Furthermore, the firm doesn't see another disruptive technology taking over for lithium in the near future. It pointed out that lithium ion batteries were "essentially invented in the 1970s, and have only truly become ubiquitous in the last few years," and that even if a technology capable of outperforming lithium batteries arose, it would have to contend with the substantial cost reduction enjoyed by lithium cells due to manufacturing scale.Supply Stormcrow gave an overview of some of the benefits and issues surrounding brine and hard-rock lithium production. For example, brine production is cheaper, but currently takes 12 to 18 months and can be held up by unfavourable weather, while hard-rock is more expensive, but features a "short and direct path to producing product." Looking at future supply, the firm expressed skepticism that current lithium suppliers would be able to "open the floodgates of lithium production" to eliminate the need for new producers in the face of a higher lithium price. "We attended a conference in 2009 where SQM (NYSE: SQM) management indicated they could expand lithium production at any time they saw strong prices," the firm said, "... Prices have roughly doubled since then. SQM's Li production, a byproduct of their much larger potassium business, has remained flat." Beyond that, it noted a number of obstacles in the form of logistics, permitting and/or government regulations that could get in the way of a production ramp-up for current lithium producers. That said, Stomrcrow does believe that RB Energy's operations and Galaxy Lithium's Sal de Vida will eventually get back on track, and it noted that Orocobre (TSX:ORL) is also expected to commence production this year. Lithium Americas (TSX:LAC), with the help of POSCO's (NYSE:PKX) extraction technology, is also expected to move forward, although Stormcrow stressed that "POSCO's technology is not the only alternative technology in the lithium space that is being developed, and is likely not the least expensive method of production, either."
Still, the firm is calling for a fairly stable production picture through 2025, with any upside surprises in total production unlikely, at least through 2020.Prices As one might expect, Stormcrow saw rising demand and stable supply leading to stronger a lithium price, especially when it comes to battery grade lithium carbonate and lithium hydroxide. The price is expected to rise from approximately $7.08 to $9.39 per kilogram for battery grade lithium carbonate and lithium hydroxide by 2025, and from $5.89 to $7.56 per kilogram for technical grade lithium carbonate. Stormcrow provided a much more in depth explanation of how they arrived at those predictions, and while we don't include it here, it's definitely worth a read (see link below). Even though the firm appears to have provided a more measured look at the lithium space, there are certainly a number of positive signs for lithium. "This is likely to be a boom period for companies that are making lithium, and investors would be wise, we believe, to act early on this opportunity," the report concluded. To see full disclosures from Stormcrow Capital and to view a full copy of the report, click here. Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article. Related reading: SQM: Lithium Price Up 10 Percent in Q1 Stormcrow Capital: 'Lithium Prices Will Rise' from Lithium Investing News