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General Market Commentary
Simon Moores: We’re in the Midst of a Global Battery Arms Race
The Investing News Network sat down with Simon Moores of Benchmark Mineral Intelligence to talk about the future of lithium-ion megafactories, lithium prices and what’s ahead for the sector.
At this year’s Benchmark Mineral Intelligence World Tour stop in Vancouver, the Investing News Network (INN) sat down with Managing Director Simon Moores to talk about the future of lithium-ion megafactories, lithium prices and what’s ahead for the sector.
Moores, who gave presentations at half-day seminars in New York, Toronto, Chicago and San Francisco before Vancouver, said attendance was up compared to last year, with investors “hungry for accurate information and accurate data in a world where we have the opposite.”
Lithium-ion megafactories on the rise
Speaking about lithium-ion battery megafactories, Moores said Benchmark Mineral Intelligence was only tracking 25 megafactories this time last year. That number is now above 40.
“Four years ago we only had Tesla’s (NASDAQ:TSLA) gigafactory. And now we are, as we keep saying, in the midst of the global battery arms race,” he said.
In terms of where most capacity is located, China continues to lead the space, with about 55 to 60 percent of the megafactories tracked by Benchmark located in the Asian country. In second place is Europe, with about 15 to 20 percent.
Despite the supply worries seen in the first quarter of the year after SQM (NYSE:SQM) signed a deal with Corfo and Morgan Stanley (NYSE:MS) released a bearish forecast, Moores said that on the demand side, lithium remains extremely strong and is getting stronger in the medium term.
“We are seeing the utility and energy storage space strengthen,” he said, mentioning Tesla’s plans and “a lot of other companies [which] are pushing forward in a market that’s growing stronger than expected.”
The electric buses and trucks space is also growing, with batteries getting bigger. For instance, Moores mentioned Los Angeles-based company Thor Trucks, which is expecting to launch a 900-kilowatt-hour model soon.
“That’s absolutely massive. That’s nearly double of what was expected to go in a truck [battery],” Moores commented. According to the expert, all these factors are building up the medium- and long-term lithium demand story.
Looking over to supply, “the story is how much of Chinese conversion capacity is going to be real capacity and then make its way to the battery market,” Moores said.
In a note earlier this year, Moores explained that the key question investors in the lithium market today should be asking is over expansions of conversion facilities. That’s because to impact the price of lithium carbonate and hydroxide, investors will have to look at the established names that have a history of creating “high-quality battery-grade chemicals — and they are few and far between.”
What’s ahead for lithium prices?
Speaking about prices, Moores said carbonate prices have come off a little bit in the last two months, while hydroxide prices have remained very strong.