Lithium can make Australia once again a lucky country

Australia's 27 years of uninterrupted economic growth was starting to look fragile - thanks to the collapse of a once-in-a-generation mining boom, banking scandals and a moribund parliament. But it seems lithium may be coming to the rescue.

The triple-digit returns from junior lithium miners Kidman Resources and Altura Mining over the past year could be just the start, with the Western Australian state government saying growing global demand for electric vehicles means the sector could attract $26 billion in investment by 2025 from virtually zero just two years ago. That would entrench Australia's position as the world's biggest producer, reinforcing its commodities-led economy thanks to Australia's global dominance in iron ore and coal and its burgeoning position in LNG.

While volumes and earnings won't match the country's iron ore trade, rising exports of lithium will once again feed into growth in Australia.Lithium may eventually even help prompt the central bank to revisit what has been one of the longest pauses in interest rates in recent memory.

Source: Bloomberg Pro Terminal

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