Eye on Lithium: California votes to knife ICE powered cars by 2035, Allkem’s revenues just went up by 800%

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• California expected to become  first US state to ban sale of new combustion engine (ICE) vehicles
• Allkem reports record FY results with revenue increasing over 800% to US$770 million
• Anson executes a binding MoU with global lithium extraction provider Sunresin for a long term, commercial alliance at the Paradox lithium project

All your lithium news for Thursday, August 25.

Tailwinds for lithium keep intensifying with California expected to become the first US state to ban the sale of new combustion engine (ICE) vehicles by 2035.

The policy has set interim targets demanding 35pc of new passenger vehicle sales in California to be zero-emission by 2026, requiring automakers to step-up production of cleaner vehicles.

According to reports, the state will face a vote on Thursday by the California Air Resources Board, known as CARB, during a meeting scheduled for Thursday, with officials expecting the proposed ban to pass by a strong margin.

Governor Gavin Newsom announced the phase-out back in September 2020, saying this was the ‘most impactful step’ the state could take to flight climate change.

CA continues to lead the way:

“Experts said the new California rule, in both its stringency and reach, could stand alongside the Washington law as one of the world’s most important climate change policies.” https://t.co/l19OOcsLgF

— Gavin Newsom (@GavinNewsom) August 24, 2022

Other US states including Connecticut, Massachusetts, New York, Oregon, Washington, Vermont, and Rhode Island are expected for follow suit.

BEV sales increased 81% YoY in first half of 2022

Strong global demand for lithium raw materials has brought the critical mineral back into focus, Kanish Chugh head of distribution at ETF Securities says.

“Demand for lithium-ion batteries remained strong in Q2, especially for use in electric vehicles,” he explains.

“Sales accelerated ahead as demand for environmentally sustainable motoring options took off – the sales trend is supporting conditions in the battery technology and lithium production supply chain.”

In the first half of 2022, global Battery Electric Vehicle (BEV) sales increased 81% YoY while sales for all drivetrains fell 12% over that period.

Automakers varied in their ability to combat supply chain issues, reduced traditional ICE sales, semiconductor shortages, and elevated commodity pricing.

But companies like Tesla and Ford beat on earnings, Chugh says, while other automakers such as GM reported more pronounced margin compression.

“Throughout the quarter automakers raised prices on EVs, which did not seem to negatively impact demand.”

Here’s how ASX lithium companies are tracking:

55 lithium companies finished in the green, 45 fell flat and 31 ended in the red zone.

Who’s got news out?

ALLKEM (ASX:AKE)

AKE says ‘record financial results’ have been achieved in the first year of its highly successful merger of Orcobre and Galaxy Resources.

New development and expansions are expected to see the business expand three-fold by 2026 with the aim of maintaining 10% market share as the lithium industry continues to grow with the increasing adoption of electric vehicles.

Group revenue for the period increased over 800% to US$770 million, compared to the prior year while the business produced a Group EBITDAIX of US$513.1m and consolidated net profit after tax of US$337.2m following last year’s net loss of US$89.5m.

Net assets also increased to US$3.081m as at June 30, including cash balances of US$664m.

AKE managing director and CEO Martin Perez de Solay says the company hit record revenue not only from strengthened pricing but from successfully and safely producing high-quality lithium products from its global operations.

Record revenue from Mt Cattlin was generated from sales of 200,715 dry metrics tonnes (dmt) of spodumene concentrate at an average price of US$2,221/tonne CIF2 for the period while revenue from Olaroz increased 341% to US$293 million on sales of 12,512 tonnes of lithium carbonate with average pricing increasing by 370% to US$23,398/t FOB4 .

“These operations have managed costs, improved safety performance and delivered record production during a period of supply chain disruption, labour shortage, high inflation and ongoing COVID-19 impacts,” he adds.

ANSON RESOURCES (ASX:ASN)

Anson has executed a binding MoU with global lithium extraction provider Sunresin New Materials Co for a long term strategic and commercial alliance for Anson’s Paradox Lithium Project in Utah, USA.

Sunresin specialises in direct lithium extraction (DLE) technology, which promises to produce cheaper, higher quality, and more environmentally friendly lithium than incumbent processes.

Its technology has already been commercialised in four operating projects and will be used in another six under construction or under contract in China and South America with a total production capacity of 73,000 tonnes per annum.

Along with global engineering firm Worley, the company and Sunresin have developed a design for Stage 1 of the Paradox project that will integrate the DLE process and downstream equipment required to produce lithium carbonate with utilities and other inputs to operate successfully in Utah.

ASKARI METALS (ASX:AS2)

AS2 has expanded its lithium portfolio through the acquisition of the Myrnas Hill Lithium Project in WA’s Pilbara, less than 30km northwest of Global Lithium Resources (ASX:GL1) Archer deposit.

Initial exploration will include a comprehensive data review and a Sentinel Satellite Imagery program ahead of a planned soil sampling and rock sampling program to define the outcropping pegmatites, which remain untested by exploration with no lithium focused drilling completed.

METALICITY (ASX:MCT)

Metalicity’s diversification into lithium continues apace as it adds a second highly prospective project in northern Queensland with multiple outcropping pegmatites to its portfolio.

Historical mapping and sampling at the new Georgetown project – located just 40km west of the town of Mt Surprise and 70km southwest of its Mt Surprise project – identified pegmatites hosted in volcanic metasediments that strike over at least 3km.

More importantly for Metalicity (ASX:MCT), Georgetown remains sparsely explored, meaning that there are plenty of opportunities for the company to really exercise its exploration muscle.

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