Shelved expansion plans for lithium projects due to collapsing demand for the material used to make electric vehicle batteries leaves the market facing a price spike after a couple of years when shortages start to emerge.
Auto sales including electric vehicles have slumped this year due to economic damage from the coronavirus. But sales are expected to accelerate over coming years as auto makers plough on with plans to meet stringent emission regulations.
"When demand comes back, the supply side won’t be able to react quickly enough," said Simon Moores, MD at Benchmark Minerals Intelligence, adding that lithium prices would bounce after 2022.