Sunday, December 20, 2015

Rio Tinto considering investment in lithium mining


It's one of the world's hottest commodities, and now Rio Tinto wants to join the lithium party.
Prices for lithium are soaring as traditional demand from ceramics and glass manufacturers coincides with rising demand from lithium ion battery and electric vehicle manufacturers.

Lithium prices rose from $US4900 ($6774) per tonne to $US5900 per tonne in the year to October 2015, and since then the price has almost doubled to $US10,000 per tonne.

Citi analyst Matthew Schembri​ said the onset of the northern winter had crimped production of lithium in China and duly created a shortage, and he predicted the price could continue rising over the next six months.

I recently wrote about the opportunity in lithium here. This is a supply and demand issue and that is why the price is soaring. My speculation in new lithium miner Orocobre is acting nicely as the shares are up around 16% since I bought them. Here is a recent chart of Orocobre stock performance.

I still like lithium and I see a bubble developing if supply cannot keep up with demand. The only new mine has been Orocobre's which is still slowly moving through the optimization process towards nameplate capacity.

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