By Chris Berry (@cberry1)

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In late 2018, we published a note examining whether volatility was a positive or negative for lithium investment. At the time, lithium pricing and lithium equity prices were at much higher (and ultimately unsustainable) levels. Lithium spot pricing has been more than cut in half and has wreaked havoc on the production plans of Alita, Nemaska, Albemarle and Mineral Resources, Livent, SQM, Galaxy, Altura, and Pilbara – not to mention their share prices despite the early run up in January 2020. The irony here is that the relative success of new hard rock entrants into the lithium sector has created an oversupply glut which has run well ahead of robust demand for the time being pressuring the whole sector. This has happened even as downstream players such as OEMs talk about battery shortages.

In short, nobody has been immune and a lesson here is that while lithium is indeed strategic and necessary for a lower carbon future, it is a commodity/specialty chemical not immune from the capital cycle. The same could be said for other metals, shown below.