Massive Lithium Oversupply by 2020

Lithium research consultants, TRU Group, says the 2020 lithium supply/demand forecast is "shocking" as "seemingly unstoppable supply growth will cause such huge overcapacity that the stability of the industry will be threatened."

TRU says it has evaluated and modeled most of the known existing lithium properties and advised numerous players on myriad lithium business, investment and exploitation issues.

In presentations scheduled to be made during the IM Toronto 3rd Lithium Supply & Markets Conference this week, TRU Group's updated lithium model reveals the possibility of "massive lithium oversupply through 2020."

TRU CEO Edward Anderson estimates lithium demand will be 40,000 tpy in the next decade while pipeline projects and expansions could increase capacity by an additional 40,000 tpy—"double what the industry needs."

Veteran Lithium Geologist Ihor Kunasz says existing lithium players "have three times the lithium concentration and also reserves that dwarf any of the new players."

Lower prices and fierce competition through 2020 is bad news for new lithium project promoters, "who will find it impossible to compete against the distinctive natural cost advantage of brine-based lithium producers."

TRU advises existing lithium chemical producers have the in-ground reserves and ability to meet nearly all market requirements in the next decade, simply by expanding capacity.

Anderson believes that lithium projects already in the pipeline will increase the mineral's supply/demand gap from 2013–2015. New development projects may exacerbate the oversupply from 2015–2020. From 2017–2018, he forecasts a "serious peak oversupply" will negatively impact current lithium producers.

He advised that emerging technologies, including selective iron adsorption, electrodialysis and nanofiltration "provide new options for medium-scale lithium developments."

"Lithium carbonate prices fell precipitately to $4500/t in 2010 and will remain depressed," Anderson forecast. "Long term there is no market-driven upward-price pressure, so prices will remain stable and likely below $5,000/t."