The Pilbara Minerals Ltd (ASX: PLS) share price is soaring today after the lithium miner’s CEO made some bullish comments.
At the time of writing, Pilbara Minerals shares are up 8.13% at $3.46 apiece.
Pilbara Minerals is one of the biggest lithium miners on the ASX, with a market capitalisation of $9.5 billion, according to the ASX.
Lithium prices expected to remain strong
The company is currently seeing very high lithium prices, which is helping to push up the Pilbara Minerals share price.
During the first half of FY22, the company achieved an average selling price of around US$1,250 per dry metric tonne.
Pilbara Minerals said that demand for and pricing of lithium chemicals and spodumene concentrate increased significantly during the period, resulting in record revenue of $291.7 million.
However, on the date that Pilbara Minerals released its HY22 result (23 February 2022), it said that after the end of the half-year, the price had continued to increase. Price reporting agencies indicated spot spodumene concentrate prices were in the range of between US$3,750 per dry metric tonne to US$4,500 per dry metric tonne.
However, the outgoing CEO of Pilbara Minerals, Ken Brinsden, said prices were likely to stay strong. The Australian Financial Review reported Brinsden as saying:
If you’re the average car or EV maker, if you’re a cell maker today, you’re just about hitting the panic button because value-added chemicals in the lithium industry have gone through the roof.
It’s happened because the carmakers were asleep at the wheel, they were not paying attention to the raw materials supply base, they are too far removed. Inevitably [demand] was coming back, and today they’ve been caught short, and they’re going to have to pay through the nose to be able to access raw materials. It’s going to be a big issue for them for quite some time to come.
[It’s] very, very healthy pricing and likely to stay strong. A mine takes five to seven years to get up and running. You can build a chemical plant and a car plant in less than two years…so it’s going to take quite some time for the mines to catch up.
How long could this go on for?
Rio Tinto Limited (ASX: RIO) says lithium demand is forecast to grow by 25% to 35% per annum over the next decade, with a significant supply-demand deficit expected in the second half of this decade.
Brinsden suggested it will be some time before supply catches up, according to the AFR, with electric vehicle demand expected to keep rising. He said:
You’ve got no choice but to lay that incentive price on the table, otherwise the raw materials supply base will not grow. Honestly, the raw material guys, at least for the foreseeable future, are going to keep winning the margin because they are so far behind as compared to where demand is today.
Meanwhile, Pilbara Minerals gave a ‘mid-stream’ project update yesterday. The completed scoping update provided preliminary support for the construction of a demonstration-scale chemicals facility at Pilgangoora, producing value-added lithium phosphate salts via an “innovative refining process”.
Pilbara Minerals share price snapshot
With today’s gains factored in, the Pilbara Minerals share price is up 28% over the past month and 220% over the past year.
It has also risen by 8% this year to date and 11% in the past week.
The post Own Pilbara Minerals shares? Here’s why the CEO is so bullish on lithium prices appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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