While the Piedmont Lithium analysis below makes for a compelling graphic, lithium has been a globally traded product for decades and there is an expectation that the growing lithium demand in the US will be largely met through imports. One of the significant positives of the Piedmont analysis is that it shows that US producers should have some sort of margin umbrella associated with pricing being based on import economics. That may not seem important today, given the extremely high price of lithium, but it will be important when lithium is oversupplied, which in our view is an inevitability – eventually. The barriers to entry for lithium are low and the buyer enthusiasm for new projects is very high. At some point, we will overbuild relative to demand and the net short nature of the US market may be critically important to companies like Piedmont, whose costs may not be the lowest. For more see today's ESG and Climate report.
