Eye on Lithium: Argus says it’s time to shake up spodumene pricing, lithium IPO up 55pc on debut
Link copied to
All your ASX lithium news for Friday, July 1.
Argus Media says it’s time for new lithium concentrate pricing in its latest white paper.
Even though China is the largest global producer of salts, it imports spodumene to satisfy demand its own resources can’t meet.
The country’s appetite for lithium feedstocks grew at an average rate of 35% a year in 2017-21.
That rapid growth is likely to “continue, and even accelerate, in the next few years as China rushes to achieve its target of hitting peak carbon dioxide emissions by 2030 and carbon neutrality by 2060,” Argus says.
But a shortfall in new projects coming online has led to supply chain bottlenecks, and with availability tight, prices have risen and import prices have become increasingly volatile.
Export prices from Australia averaged $380/t in January 2021, topped $1,000/t in December 2021, and then soared to $1,911/t in March 2022 — a 400% gain over 15 months.
Lithium concentrate producers typically sell feedstock through offtake agreements with converters.
But Argus says there’s currently a disconnect between longer- dated spodumene offtake pricing arrangements — which reference lithium chemical pricing inputs — and the emerging spodumene spot sales market.
For example, last year Pilbara Minerals (ASX:PLS) restarted its Ngungaju Plant, which will lead to a ramp-up in capacity to 180,000-200,000 dmt/year by mid-2022, but none of these concentrates are committed to any offtake arrangements, so there will probably be more hitting the spot market.
“As spot trades grow in share, there will be a greater need for more transparent and flexible pricing for spodumene to reflect market changes in a timely manner,” Argus says.
Argus says its lithium concentrate (spodumene) cif China assessment will help market participants keep track of lithium feedstock prices.
Lithium stocks missing from our list? Shoot a friendly mail to [email protected]
A total of 62 stocks were in the green today, 38 were flat and 30 were in the red.
Oceana Lithium listed today and was trading 50% up from its listing price of $0.20 at the time of writing.
The company raised $6m via its IPO with $1m from cornerstone investor Sichuan Yahua Industrial Group, the third largest Lithium Hydroxide producer globally and major supplier to EV manufacturers Tesla, BYD Auto and Sinopec.
The company says the funds are for aggressive exploration of its owned Solonopole and Napperby lithium pegmatite projects in Brazil and Australia, respectively.
At Solonopole, pegmatite mineralisation has been identified along an approximate 17km corridor.
High grade outcropping rock samples have returned assay values of over 9% Li2O and over 1% Ta2O5 .
Plus, the company has flagged more than 15 historical artisanal mines have been identified on the leases to depths of less than 10 metres vertical depth.
Oceana will rank targets for immediate drill testing upon completion of the initial sampling program and detailed review of the existing dataset.
Midas has exercised its option to acquire the Newington lithium-gold project in WA, which is on the northern extents of the Southern Cross Greenstone belt that hosts of the Mt Holland pegmatite lithium deposit being developed by the Wesfarmers (ASX:WES) and SQM Covalent JV.
Initial assays have returned up to 1.3% Li2O from highly weathered pegmatites and exploration manager Mark Calderwood said the company plans to kick off drilling in the next two months.
“Systematic auger geochemistry and pegmatite mapping has commenced, and drill hole planning is well advanced with drilling expected to commence within two months,” he said.
“A review of prior gold exploration is also underway with the aim of understanding the potential of areas of anomalous to significant mineralisation.”
Lithium Australia subsidiary Envirostream has received its first cash rebate from the B-cycle Scheme for collecting, sorting and recycling end-of-life (EOL) batteries.
The Scheme became operational on 4th January 2022 and provides rebates to accredited parties for eligible batteries collected, sorted, and recycled in Australia.
The company has also established relationships with electric vehicle (EV) manufacturers in Australia seeking an EOL solution for their batteries.
Particularly considering that battery volumes available for recycling are expected to significantly increase from EV’s over the balance of the decade.
In preparation for this, work has commenced to ensure EV batteries can be efficiently dismantled and recycled and Envirostream has already undertaken trials for several EV manufacturers to recycle their cells and report back findings.
“It is estimated that over 90% of lithium-ion batteries in Australia are currently disposed into landfill with the potential to pollute our land and waterways,” CFO Stuart Tarrant said.
“Fortunately, recycle rates are increasing presenting a major opportunity for Envirostream to process these volumes in a safe and efficient way, recovering the critical minerals for repurposing into new lithium-ion batteries.
“It is hugely rewarding to receive the first rebate from B-cycle and we anticipate further revenues as we seek to capture the growing wave of spent batteries.”