* Major lithium producers delay investment
* Lithium market surplus expected to narrow this year
By Pratima Desai
LONDON, May 27 (Reuters) - Shelved expansion plans for lithium projects due to collapsing demand for the material used to make electric vehicle batteries leaves the market facing a price spike after a couple of years when shortages start to emerge.
Auto sales including electric vehicles have slumped this year due to economic damage from the coronavirus. But sales are expected to accelerate over coming years as auto makers plough on with plans to meet stringent emission regulations. demand comes back, the supply side won't be able to react quickly enough," said Simon Moores, managing director at Benchmark Minerals Intelligence, adding that lithium prices would bounce after 2022.
Delays include Chile's SQM SQMA.SN and Australia's Wesfarmers WES.AX pushing back a final investment decision on the Mount Holland project in Western Australia to early 2021. Lithium Corp 002466.SZ , one of the world's biggest producers, also postponed commissioning the first phase of its flagship plant in Kwinana. Mineral Intelligence (BMI) estimates supplies at 324,000 tonnes and demand at 315,000 tonnes this year.
BMI had forecast supply at 572,000 tonnes for 2023, but now expects that number at 543,000 tonnes and a shortfall of 8,000 tonnes. It expects the deficit in later years to balloon.
"It could take the best part of a decade to get a new mine to integrated chemical plant fully operational," Moores said.
Lithium prices have fallen about 40% over the past 12 months due to weak demand. Prices for lithium hydroxide, typically used to improve performance of high nickel content batteries, were about $8,375 a tonne in April from about $13,300 a tonne in May 2019.
Robert Baylis, managing director at consultants Roskill, expects supply to tighten in the short term due to stronger "post-COVID-19" demand and a possible structural deficit emerging towards the middle of this decade.
"Even major incumbent lithium producers are at risk of failing to meet targets and expansion plans, highlighting the technical and financial hurdles involved with bringing sizable volumes of new capacity online," Baylis said.
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https://tmsnrt.rs/36oufZi EV sales penetration
https://tmsnrt.rs/2A8hXIj Lithium prices
https://tmsnrt.rs/2WUFRjF Lithium carbonate equivalent -- refined output and demand
https://tmsnrt.rs/2TKy0Dh
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