Eye on Lithium: Big guns look to a more positive year as Aussie juniors look abroad
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All your lithium news, Friday May 19.
It’s all about the big players today as lithium giant SQM sees profits dip despite prices turning a corner, and UBS regrades Albemarle into more positive territory.
Sociedad Quimica y Minera (SQM) reported a 6% decline in revenue for the first quarter of 2023, marked by weaker demand from China and high inventory levels.
However, the Chilean outfit is rightly quite optimistic about the rest of 2023 as the lithium index turned a corner with EV sales increasing more than 20% in China in the first quarter of this year, as well as a 50% rise in sales in the US compared to Q1 2022.
“We believe that the annual global EV sales will be almost 30% higher this year and the total lithium demand will grow another 20% when compared to the previous year,” the company stated in a note.
“With the demand recovery seen in the last month and this strong growth ahead of us, we expect to see our sales volumes increase in the coming quarters.”
The company said that for the rest of this year it will continue to implement growth plans and expects to invest almost US$1.2 billion in expanding its production capacity across its assets.
Meanwhile UBS has scratched Abemarle’s back with an upgrade from “neutral” to “buy”, lifting its price target for the US miner more than 23% to $255.
“We see the current inflection in China Lithium pricing and 2023 earnings reset leading to increasingly positive sentiment on the stock,” UBS stated.
“Lithium is ~85% of ALB’s EBITDA and lithium prices in China are down >50% from peak levels in Dec-22, while ALB stock is down ~35%.
“We estimate ALB stock is pricing in close to $20/kg long-term realized lithium pricing (vs $23/kg), and 2030e volumes ~10% below our estimates.”
Both SQM and Abemarle have cemented positions in Australian lithium production, with the South American conglomerate owning a 50% stake in the Mt Holland lithium JV with Wesfarmers, with the latter also sharing 49% of the Greenbushes lithium project with Chinese-owned Tianqi and Independence Group.
Meanwhile in Australia, there’s optimism for the lithium market.
Read more below.
Lithium had more winners than losers today, with 62 in the green, 55 flat and 33 dipping.
Here’s a selection of news out from lithium plays today.
PAM offered up some big news by partnering up with Vietnamese energy company VinES to assess the construction of a 20-25,000tpa lithium refinery in-country.
The facility is aimed to complement PAM’s lithium projects in neighbouring Thailand.
“We are thrilled to be working with VinES, an ESG-focused EV battery manufacturer, in the evaluation of a standalone Lithium Conversion Facility in Vietnam,” PAM boss Paul Lock said.
“This is a significant step towards achieving our strategy focused on developing an integrated supply chain to cost-effectively deliver relevant and in-demand products to the Li-ion battery market in South-East Asia.”
In Canada, developer GT1 signed an offtake agreement with LG for 25% of spod concentrate from its 9.9 million tonne Seymour project in Ontario.
We welcome the execution of these important agreements with LGES and look forward to their contribution as a new strategic partner with GT1, alongside AMCI, Lithium Americas and Primero,” GT1 chairman John Young said.
“LGES brings global scale and expertise in battery manufacturing as well as balance sheet strength as GT1 advances its integrated lithium strategy in the Tier 1 jurisdiction of Ontario.”
The company recently secured land for its proposed Thunder Bay conversion facility and metallurgical testwork is underway to optimise the process.
LEL is still kicking goals down at Solaroz in Argentina, moving onto Hole 6 of 10 in its drilling program as it proves up brine deposit after brine deposit on its way to defining a maiden JORC resource estimate.
The company seems very optimistic about its endowment, with its neighbour to the south of the project, Allkem, already in production of its 19.2 million tonne lithium resource.
Three drill rigs are now active at Solaroz, with two waiting to hit Hole 7 and Hole 8 as soon as results come in from Hole 5 and Hole 6.
FBM has more news out today announcing it has thrown itself into more metallurgical test work at its Kangaroo Hills lithium play to better understand just how rich are the pegmatites it’s found.
Five holes were drilled as a follow-up to RC drilling that returned assays of 27m at 1.32% Li2O and 29m at 1.36% Li2O.
“Given the continued flow of positive results from our RC drilling campaign, we believe the timing is now right to begin early metallurgical testing activities,” technical director Robin Cox said.
“We hope these results will provide confirmation of the amenability of the diamond core to conventional lithium processing techniques, as well as additional mineralogy and characterisation data, which will be invaluable to our ongoing exploration activities.”
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