Platinum has recently lost its honorary title of “the white gold” to lithium. The latter’s fame grew tremendously as the global strides to achieve a green economy accelerated. As is well-known, lithium is one of the pivotal elements for the transition, essential for batteries. It may be surprising, therefore, that it is the only metal analyzed in this report whose price has markedly dropped.

“The volatility in lithium’s price is primarily due to it being a nascent, immature but very dynamic market,’ explains Ernie Ortiz, president & CEO of the biggest royalties company in the space, Lithium Royalty Corp. The novelty of the market for lithium exacerbates the surges and dips that can lead to a mismatch between supply and demand at any given time but over the long term, deficits are expected to materialize at current growth rates. Ortiz assures us that these will normalize with time. “We model and invest with a long-term perspective to ensure profitability regardless of  short-term price fluctuations,” he adds, emphasizing that lithium’s growth rate is projected to be more than 20 percent CAGR over the next decade. As a royalty company, Lithium Royalty does not directly engage in mining but provides capital to mining companies in return for royalties. One of its key assets is Sigma Lithium, a major global lithium producer. “We are doubling production next year, which is a substantial step forward for us. Our expansion includes a second plant, reinforcing our commitment to meeting growing demand,” Ana Cabral, Sigma Lithium’s CEO says. Cabral adds that her company is amongst the lowest cost producers, expressing confidence that the current lithium prices will not impact Sigma’s operations. High-cost producers, however, will likely be phased out until the market finds equilibrium.