Supply & Demand Forces, Case Study of Lithium

SUPPLY & DEMAND FORCES, CASE STUDY OF LITHIUM 1
SUPPLY & DEMAND FORCES, CASE STUDY OF LITHIUM
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SUPPLY & DEMAND FORCES, CASE STUDY OF LITHIUM 2
QUESTION 1 (ii)
https://www.economist.com/business/2017/11/25/australia-is-the-new-frontier-forbattery-
minerals
In their article “Australia is the new frontier for battery minerals” The Whizz of Oz has
presented Australia to be the leading country in the production of battery minerals like Lithium
and cobalt. Away from that, the article has gone ahead to enlighten us on the reason behind its
expansion when it comes on the mining sector of these minerals as the increasing demand in the
Chinese markets. In this perspective, the Whizz of Oz presents us with a scenario on how the
forces of demand and supply have played a major role in the expansion of this industry. It’s
through these forces of demand that we realize the many types of lithium but the difference in
their demand from the main market has brought about differences in the type which is mined
most. From the article also, we get to know that the increasing demand for these minerals has led
to most people venturing into the sector and hence its expansion (The Economist, 2017).
http://www.mining.com/web/lithium-supply-demand-story/
In his article “The lithium supply and demand story” Brian Leni enlightens on the
manner in which the forces of demand and supply are shaping the lithium mining sector as
compared to how the market used to be some few years ago. Brian manages to picture the power
of demand in the market by comparing the growth of lithium mining sector some few years ago
when demand for lithium components was low and currently when its demand is high (Leni,
2017). According to Brian, the lithium industry has increased following the increased demand
for lithium products currently. In regard to supply forces, Brian has shown that the low demand
for some of the lithium products has led to reluctance in their production and hence reduced

SUPPLY & DEMAND FORCES, CASE STUDY OF LITHIUM 3
supply. Through the two approaches, Brian has managed to enlighten his readers on the forces of
demand and supply in shaping any market
QUESTION 1 (ii)
Classic Oligopoly market structure is the market structure that best describes the market
of lithium both in Australia and across the world. From Brian’s article “The lithium supply and
demand story” his statistics on Lithium reserves has indicated that just a few countries have
lithium and hence its market can be said to have been dominated by just a few countries. An
oligopoly is where the market is controlled by just a few countries or companies and that is
exactly what has characterized the Lithium market (Benchmark Minerals Intelligence Blog,
2018). The oligopoly in lithium industry and which has been commonly referred to as the
Lithium Cartel traditionally consisted of Sociedad Quimica y Minera, Albemarle, FMC
Corporation and Tianqi. These few firms regardless of the few others like Ganfeng which have
attempted to enter the market; they capture more than 85% of the world’s lithium production,
clear evidence that this market is an oligopoly market.