Benchmark’s Simon Moores on identifying the bulls*&t in battery metals analysis
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Price-reporting agencies (PRAs) should, in theory, bring transparency to commodity markets.
This is particularly important for sectors that are inherently opaque and confusing, like the nascent (but rapidly evolving) lithium-ion supply chain.
Nowadays, there’s more PRAs covering the battery metals space than you can poke a stick at. But in 2014 there was just one – Benchmark Minerals Intelligence.
Launched by experienced analyst Simon Moores, Benchmark remains the yardstick for everything lithium-ion battery to EV supply chain-related.
So how do people cut through the misinformation around battery metals demand and supply? Stockhead spoke with Simon Moores on the sidelines of last week’s Benchmark Mineral Intelligence’s 5th annual World Tour in Perth.
“For me, it’s really simple. Fundamentally, all the PRAs covering this space – lithium, graphite, cobalt, nickel – collect their price data in a journalistic way.
The only differentiating factor between them is expertise in the space – are they specifically focused on [battery metals], or do they cover a wide range of minerals and metals?
Do these analysts know the lithium industry, for example? How long have they worked in the industry, and more importantly – does the industry know them?
This is very important. When you are collecting very sensitive price data you have to be sure the information you’re getting is accurate.
The second thing is resources – how many people have they got working on this, specifically?
It’s a balance of resources, experience and specialism. All the other PRAs are much bigger organisations covering a vast array of minerals and metals; Benchmark are the only guys in the space that focus solely on the lithium-ion supply chain. We do nothing else.
When I launched Benchmark in 2014 there was no one else specialising in the lithium-ion supply chain.
It was only when the price spike happened in 2016/2017 that all these big companies – Fastmarkets, Platts, and so on – decided that they needed to get in. It was very reactive.”
“In the last four months we have hired people from Tesla [and lithium majors] Albemarle and SQM to add to the experience we already have.
That shows you where we are as a business.
But general investors or people sitting outside the actual supply chain won’t know [an analyst] so it comes down to reputation. You need to be able to stand behind all the data and analysis you put out there.
This is why we do the Benchmark World Tour. We can stand up, honestly answer questions, and be transparent with our knowledge. It gives confidence to the market and those people outside the supply chain.”
When setting lithium prices, industry has to trust you w/ sensitive info. It has to trust that you know when data is bad. Your analysts have to know lithium to assess whether a price is reflective. Core reasons why @benchmarkmin became #1 https://t.co/zGbDVEZV0J
— Simon Moores (@sdmoores) June 17, 2019
“We visit mining operations, battery plants, automotive OEMs [original equipment manufacturers] – the whole supply chain.
That is a core part of our data collection. I don’t think the other guys do it, to be honest.
Our lithium price assessments, for example, cost four to five times our nearest competitor which means that it is a different product.
We publish 10 lithium chemical prices, 1 spodumene price, and an index price every month.
And it’s not just about having accurate and trusted lithium prices – which we have – it’s also about the context around that price.
Having that context is absolutely crucial for people making big investment decisions. How did we get that number, but more importantly – what does it mean?
They need to know the context, not just the price, and we can provide both. That is a key differentiating factor for us.”
“I can honestly say that the lithium industry was shocked.”
What a mistake. They went with the “safe” choice–a group that has no native expertise in Lithium. When in human history has the safe choice been the right choice? This could lead to more Li pricing confusion, not less. Should have been Benchmark. https://t.co/ovKEa1ACun
— Sam Jaffe (@samjaffe) June 10, 2019
“We were at a lithium conference in Santiago [Chile] at the time, and there was certainly a down and depressed feeling that we didn’t get it.
But the LME is new to lithium — it doesn’t define lithium.
For the LME lithium price to work it must have the trust of industry, which it doesn’t. It all started very badly.
The industry still wants to smooth out volatility in lithium prices but there are other mechanisms they want to use. Benchmark is helping develop those with the industry — that’s the future.”