Eye on Lithium: EV sales to jump from 2m in 2020 to 73m per year by 2040

• EV could make up about half of all new vehicle sales worldwide by 2035
• Efforts to diversify EV battery manufacturing starting to pay off
• Azure drilling bears fruit with RC hole hitting sweet lithium interval

All your ASX lithium news, Feburary 13.

Electric vehicles could make up about half of all new vehicle sales worldwide by 2035, which provides a hint of where future lithium demand will come from.

Goldman Sachs Research forecast that EV sales will jump to 73 million units in 2040, up from about 2 million in 2020.

Developed countries are expected to be at the forefront of this shift, with EVs expected to secure more than 80% of the market.

“We expect the automobile industry to undergo a major transformation between 2020 and 2030, driven by the increasing adoption of vehicle electrification and autonomous driving,” Goldman Sachs equity research strategist Kota Yuzawa said.

“There will be no let-up in the EV industry’s expansion as environmental rules tighten and electrification technologies become more sophisticated. But the sector’s sources of profits will change dramatically.”

Additionally, the market for EV batteries, which account for as much as 40% of the car’s cost, is becoming concentrated with the top five manufacturers accounting for more than 80% of the global market share in 2020.

Efforts to diversify the battery supply chain are also gaining momentum with the US Inflation Reduction Act, which is due to be officially announced in March, expected to give a relative advantage to manufacturers that are pushing ahead with local production in the US for EVs, battery-related products and EV components.

Goldman Sachs adds that tech innovation will be critical for the industry with the EV battery market expected to grow substantially this decade, driven in part by the development of new materials and the introduction of new battery designs.

Powertrain units and thermal management will also become more efficient to reduce power consumption as engineers seek to reduce the weight of EVs.

Here’s how ASX lithium stocks are tracking:

Lithium stocks stumbled today in line with the broader market with 50 companies in the red, 58 unchanged and just 29 companies in the green.

Who’s got news out?

Azure Minerals (ASX:AZS)

Azure Minerals has intersected a lithium-rich pegmatite at its Andover project which returned an assay of 7.2m at 1.51% Li2O from hole ANDD0199 which was drilled near the VC30 VTEM nickel target.

Other holes in the same program targeting extensions of the Southern Mineralized Corridor proximal to the VC-30, VC-31 and VC-32 VTEM anomalies also intersected pegmatites containing lithium mineralisation.

The results highlight the extensive lithium prospectivity of the Andover project.

An initial drilling program of 30,000m of Reverse Circulation and 10,000m of diamond core drilling will be undertaken to determine the scale and depth potential of the lithium mineralisation already mapped and sampled at surface.

Encounter Resources (ASX:ENR)

Rock chip sampling has return highly anomalous assays of lithium and other critical minerals which confirm the presence of lithium-caesium-tantalum pegmatites at Encounter’s Junction project in the Northern Territory.

Top assays include 0.2% Li2O, 0.57% rubidium, 500 parts per million (ppm) tin, 498ppm caesium, 51ppm tantalum and 740ppm tungsten.

The outcropping pegmatite trend at the project covers at least 4km of strike and potentially extends under shallow cover.

Encounter will complete the soil sampling program to define targets for drilling.

First AU (ASX:FAU)

First Au is spreading its wings with the signing of an agreement to acquire a lithium project in Western Australia’s Pilbara region which is close to projects held by the likes of Pilbara Minerals, Mineral Resources and Sayona Mining.

The 180km2 Red Rock project hosts historically mapped outcropping pegmatites across the tenement package with rock chip and soil sampling returning results of up to 249ppm Li2O and 160ppm Li2O with 48ppm tantalum, 184ppm caesium and 141.5ppm tin.

Additionally, the tenements contain important geological features, including critical ‘young granites’ and mapped greenstone which is a well-known source of many deposits in Western Australia.

Forrestania Resources (ASX:FRS)

Forrestania has wrapped up the second lithium-focused reverse circulation drill program at its namesake project with 25 holes drilled for 3,983m over the South Iron Cap East, the Giant Pegmatite, the Gem Pegmatite and Bounty East targets.

Pegmatites were intersected in 13 of the holes with holes at the Giant Pegmatite returning encouraging intervals of 10m from 110m and 11m from 73m.

Additionally, weathered near surface felsic material at South Iron Cap East and Bounty East has been interpreted as pegmatite.

Results from this program will assist in the planning of follow-up drilling.

Jindalee Resources (ASX:JRL)

Jindalee is bringing out the big guns, reaching a non-binding memorandum of understanding with South Korean conglomerate POSCO Holdings to undertake joint research into its McDermitt lithium project in Oregon.

This will seek to optimise the flowsheet for the processing of ore sourced from the project with the company providing a large composite sample for testing at POSCO’s research facility in Korea.

Three separate metallurgical processes will be tested as part of the agreement, which is expected to take about six months and cost about $2m with POSCO picking up the tab.

McDermitt has an Indicated and Inferred Resource of 1,820Mt at 1,370ppm lithium, or 13.3 million tonnes of lithium carbonate equivalent.

Lepidico (ASX:LPD)

Lepidico has upgraded Ore Reserves at its Karibib project in Namibia by 14% to 9.4Mt at 0.43% Li2O with the definition of a maiden 1.16Mt at 0.62% Li2O Ore Reserve for the Helikon 4 pegmatite.

The company now plans to carry out drilling over the Helikon 2, 3 and 4 pegmatites from this month with the goal of extending Phase 1 operating life at the project to over 20 years.

It is also arranging site access to drill a new w occurrence of lepidolite bearing pegmatites that it had identified last quarter within EPL5439, which has intermittent outcrop and historical workings extending over a 1.5 km strike.

Midas Minerals (ASX:MM1)

Midas is moving to acquire a Canadian lithium project, where historical government sampling returned 15m at 1.25% Li2O across a single pegmatite outcrop, open in all directions.

The 102km2 Greenbush project in Ontario – not to be confused with the Greenbushes lithium mine in Western Australia – has a similar geological setting to the Root Lake LCT pegmatite field less than 100km west which is being explored by fellow Australian Green Technology Metals.

Additionally, the extent of the spodumene pegmatite remains undefined with no evidence of prior drilling within 5km of this outcrop.

Reach Resources (ASX:RR1)

Reach Resource has expanded into lithium with the acquisition of E09/2375, which brings known lithium mineralisation into its portfolio.

Previous work had identified a 5km long lithium soil anomaly with caesium, tantalum in soils to a level that indicates LCT pegmatites.

Widespread outcropping pegmatites have already been mapped across the tenement, which shares the same geology as Red Dirt Metals’ (ASX:RDT) Yinnietharra lithium project, which has seen drill intersections encountering lithium and spodumene mineralisation.

Vulcan (ASX:VUL)

Vulcan has released a Definitive Feasibility Study which outlines robust economics for Phase One of its Zero Carbon Lithium project in Germany’s Upper Rhine Valley.

The project is expected to generate post-tax Net Present Value and Internal Rate of Return, both measures of a project’s profitability, of €2.6Bn ($4bn) and 26% respectively on annual revenues of €700m per annum.

Production has been cranked up to 24,000tpa lithium hydroxide monohydrate to meet European demand.

CAPEX is estimated at just below €1.5bn with payback expected in 3.5 years.