Future Demand and Price Development †Free Samples to Students

Question: Discuss about the Future Demand and Price Development. Answer: Introduction Natural resources are the gift from nature. The natural resources are extracted and used for various productive purposes. Australia has the blessing from nature with a huge storage of mining resources. The paper discusses demand and supply condition of mineral resources particularly for lithium in Australia. To combat pollution there nations across the world is now focuses on using Electronic vehicles. This increases the demand for lithium used in the battery and gives the opportunity of a price gain. There is initially a supply short fall and the producers need to increase supply to maintain a balanced situation. The paper analyzes this issue economically. In the global market, the demand for lithium is scrambling leaving a path on the iron ore of northern Australia. The work in mines are accelerating to fulfill the rising demand of battery makers globally. Large planned projects are initiated to increases the supply of lithium and retain the position of Australia one of the top suppliers of in the global market. This will help to maintain the grip of Australia in the global market (www.bloomberg.com 2017). The biggest mine is extended about 75 miles from the Hedland Port, which provides a gateway to the Chinas market. The target of Pilbara Minerals Ltd is to start shipment in the second quarter of 2018 from the Pilgangoora project and advances its working for potential expansion. Another company Altura Mining Ltd has scheduled to boost their output. The Wodgina mine located nearly Mineral Resource Ltd is known for its largest lithium deposits. The undertaken projects will form an emerging cluster global production cluster as opined by Althura and Pilbara. The successful implementation of all the emerging projects makes the region worlds largest production hub. The projected time for this to be happen is mid-2020 (www.miningreview.com 2017). The consumers outside the China have shown their interest in recent weeks. These nations include South Korea and Europe. They are now exploring supply deals. The production of electronic vehicles raises Chinas demand for lithium and the energy storage brings considerable price gains. It is projected that by 2040, almost fifty percent of all the new cars and one third of the all the light fleet vehicles globally will be electronic. In the long run the situation is expected to be changed. The other suppliers may emerge in the world market but the position of Australia will remain dominant. In 2027, Australia is forecasted to control about 37 percent of world supply beating Argentian that captures 18 percent share. Australia is continuously stressing importance on the equity investment in mines (www.ft.com 2017). Besides the role of Australia as manufacturer of battery sees progress in terms of exporting high value lithium. One of biggest sport utility vehicles maker of China give its consent to invest in Tawana Resources NL, the Australian developer. Economic analysis of the article Demand and supply are the two most fundamental concept of market economics. Demand is the buyers willingness to buy while supply reflects the sellers decision of supplying in the market. These two forces act to determine equilibrium price and output in the market (Chenayah 2017). When there is any mismatch between the two forces, this affects the price. The world demand of lithium is increasing at a rapid pace. The high demand of lithium limits the miners in the world. The sales of electric vehicles has risen fast. The drivers worldwide experiences the electronic vehicles ramping up the road quickly (Martin et al. 2017). The supply shortage from increasing demand raise the price. The scenario can be described using simple demand supply tool. The initial demand curve is DD and supply curve is SS. In response to high price demand curve shifts to D1D1. This raises the prices from P* to P1. The increasing price attract the investors attention and they invests willing to invest in the mining industry and boost supply. The persistently rising demand attracts multiplier suppliers in the industry. However, the dominant position of Australia remained with projected supply of 37 percent in 2027 (Maxwell 2014). This will keep Australia ahead of other nation. This is expected to stabilize prices in the long term (Friedman 2017). However, the new supply wave still lacks the demand. The anticipated growth outlook of demand keeps the prices still at a high level. The lack of raw materials creates the supply constraints in the lithium market. However, though forecasting is made about a supply ease of lithium by 2020 bur in future the market may face again supply shortage in the future because of the lack of additional capacity to support the market (theconversation.com 2016). Recommendation Australia has the opportunity to take advantage of the rising global demand of lithium. To supply lithium in line with the demand Australia is recommended to develop a system of recycling and create models for to lease the resources. The third position of lithium in the periodic table makes it an important element of battery for electric vehicles. Australia should go for innovation to meet the demand. The government and business should made proper planning for collecting and processing the waste stream. There are growing need for efficiently sorting the system in order to isolate batteries and have a moderate risk for fire. Conclusion The paper discusses supply and demand condition of mineral resources in Australia. The increasing use of electric vehicles raises the demand of lithium. Australia is one of biggest supplier of lithium. The growing demand coming from China, South Korea and Europe. This pushes price in the lithium market up. However, the supply is increasing from multiple sources but still it lags behind the demand and this maintains a high price in the market. Australia should use recycling system and employ model for leasing resources. References Chenayah, S., 2017. Book Review-Fundamentals of Microeconomics.Institutions and Economies, pp.149-150. Friedman, L.S., 2017.The microeconomics of public policy analysis. Princeton University Press. Ft.com. (2017).BHP positions itself at centre of electric-car battery market. [online] Available at: https://www.ft.com/content/367149e8-7ca2-11e7-ab01-a13271d1ee9c [Accessed 25 Nov. 2017]. Martin, G., Rentsch, L., Hoeck, M. and Bertau, M., 2017. Lithium market researchglobal supply, future demand and price development.Energy Storage Materials,6, pp.171-179. Maxwell, P., 2014. Analysing the lithium industry: Demand, supply, and emerging developments.Mineral Economics,26(3), pp.97-106. Miningreview.com. (2017).Lithium supply shortfall caused by electric vehicle boom. [online] Available at: https://www.miningreview.com/news/lithium-supply-shortfall-caused-electric-vehicle-boom/ [Accessed 25 Nov. 2017]. Stringer, M. (2017).Australia's Got a Lock on Supply of the Metal Used in EV Batteries.Bloomberg.com. Retrieved 25 November 2017, from https://www.bloomberg.com/news/articles/2017-10-25/ground-zero-for-lithium-giving-australia-lock-on-global-supply The Conversation. (2016).Lithium: Australia needs to recycle and lease to be part of the boom. [online] Available at: https://theconversation.com/lithium-australia-needs-to-recycle-and-lease-to-be-part-of-the-boom-54037 [Accessed 25 Nov. 2017].