Why did the Sayona Mining share price crash 32% in June?

Last month was a tough one for this ASX lithium developer.

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Key points

  • The Sayona Mining share price was sold off in June
  • A bearish note out of Goldman Sachs weighed heavily on lithium shares
  • News that a major automaker is buying lithium mines to go straight to the source also weighing on sentiment

The Sayona Mining Ltd (ASX: SYA) share price had an incredibly volatile month in June.

Although the lithium developer’s shares recorded a monthly decline of 32%, that’s only part of the story.

What happened to the Sayona Mining share price in June?

Sayona Mining and other lithium shares came under significant pressure last month for a number of reasons. These include a bearish note out of Goldman Sachs and news that BYD is planning to buy a large number of lithium mines.

In respect to the latter, Warren Buffett-backed electric vehicle company BYD is reportedly planning to buy six lithium mines in Africa with the aim of producing approximately 1 million tonnes of lithium carbonate each year.

That would be enough to build at least 27.78 million electric vehicles, which covers the automaker’s expected demand for the next decade.

This means that as well as increasing overall supply, it would take a major lithium buyer out of the chain, which could have a big impact on the demand side of the equation. And if other automakers decide to follow suit, lithium developers like Sayona Mining could end up being bypassed.

What else?

Also weighing on the Sayona Mining share price was a note out of Goldman Sachs. Although the broker has been predicting a sharp decline in lithium prices in the coming years for some time, its latest note reiterating this view caught the attention of investors this time around.

This had investors panicking that lithium prices will be nowhere near current levels when Sayona Mining and other developers finally get around to producing and selling the white metal.

Following these events, the Sayona Mining share price eventually dropped as much as 50% month to date before a late rebound pared some of these declines.

That rebound was driven by the release of an update on drilling activities in Canada. Those results reveal that the Moblan deposit has the potential to become a world-class deposit.

Here’s hoping that July is a better month for shareholders.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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