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Lithium expected to remain in short supply even as new projects come online

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Lithium expected to remain in short supply even as new projects come online

Lithium is expected to remain in short supply as a result of the evolution in the electric vehicle industry and despite large amounts of new supply being scheduled to come online in the next five years, according to speakers at the 121 Mining Investment in Hong Kong on Oct. 18.

Adrian Griffin, managing director of Lithium Australia NL, warned that uncertainties on the supply side will continue to weigh on the sector.

"There is no shortage of lithium. The issue is how quickly you can bring it to the market," Griffin said during a panel discussion focusing on the lithium investment cycle.

Griffin told S&P Global Market Intelligence on the sidelines of the panel that growth in demand is likely to outpace supply in next few years.

"A lot of projects are coming to supply the market in five years," Griffin said, noting that some projects may face difficulties getting off the ground due to difficulties in securing funding, relatively high production costs and bad weather. "Funding would be a key challenge for new players," he said.

While lithium production capacity is slowly building, the growing use of lithium-ion batteries is expected to drive significant demand growth for the mineral in the next decade, said Charles Whitfield, director of Drumrock Capital.

Whitfield said on the same panel that there has been strong interest in the battery sector from the investment community.

Climate concerns, which are leading the world to switch to renewable energy sources, as well as the uptake of electric vehicles and electronic products, are significant demand drivers for lithium, Whitfield said. "The [electric vehicle] story is real and we actively need these [new supplies]."