Forecasting Lithium Prices

The main aim of this paper is to forecast both in-sample and out-of-sample lithium prices. Specifically, we explore the empirical implications of the present value model for exchange rates, market indexes, mining company prices and related company prices in hi-tech, automotive, electric vehicle and micro-mobility industries. Our modelling strategy assumes that a given variable is a linear function of the present discounted value of expected future of its fundamentals, and therefore it should Granger-cause their fundamentals. From our analysis we only find evidence of Granger causality for lithium mining companies. This is to be expected given that lithium accounts for a small percentage of the production of the companies studied. In terms of exchange rates, lithium exports for the economies studied (Australia and Chile) also account for a very low percentage in relation to the export basket. By contrast, for the mining companies, lithium can be considered as their main fundamental