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Battery metal shortage to last well into the next decade - Piedmont Lithium's Keith Phillips

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(Kitco News) - Battery metal shortage to last well into the next decade - Piedmont Lithium's Keith Phillips

When the markets turned favorable for lithium in 2020, it was a hard tack, said Piedmont Lithium's CEO Keith D. Phillips.

Phillips spoke to Kitco on Monday. In early 2020 the lithium miners announced a series of production cuts, but the market reversed itself.

"It's really tremendous. I think a lot of us in the industry thought we would have a very strong market for a decade or so to come. I don't think we expected it to happen so fast. Prices are up 10x in about 18 months which is staggering," said Phillips. "Fundamentally, we have tremendous shortages of lithium chemicals that the battery and car companies need to produce all the electric cars they want to produce. These shortages are likely to last for years and years. I think well into the 2030s."

Piedmont Lithium (ASX:PLL) describes itself as a domestic lithium provider "to power America's energy transition." The company is advancing 60,000 tonnes per year of lithium hydroxide production in the USA. Its 100% owned Carolina Lithium Project is in the permitting stage. A final investment decision is pending.

It also has partial interest in companies advancing projects in Canada, Sayona Mining, and Ghana, Atlantic Lithium.

Piedmont has a market cap of $1.7 billion.

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There was a lot of M&A in the battery metal space in the past two years. Wyloo and BHP Billiton spent most of 2021 in a bidding war for Noront Resources. Sibanye-Stillwater made a series of acquisitions, such as ioneer and Keliber. China's Ganfeng Lithium and Lithium Americas were in a bidding war for Millennial Lithium.

Phillips said customers are driving mergers and acquisitions in the lithium space.

"Scale matters. [The car companies] are big companies with big requirements. They'd like to have two, three, or four good suppliers they can rely on. It's going to be really difficult for them if they have to manage 6, 8, 15, or 20 lithium suppliers."

The other impetus is China, which is trying to secure a raw material supply. In 2021, 148 of the world's 200 lithium-ion battery megafactories in the pipeline are located in China. In contrast, Europe and North America have only 21 and 11 megafactories in the pipeline, writes Benchmark Minerals in an analysis of the market.

"The Chinese are really in a scramble for raw materials. This is one of these businesses where the Chinese dominate the lithium chemical market—certainly the lithium hydroxide market—but they are mostly converters. They don't own their own raw material, for the most part, so they're exposed to upstream raw material prices. They're doing all they can to acquire stakes or full ownership of assets around the world."

Follow Michael McCrae on Twitter: @michaelmccrae

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