This week I had the distinct pleasure of interviewing Joe Lowry, aka “Mr. Lithium.” Our maiden interview in June of last year received a tremendous amount of interest, so we followed it with a very well received Part 2. Now, back by popular demand, we proudly present Part 3, in which the interviewer wonders…. Is this Lithium Love or Lithium Lust? Continue reading to find out.

As a reminder, I, Peter Epstein, have no prior or existing business relationship with Joe Lowry or any of his business interests. Nor do I have any prior or existing relationship with any company named.

Joe, I understand you’ve been traveling the world. Can you share comments on the lithium market to start us off?

Peter, nice speaking with you again. Yes, recently I spent a week in Australia, a week in Japan and a week in China. Please note though, I do this sort of trip several times a year. I have run a U.S. based, independent lithium advisory business for more than three years and have visited Asia more than two dozen times since then.

I began traveling to China on a monthly basis in 2000 – the year I moved to Japan. I made trips to such disparate places as Xinjiang, Tibet & Sichuan to meet lithium producers. I moved to China in 2005 and lived there for over five years, making trips to Japan every three weeks. My daughters considered Japan and China home, both graduated from high school in Shanghai.

Oh, and the short story on the market is;

The lithium shortage is real, the US$20,000+/Mt pricing for carbonate & hydroxide in China is real, and robust growth in lithium demand is real.

What was the biggest surprise for you on this trip?

I thought the recent 3x price run-up in China would be a major point of discussion, but that point was dwarfed by concerns over lack of supply. The overwhelming interest in lithium on the part of Australian investors was also a bit of a surprise.

Please explain how you are able to gain access to key lithium industry participants?

It’s All About Relationships…. I am perhaps the, “Forrest Gump” of the lithium business, blessed to be at the right place at the right time during twenty years of lithium demand growth. I took over responsibility for FMC Lithium’s carbonate and hydroxide businesses just as the lithium ion battery was being commercialized.

After five years of traveling to Japan every six to eight weeks to meet with customers from the emerging lithium ion battery market, I was asked to move there and take over responsibility for not only FMC’s Asia sales, but also a Japan-based lithium ion battery cathode production JV, and a profitable downstream JV producing both lithium metal & butyl lithium.

Business in Asia is much more relationship-based than it is in North America, I had the opportunity to forge great relationships in business meetings, at dinners, karaoke and on golf courses. Being a resident instead of a visitor was a great help as was acquiring language skills.

As mentioned, I traveled to Asia multiple times a year (and still do) and became a supplier in some cases, a customer in others, but more importantly a friend. Long story short: I’m a well-recognized face and a trusted one in the Asian lithium market.

Do you see evidence of a vibrant EV market in Asia / Australia?

I would say the vibrant growth in e-transportation is real. In 2015,  e-buses in China were the major story, but all other forms of e-transportation are gaining traction. As is Energy Storage Solutions (ESS), albeit from a smaller base.

Which major countries are serious about facilitating widespread use of lithium ion batteries?

Due to the combination of population, air quality issues and the power of the government to, “influence” outcomes – China is the main story. I would lump major EU countries together as also being significant. Even India is making noise in both e-transport and ESS. The U.S. will also show growth, but as a follower, not a leader.

Aside from prices, what best reflects the state of the lithium industry?

Australia is now the center of the lithium universe. Talison plus Galaxy’s Mt Cattlin project, Neometals/Ganfeng’s Mt Marion and the potential of Pilbara Minerals are like to increase spodumene’s volume hegemony over brine at least until 2022.

To the extent that you can comment on pricing; past, present or future, please do!

One point I find extremely interesting is that the countries that always were low price buyers, trying to secure the cheapest Chinese product, have now been shut out due the price run-up in China and the VAT penalty creating a disincentive for exports.

I have been approached for help in securing product by companies in India and in similar markets, who in the past always sought the lowest price. These companies, faced with shutting down their plants, have offered US$28,000 – US$30,000/Mt, in advance, for lithium hydroxide.

Unfortunately, since they have no relationships, supply for these companies is hard to come by. What we considered the bottom of the market appears to prove that demand destruction is not a major concern. On the other hand, the Japanese have contracts at low prices for much of their 2016 volumes and seem to be in denial that they will have to pay much higher prices in 2017.
I see a return to a normalized global price range as a major theme for 2017.

Any thoughts on how Tesla’s (under construction) giga-factory fits into global battery markets?

Yes, good question. The western press seems fixated on the Tesla giga-factory; however Tesla is really just one of many large battery projects worldwide. China has multiple projects, some of which, although smaller than Tesla’s planned operation, are already in production and will grow in phases.

I think what Tesla is doing is great, but it’s only part of the global story.

Based on extensive meetings around the globe, are there critical events on the horizon that could shake things up?

As long as China continues a reasonable level of support for battery related initiatives and there is not a major global recession, I think lithium ion battery demand for non-consumer applications has reached a tipping-point, ensuring robust lithium demand for the next several years.

Some are forecasting price increases of 10%+ per year for a decade or more. What could disrupt the conventional wisdom of soaring demand?

The current US$20,000/Mt price in China already ensures great profits for even the highest cost producers. I believe in market forces. New spodumene capacity comes online more quickly than brine but if prices stay at the high teens for five years, I believe you will see at least a brief oversupply situation no later than 2024. As long as spodumene is a major lithium source, price is not likely to return to US$6,000/Mt in the next decade. Having said that, I do not believe 10% annual price increases for a decade is even a remote possibility.

Thank you once again for your keen insights and timely update on the lithium industry.