The Chilean Government’s expansion approval for one of the world’s largest lithium miners has damaged the prospects of Australia’s flock of lithium juniors.
Lithium has been the darling of the junior mining scene for the last 12 months, with investors eyeing the growing market for electric cars to create a potential boom in demand for the metal, which is crucial for cars’ batteries.
But critics of the lithium investment drive have suggested the market isn’t as big as many think, and demand growth may not take place anywhere near as rapidly as supply.
Share prices of Australian and foreign lithium juniors took a hit last week, with the news Sociedad Quimica y Minera de Chile had finally agreed to terms with the Chilean Government, to raise its lithium production.
The newly-inked deal allows SQM to increase its lithium production from 1mt to 2.2mt lithium carbonate per annum, and expands its lease from 2022 to 2030.
Shares in WA lithium miner Galaxy Resources dropped from $3.82 on January 18 to $3.52 when the news broke on January 19. Mineral Resources Limited saw its share price drop from $20.23 to $18.88 in the same timeframe. Pilbara Minerals shares fared better, holding at $1.00 from $1.01.