ECO100 Economics for Business

 Choose a topic from Micro economics that matters to you and find a recent news article covering that topic. For example following can be some of the useful topics:
- Australia stand on Renewable energy
- Demand and supply of certain resources in Australia
- Oligopoly, Monopoly and Duopoly in Australia
- Growth in Australian Agricultural sector
- Environmental effects on Great Barrier Reef and its economic impact.

2) Evaluate the article using Economic concepts. You should include The essence of the story (1 to 2 paragraphs): Introduce the issue,who is interested in it and why.The economic analysis (3 to 4 paragraphs): Explain how you can
present the issue in terms of economic concepts and theories you have learnt in class.Explain your view (2 to 3 paragraphs): Explain what actions you would recommend to the key players and/or policy holdersExplain how the above analysis supports.

Australia is blessed with huge storage of natural resources such as natural gas, minerals and mining. Demand and supply of conditions of mineral resources particularly for lithium in Australia has been discussed. Nation is relying on using electric vehicles for combatting environmental issues such as pollution. Mineral resources such as lithium has witnessed an increase in demand for its use in battery and there is an opportunity of price gain. A short of supply of lithium has been experienced by country and in order to maintain a balanced situation, it is required by producers to increase the supply of such mineral resources (Lombrana and Gilbert 2017). Issues of shortfall of lithium in country has been analyzed from economic perspectives.

The article is about demand and supply of natural resources in Australia that has alarmed resource sector. Australia is forecasted to be the biggest exporter of liquefied petroleum gas by 2020 following a decade long boom in investment. Issue of tacking shortage of lithium has been explained in the article with an attempt by efforts of Australian government such as measures of controlling exports. Analysis of demand and supply is same for almost all resources but there exist difference in analysis due to some exogenous factors in economy (ft.com 2017).

Lithium demand in global market is climbing leaving a mark on northern areas iron ore in Australia. Increasing demand of lithium in global market is accelerating working in mines industry. Some of attempt to increase lithium supply in the market involves planning of large projects so that position of Australia as one of the top providers of such mineral is retained.  Extension of biggest mine is done about 75 miles from the Port of Hedland that is an access for market of China.

Pilbara Minerals Ltd has the target of initiating shipment from the Pilgangoora project in second quarter of year 2018 and it intends to expand. Output has been scheduled to get boosted by Altura Mining Ltd. Organization or mine that is renowned for its largest deposit of lithium is Wodgina mine. An emerging cluster is sought to be formed by undertaking of projects that is opined by Pilbara and Althura (Zhai et al. 2017).

Australia is regarded as the largest production hub for lithium due to implementation of project successfully. Chinese consumers have shown their interest in Australian market and other nation include Europe and South Korea.                                           Supply of Lithium in some major regions of the world

                                                           (Source: Wilson and Biesheuvel 2017)

The demand of lithium from Chinese market has increased due to production of electric vehicles and a substantial gain in pricing has been brought due to energy resources. By 2040, one third of the all light fleet vehicles and fifty percent of new cars will go electronic at global level. It is expected that this prevailing situation will change and Australian position in terms of mineral resources is expected to remain dominant. 37% of supply of world is expected to control by Australia in year 2027 and this will beat Argentina capturing 18% of world market share (Martin et al. 2017). There is continuous emphasize importance on the equity investment in mines in Australia. Australia as a manufacturer of battery also witness becoming as exporter of lithium. Mineral developer of Australia that is Tawana Resources NL has the biggest investment received from of biggest sport utility vehicles maker of China.

Analysis of article from economic viewpoint:

The two most fundamental concept of economy is supply and demand. Demand for any product is influenced by price and it leads to increase or decrease keeping all other factors determining demand constant. It is explained by law of demand that there exist inverse relationship between price charged for product and quantity demanded. Equilibrium output and price in market is determined by two forces and any mismatch leads to disequilibrium and effects quantity and price (Maxwell 2014).

Lithium short fall in supply:

Demand for lithium is increasing at hasty pace and world miner’s face, imitations due to high lithium demand. Fast rise has been witnessed in electric vehicles demand. Price of lithium increases due to increasing demand and lower supply. Tool of demand and supply can be explained with the help of above graph. SS and DD are initial demand and supply curve. There is a shift in demand curve to D1D1 when price increases. It results in increase in price from P1 to P*. Increase in price boost supply from miners that lure investors to invest in mining companies (Martin et al. 2017).

Mining industry situation in long run:

Multiple suppliers in industry are attracted by continuous rising demand. Australia is expected to be ahead of other nations because of its dominant position with increased market supply of 37% (Stringer 2017). Therefore, price is expected to get stable in long run and price is anticipated to remain at higher level due to increased demand outlook. Market of lithium experiences constraint in their supply due to lack of raw materials.

Conclusion:

This particular study demonstrate supply and demand of Australian mineral resources. Demand of lithium increases due to increased use of electric vehicles. Growing demand for Australian lithium is sourced from several nations such as South Korea, China and Europe. This increased demand is attributable to increasing price of lithium. Supply of this particular lithium has been increasing that is backed by increasing high demand. This helps in maintaining price stability in market. The rising demand of lithium globally provides wide range of opportunities to Australia. Australian Lithium supply is in line with demand. In this regard, it is recommended to create models and develop recycling system. In order to meet ongoing demand, it is recommended to create innovation. Several measures should be taken by government such as processing and collecting waste stream.

References list:

Martin, G., Rentsch, L., Hoeck, M. and Bertau, M., 2017. Lithium market research–global supply, future demand and price development. Energy Storage Materials, 6, pp.171-179.

Maxwell, P., 2014. Analysing the lithium industry: Demand, supply, and emerging developments. Mineral Economics, 26(3), pp.97-106.

Speirs, J., Contestabile, M., Houari, Y. and Gross, R., 2014. The future of lithium availability for electric vehicle batteries. Renewable and Sustainable Energy Reviews, 35, pp.183-193.

Zhai, Q., Dong, Z., Meng, K. and Ma, J., 2017. Modelling and Analysis of Lithium Battery Operations in Spot and Frequency Regulation Service Markets in Australia Electricity Market. IEEE Transactions on Industrial Informatics.