When lithium is mentioned, most ASX investors immediately think of electric vehicles (EVs).
Critical minerals expert Ken Hoffman argues that artificial intelligence (AI) should now be added to that list.
Hoffman was in Australia recently to present on the lithium market and the fundamentals driving the price.
He did the same thing in 2025, when he forecast an upswing in the lithium market that has since taken PLS Group’s (ASX:PLS) share price up 118% over the past year.
Hoffman’s analysis says AI’s growing demand for electricity is, in turn, driving significant demand for battery storage.
The current investment drive in the US is larger than previous ‘capex booms’, such as the railroads, interstate highways, and rollout of the internet.
Source: Traubenbach Associates
The United States is currently experiencing a construction boom as data centres are being built across the country. The same thing is happening in Australia, too.
During the week of 4 July, which included the Independence Day holiday, the US grid saw record demand. One operator said the national holiday helped prevent the grid from going down.
Hoffman’s analysis suggests that lithium demand will remain far more robust than currently assumed as long as American hyperscalers continue to spend hundreds of billions of dollars on their ‘AI factories’.
Based on this analysis, his firm expects another potential lithium price run-up over the next six to 18 months.
The producing miners agree with his bullish forecast
Several mining companies are also forecasting stronger demand.
Elevra Lithium (ASX:ELV) is a North American producer that released its full-year results last week.
Management at the company expects a supply gap to form.
Elevra also highlighted the current broker consensus, which was more subdued in its price forecasts than Hoffman’s:
Source: Elevra Lithium
Liontown Resources (ASX:LTR) is another major lithium company that’s listed on the Australian market.
It released its full-year results today as well.
The company says positive market signals have prompted it to move from a defensive position to accelerating development and restarting deferred capital expenditure.
Management at Liontown also sees a supply gap forming in the market:
Source: Liontown Resources
Liontown CEO and Managing Director Tony Ottaviano says in the annual report:
“When Kathleen Valley was first approved in 2022, EVs were the only demand vector for spodumene. Today that has changed fundamentally — stationary storage, commercial vehicle electrification, eVTOLs, and robotics are all pulling on the same supply chain.
“We always had the conviction that the demand profile would broaden. We also believed the prolonged downturn was quietly destroying the supply response the market would eventually need.
“In April, I took the Board to China to see the market beyond the spreadsheets. What we saw confirmed it. Supply is tight, investment in refining capacity is strong, and the greenfield pipeline that is supposed to fill the gap is years away.”
Hoffman’s lithium price projection does not include potential future uses such as robotics, eVTOLs, and drones. He says these markets could represent another “huge increase” in demand if they take off.
For him, the lithium bull market is all about AI right now. Where AI goes, he argues, the lithium price will follow.
Write to Callum Newman at Mining.com.au
Images: Unsplash, Liontown Resources, Elevra Lithium & Traubenbach Associates
