Red-Hot Lithium Boom Pits Wall Street Against the Wonks

There’s a fight brewing in the lithium market, after a controversial forecast from Goldman Sachs Group Inc. analysts set off a backlash among some of the industry’s most prominent experts.

Lithium is a vital component of electric-vehicle batteries, which means the outlook for supply, demand and pricing is increasingly consequential. For years, a small group of niche consultants has dominated the conversation in a commodity that some say will become as important as oil in the coming century. Now, with prices surging and demand booming, they’re increasingly sharing the stage with Wall Street titans like Goldman.

The bank made headlines when it warned that a searing rally in lithium will go into reverse this year as supply from unconventional new sources overwhelms demand. Credit Suisse Group AG also joined in predicting a correction. But specialists including London-based Benchmark Mineral Intelligence are loudly pushing back.

The rift matters because both groups play important roles in the burgeoning electric-vehicle industry. The niche consultancies offer tailored research to miners, battery-makers and car companies that guides decisions about whether to invest in new projects; Wall Street banks — and the investors that read their research — help determine whether they can afford to do so.