5 ms·

Something about the economics of lithium, and other recently important minerals confuses me. How is a $1.5bn deposit, a major, significant source? That's would

by netcan 5y ago

Something about the economics of lithium, and other recently important minerals confuses me. How is a $1.5bn deposit, a major, significant source? That's would be about 10 days worth of oil. The whole global lithium market is just $3bn-$4bn pa. The rare earth market is about $2.5bn annually. Seems super low, relative to headlines/concerns/etc. How are these materials simultaneously of such importance, and also so economically minor. What am I missing here?

Strom 5y ago
> How are these materials simultaneously of such importance, and also so economically minor. What am I missing here? My guess is the amount of skill required to get these materials. Miners can be paid pennies and they'll still do the work. Something similar to how garbage takeaway is of very high importance, but economically pretty minor.
- netcan 5y ago
  Waste management is a multi-trillion dollar industry.
  - Strom 5y ago
    Come on now. That's changing the goal posts. Natural resource extraction is also a multi-trillion dollar industry.
    - netcan 5y ago
      I'm not seeing the analogy. The lithium market is surprisingly small for the same reasons that plastics are...? I concede the point that small individual parts of the overall waste economy are prominent problems... but where's the way back to lithium. Lithium is cheap enough that Elon could buy all of it with just his bitcoin. He's a guy with a use for lithium. Why not solve all possible scarcity concerns with the jingle of a purse. More realistishly... Unless there's something I'm missing, I can't see how a lithium price spike could affect the price of an electric car noticeably. That doesn't scream scarcity.
      - Strom 5y ago
        My analogy wasn't about any special processing or any special segment of garbage. It was a more basic comparison that we as a western society depend heavily on regular garbage takeaway (because we consume so much single use crap) but the people who take away our garbage aren't paid much and get looked down upon on top of that. So it's an important part of society that is severely underpriced compared to the value it provides. One of the primary reasons it can be so underpriced is because the workforce can be trivially trained (relatively speaking) and there seems to always be enough people interested in working. From your comment that the lithium market is so small, yet always talked about as criticial - I guessed that perhaps that's because it's similarly easy to find and train lithium miners. As for Elon and lithium, I remember recently watching some interview or talk that he gave, where he mentioned that he doesn't consider lithium a problem at all precicely because it is so abundant in the US. So yes, to me it seems as well that there is no scarcity to fear. There might be a temporary shortage, but it can be solved rather quickly with money.
philipkglass 5y ago
These elements are critical but tiny parts of a number of products. Downstream users and even governments make a lot of noise about ensuring affordable supplies, but major multinational miners are slow and cautious about developing new projects. The total addressable market isn't that large. Miners aren't interested in over-supplying these commodities as a favor to manufacturers of batteries, magnets, or light bulbs. Especially for rare earth elements, market demand is so limited that one new major producer could significantly reduce market prices.
- netcan 5y ago
  Why doesn't someone just "solve this problem with money." I realize this is a simplification, but any number of actors could affordably silo a massive stockpile and make the risk of supply deficits go away entirely. Some of the politicians bringing this stuff up as major future risks could personally afford to seriously mitigated on their personal accounts.
  - philipkglass 5y ago
    The United States used to stockpile raw materials for military use. A lot of that ended after the Cold War did because it was considered inefficient. (And it probably was; efficiency and resiliency are at odds here.)

by netcan 5y ago

Strom 5y ago

> How are these materials simultaneously of such importance, and also so economically minor. What am I missing here? My guess is the amount of skill required to get these materials. Miners can be paid pennies and they'll still do the work. Something similar to how garbage takeaway is of very high importance, but economically pretty minor.

netcan 5y ago
Waste management is a multi-trillion dollar industry.
- Strom 5y ago
  Come on now. That's changing the goal posts. Natural resource extraction is also a multi-trillion dollar industry.
  - netcan 5y ago
    I'm not seeing the analogy. The lithium market is surprisingly small for the same reasons that plastics are...? I concede the point that small individual parts of the overall waste economy are prominent problems... but where's the way back to lithium. Lithium is cheap enough that Elon could buy all of it with just his bitcoin. He's a guy with a use for lithium. Why not solve all possible scarcity concerns with the jingle of a purse. More realistishly... Unless there's something I'm missing, I can't see how a lithium price spike could affect the price of an electric car noticeably. That doesn't scream scarcity.
    - Strom 5y ago
      My analogy wasn't about any special processing or any special segment of garbage. It was a more basic comparison that we as a western society depend heavily on regular garbage takeaway (because we consume so much single use crap) but the people who take away our garbage aren't paid much and get looked down upon on top of that. So it's an important part of society that is severely underpriced compared to the value it provides. One of the primary reasons it can be so underpriced is because the workforce can be trivially trained (relatively speaking) and there seems to always be enough people interested in working. From your comment that the lithium market is so small, yet always talked about as criticial - I guessed that perhaps that's because it's similarly easy to find and train lithium miners. As for Elon and lithium, I remember recently watching some interview or talk that he gave, where he mentioned that he doesn't consider lithium a problem at all precicely because it is so abundant in the US. So yes, to me it seems as well that there is no scarcity to fear. There might be a temporary shortage, but it can be solved rather quickly with money.

philipkglass 5y ago

These elements are critical but tiny parts of a number of products. Downstream users and even governments make a lot of noise about ensuring affordable supplies, but major multinational miners are slow and cautious about developing new projects. The total addressable market isn't that large. Miners aren't interested in over-supplying these commodities as a favor to manufacturers of batteries, magnets, or light bulbs. Especially for rare earth elements, market demand is so limited that one new major producer could significantly reduce market prices.

netcan 5y ago
Why doesn't someone just "solve this problem with money." I realize this is a simplification, but any number of actors could affordably silo a massive stockpile and make the risk of supply deficits go away entirely. Some of the politicians bringing this stuff up as major future risks could personally afford to seriously mitigated on their personal accounts.
- philipkglass 5y ago
  The United States used to stockpile raw materials for military use. A lot of that ended after the Cold War did because it was considered inefficient. (And it probably was; efficiency and resiliency are at odds here.)