi Ampofo and Peng Xu in a statement. notice this month.

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In the longer term, the recovery of metals, including lithium, through recycling batteries will also have an impact on the market. Ganfeng currently has recycling facilities in China capable of handling around 65,000 tonnes of used batteries per year, and plans to build factories overseas, Wang said.

Until there is a more developed electric car industry and higher volumes of battery packs – which typically last at least eight years in a vehicle – there is likely to be a small source of electricity remaining. supply and may only represent around 10-15% of the lithium market after 2040, he said.

“We have customers and automakers asking about the supply of recycled lithium carbonate or hydroxide from retired cells,” Wang said. “It’s just that the batteries available for recycling are still relatively few at the moment. “

© 2021 Bloomberg LP

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