Battery metals have been on a tear in recent months with lithium, cobalt, nickel and graphite all seeing strong price increases.
And they may all be about to head for the moon.
Billionaire investor Chamath Palihapitiya, who was a very public champion of the effort to drive up GameStop’s shares in the epic confrontation between a plucky band of Reddit stock followers and hedge funds taking short positions, has now cast his eyes towards battery metals.
In a Twitter post yesterday, the maverick investor pointed out that Tesla alone would need 165 per cent of 2019’s lithium production and 94 per cent of graphite production from the same year just to meet its goal of building 20 million electric cars per annum.
He then questioned how much of those and other metals would be needed all vehicles are electric.
Given that the followers of r/wallstreetbets have proven that the market does indeed move when they flex their collective muscle, it is not unreasonable to expect interest to grow in resource companies exploring for or developing battery metals.
However, Palihapitiya’s post is not all about investors following the newest trend as it raises the very real question of how electric vehicle companies and their component manufacturers – particularly for batteries and potential rare earths magnets – are going to source the raw materials needed to keep up with the anticipated demand.
Resources companies themselves are scrambling to define new deposits, expand existing ones and bringing projects into production.
Nor is Palihapitiya’s comment a one-off. The investor said earlier this year that he has been learning about the mining needed to produce the key inputs – battery metals and rare earths – for batteries and electric motors.
Australian battery metals, rare earths could benefit
There is every reason to believe that Australian companies are going to see some of this attention come to them.
Here are some players with news today.
European Metals (ASX:EMH) noted that interim results from the first six holes of its 19-hole drill program at the Cinovec lithium project in the Czech Republic have been in line with or better than expected.
This is encouraging given that the drilling is intended to convert a larger portion of the resource to the high confidence Measured category, which will provide greater certainty to the financial model and security for the financiers that the company is in discussions with.
Cinovec contains the largest hard rock lithium deposit in Europe.
Fellow European-focused lithium play European Lithium (ASX:EUR) has kicked off a resource extension drilling program at its Wolfsberg project in Austria.
The drilling is intended to upgrade Inferred resources to the higher confidence Indicated and Measured categories.
Meanwhile, Anson Resources (ASX:ASN) has noted that the recent policy changes in the US supports the global shift towards electric vehicles and that a large volume of US Government purchase orders would drive further significant investment in battery technology and key commodities such as cobalt, lithium, nickel, graphite and vanadium.
This is well-timed given that the company has accelerated work on its Paradox lithium brine project in Utah by conducting commercial battery cell test work.
Vital Metals (ASX:VML) has signed an offtake agreement with REEtec for the supply of 1,000t of rare earth oxides excluding cerium per annum for a five-year period.
The rare earths will be supplied from the company’s Nechalacho project in Canada’s Northwest Territories, which is expected to start production in 2021.