TORONTO (miningweekly.com) – Lithium prices, which early last year reached levels last seen in 2008, will continue climbing as supply tightens, Australian producer Talison Lithium said on Monday.

Demand for the silvery white metal, used to make batteries and ceramics, has been climbing over the past few months, mainly driven by sales of electric vehicles.

Talison CEO Peter Oliver said on a conference call that weather issues in South America and China, the two biggest sources of lithium, had held back production during the three months ended June.

Costs had also been rising, with three of the biggest producers increasing their prices by as much as one-quarter earlier this year.

“There’s no doubt that the market is tightening. The bulk of major producers are fully sold, and supply is getting tight,” Oliver commented.

“I have no doubt that prices are on the way up, and we’re already seeing that in our Chinese markets.”

TSX-listed Talison owns the Greenbushes mine near Perth, in Australia, where it is doubling capacity to 740 000 t/y of lithium concentrate by the middle of next year.

The company is also studying the construction of a processing facility that would make lithium carbonate, that would allow it to grow its exposure to the electric vehicle sector, said Oliver.

Talison reported a 25% rise in production for the June quarter, but only a 5% hike in volumes sold, as shipment timing affected sales.

Revenue for the quarter was 11% lower at A$26-million as the stronger Australian dollar eroded gains in prices.

The company made a A$7-million profit for the three months, compared with a A$34-million loss in the same period last year.

Shares in Talison climbed 2.4% to trade at C$3.80 by 10:36, on thin volumes.