Lithium producer Orocobre predicts it will be paid about 25 per cent more for lithium in the June half than in the December half as the demand for electric vehicles accelerates.
The company reported record half year revenue of $US63.1 million for the December half on Friday.
The company, whose Olaroz facility in Argentina is considered one of the lowest cost producers of lithium carbonate in the world, also reported a significant jump on the prices it received per tonne in the December half, revealing an average price of $US11,145 per tonne, up 24.3 per cent on the first half of fiscal 2017.
The company, which recently signed a deal with the Toyota group’s trading arm Toyota Tsusho Corporation, hopes to cash in on the global rise of electric vehicles.
Under a deal announced in January, Toyota Tsusho will take a 15 per cent stake in the Orocobre business. The agreement will help Orocobre pursue plans to more than double the production capacity of Olaroz, to more than 42,000 tonnes per year.
Orocobre’s managing director, Richard Seville, said Orocobre was expecting to receive prices about 25 per cent higher this half than in the December half.
“There’s a shortage of supply at the moment and security of supply is more important than price. And we’ve actually seen strong price rises over these last two to three years. So this is a continuation of that,” he said.
“We’re expecting, more than likely, a further increase in the second half, but we can’t provide any formal guidance,” he said.
Mr Seville said the fundamentals of the lithium market were sound.
“Customers are concerned about supply. They’re concerned about supply right now, and they’re concerned about supply for their big planned investments in 25 years’ time.
“So we’re getting two levels of nervousness going on at the moment. And when we look forward, in terms of our view of the supply response…we fully understand that nervousness, because the supply is going to struggle to keep up with demand, assuming that the EV (electric vehicles) sector takes off the way that everybody is currently expecting,” he said.
Mr Seville also said recent research reports predicting a strong take up of electric vehicles in the world’s key car markets over the next decade or so were “reasonable”.
In a new report released late last year experts from UBS lifted their forecasts sharply for electric vehicle sales in future years.
UBS predicted that almost one in every six new cars sold around the world in 2025 would be electric vehicles, adding that the EV market share in Europe would be even greater.
In Europe, one in every three cars sold in 2025 would be electric vehicles, UBS forecast.