Is the lithium boom about to come to an end?

Is the Galaxy Resources Limited (ASX:GXY) share price in danger of declines from production plans in Argentina?

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Unfortunately for many of Australia's leading lithium miners, the days of sky high lithium prices could come to an end in the near future if Argentina has its way.

According to a report from Bloomberg, the South American nation may be about to flood the market with lithium.

The report reveals that 40 foreign companies are considering opportunities in Argentina's mining industry following President Macri's decision to remove currency and capital controls and taxes introduced by his predecessors.

Mining secretary Daniel Meilan revealed that more than half the companies considering opportunities are looking at mining lithium.

So much so the government predicts that by 2020 Argentina will represent about half of global lithium production.

What is lithium used for?

Lithium is used in the batteries of everything from smartphones, laptops, renewable energy, and electric vehicles. Demand for the metal has grown rapidly in recent years and is predicted to surge over the next decade.

As supply struggles to keep up with demand, prices have absolutely skyrocketed. Much to the delight of lithium miners such as Galaxy Resources Limited (ASX: GXY), Orocobre Limited (ASX: ORE), Pilbara Minerals Ltd (ASX: PLS), Kidman Resources Ltd (ASX: KDR), Neometals Ltd (ASX: NMT), and Altura Mining Ltd (ASX: AJM).

Is the boom coming to an end?

Despite what the Bloomberg report says, I'm not overly convinced the lithium boom is coming to an end just yet. Whilst the plans in Argentina are likely to lead to an increase in supply in the long-term, it is worth remembering that it takes considerable time to set up mines and commence production.

For this reason I think the likes of Galaxy and Orecobre will continue to enjoy high prices for lithium for at least another couple of years.

But as with every mining investment, I think it would be prudent for investors to keep a close eye on developments. After all, a significant amount of future growth has been built into the lithium miner's share prices.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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