Lithium Industry

This report analyses the lithium industry on a global basis with a focus on Galaxy Resources Limited, an Australian lithium mining and producing company. The lithium industry competes in the mineral resources sub-sector of the metals and mining industry which encompasses the exploration, quarrying, mining and processing of minerals and rock to basic mineral commodity stage so it can be sold.

Although this industry suffered in 2009 from the damaging effects of the global financial crisis market conditions have improved and the future looks bright with current world demand of lithium of 110,000 tons and a forecast of lithium to increase by seven per cent annually for the next decade. This increase in demand is largely fuelled by driven by the increased importance and production of lithium-ion batteries as the next generation power source for electronics including electric vehicles and e-bikes. Top producing countries for lithium are Chile, Australia, China and Argentina.

Porter's five forces model was used to gain a better insight about the lithium industry. Overall it revealed that the industry is attractive mainly due to the growing demand for lithium. However as lithium is deemed a commodity buyers in this industry do posses some power posing an obstacle for producers in this industry. However with the increasing demand for lithium this has the potential to shift towards the favour of the producers in the future. Conversely this industry may be seen as less attractive for new comers due to the high barriers to entry.

Kotler's position strategy reveals that SQM is the clear market leader of lithium, with Galaxy Resources Limited as a challenger in the industry based on its vertical integration strategy.

Galaxy Resources Limited takes of a focus differentiation strategy focusing on producing battery grade lithium predominantly for Asian markets. Porter's value chain revealed that Galaxy adds value through extra steps