What happened

After taking a brief midweek breather, shares of start-up lithium mining company Lithium Americas (LAC) resumed marching higher on Thursday, rising 11.8% through 10 a.m. EDT on no obvious news.

Lithium Americas did get some good news earlier in the week, however, when investment banker Cowen raised its price target on the stock Monday.

Simple green arrow going up

Image source: Getty Images.

So what

As StreetInsider.com reported at the time: "constructive western policy and near-term supply limits [are] driving lithium and rare earths pricing higher. ... We have seen a number of new supply initiatives announced but still anticipate a relatively tight market into mid-2025 as the market underwrites new supply beyond 2025."

So essentially, what Cowen predicted earlier in the week was a situation of rising demand for lithium meeting constrained supply, yielding higher prices (and profits for lithium companies) over the next several years.

Now what

That's good news for Lithium Americas. According to the latest analyst estimates compiled by S&P Global Market Intelligence, the company will finally get its production operations underway, and begin generating revenue next year, then turn profitable in 2023. If Cowen is right and lithium supplies remain constrained through 2025, then this means Lithium Americas still has time to cash in on the demand before even more competition emerges in the sector.

Granted, elsewhere in the industry, other players are working to bring even more production online. Piedmont Lithium submitted applications for funding and for environmental permits for its Carolina Lithium Project yesterday, while Standard Lithium says it has set up a lithium carbonate plant at its El Dorado location in south Arkansas. Both of those companies are expected to begin reporting revenue in 2022 as well, but appear to be about a year behind Lithium Americas in terms of turning their revenue into profits.

For the time being, at least, Lithium Americas remains in the lead.