The Core Lithium Ltd (ASX: CXO) share price is running ahead of its lithium peers, surging 30% in the last two days to record highs of 55 cents.
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Australia's next lithium producer
Core Lithium is positioned to become Australia's next lithium producer following the Board's Financial Investment Decision (FID) to proceed with the construction of its Finniss Lithium Project.
According to the FID announcement, Finniss' development is fully funded and project execution will begin immediately in October 2021.
The Core Lithium share price has faced little resistance in its recent rally, trading flat at the beginning of October before breaking out in the last two days.
Core Lithium expects to begin commissioning its DMS (Dense Medium Separation) plant and first production of lithium concentrate by Q422.
The company expects to achieve steady-state production by FY23 and forecasts Finniss to produce about 175,000 tonnes per annum of spodumene concentrate for world markets.
To add some perspective, the $5.8 billion market cap Pilbara Minerals Ltd (ASX: PLS) is projecting FY22 spodumene concentrate production between 460,000 to 510,000 dry metric tonnes (dmt).
By comparison, the Core Lithium share price currently trades at a market cap of around $650 million.
Core Lithium has in place significant end-users with binding offtake agreements with China's lithium giant, Jiangxi Ganfeng Lithium and Ya Hua International.
Core Lithium share price riding sector tailwinds
The lithium sector is running hot amidst surging spot prices and the anticipation that prices will continue to soar.
In the last two weeks of September, battery-grade lithium carbonate prices cracked 2018 highs on the back of strong demand from China and tight supply.
But this could be the beginning according to the International Monetary Fund (IMF).
In the IMF's World Economic Outlook, it cited that prices for green materials such as cobalt, nickel and lithium could see triple-digit increases in order to meet the world's transition from fossil fuels.
"… prices would reach historical peaks for an unprecedented, sustained period under the Net Zero by 2050 emissions scenario. The prices of cobalt, lithium, and nickel would rise several hundred percent from 2020 levels …" the report said.
