Eye on Lithium: Lithium’s a winner for WA as carbonate prices rise

• Lithium is poised to beat gas as WA’s second-most valuable resource
• Battery-grade lithium carbonate prices rising
• Lithium Energy has some really thick brine intersections at Solaroz

All your lithium news, Friday May 12.

Highlighting just how important lithium is becoming, Western Australia has declared in its latest State Budget that the battery metal will overtake fossil fuels as its second-most valuable resource.

The state is poised to collect about $910m in royalties from lithium in the 12 months to 30 June 2023, which isn’t all that far away from the $1.3bn that it expects to receive from the North West Shelf liquefied natural gas plant for the same period due to high international gas prices.

While it must be noted that lithium prices were also elevated in the first half of the 2023 financial year before dropping sharply, WA believes that in the 2024 financial year royalties from the NWS will more than halve to $660m.

In complete contrast, the state’s Department of Treasury commented that the growing adoption of electric vehicles meant that there was only one way for lithium to go – up.

“With around 80% of global lithium being used for batteries in electric vehicles, demand is particularly driven by trends in EV sales in China, which accounts for almost 60% of global EV sales,” WA Treasury added.

“Demand for lithium is expected to continue increasing at a rapid pace, supposed by policies in many advanced economies.”

This growing demand for lithium is also expected to help offset the expected reduction in iron ore royalties.

And to make it all that much better for Western Australia, the state’s lithium resources are well suited for processing into lithium hydroxide, which is preferred by EV manufacturers.

It is no surprise than that major companies such as Albemarle and China’s Tianqi are moving to build lithium hydroxide plants in the state such as the former’s investment of up to US$1.5bn to build two additional processing trains at its lithium hydroxide plant in Kemerton.

Prices turning the corner

There is a growing body of evidence that lithium chemical prices are starting to bounce back.

Benchmark Mineral Intelligence noted that despite limited reports of purchasing activity from downstream, improving trader sentiment was enough to send lithium carbonate prices rising in the assessment period from 3 May to 10 May.

Battery grade lithium carbonate prices rose 6.6% to US$26,850/t while technical grade carbonate was up 14% to US$24,300/t.

And while lithium hydroxide continued to dip, falling 3.5% to US$30,800, this is noticeably lower than the 16.9% dip it experienced in the assessment period from 19 April to 3 May.

Benchmark added that cell makers continued to employ a watch-and-wait strategy, awaiting reports of bulk purchases from larger competitors in the market, which could indicate the resumption of wider purchasing activity.

This led cathode manufacturers to maintain modest stock levels though they are also said to be hiring employees that were previously let go in the first quarter of this year.

Here’s how ASX lithium stocks are tracking:

Lithium stocks on the ASX were almost equally balanced between the yays and the nays with 44 companies making gains while 43 were in the red. The remaining 62 companies were unchanged.

WHO’S GOT NEWS OUT?

Here’s a selection of news out from lithium plays today.

Lithium Energy (ASX:LEL)

Lithium Energy’s ongoing drilling at its Solaroz project has extended massive intersections of lithium brines.

Drillhole 4 (SOZDD004) has now intersected a total of 473.5m of conductive brines with assays returning up to 508mg/l lithium to date while hole 5 (SOZDD005) has intersected a current total of 417.5m of conductive brines.

There is potential for further growth as sampling and assays pending for a further 140m in Hole 4 and 73.5m in Hole 5.

The company is also mobilising a third rig to drill Hole 6, which is located along a 15km zone between Holes 1 and 3 in the northwest region of the Olaroz Salar.

Venture Minerals (ASX:VMS)

Venture Minerals will get the benefit of SensOre’s cutting edge AI technology to target lithium and copper at its Golden Grove North project while locking in drilling at its high grade Vulcan REE prospect in a significant farm-in deal with the mineral technology and exploration player.

SensOre can earn up to 70% in all mineral rights sans rare earths by spending up to $4.5m in two stages.

The farm out of rights for commodities like lithium and copper, where SensOre’s proprietary AI technology has already highlighted major exploration potential at Golden Grove North, will come on the proviso SensOre drills at least 300m of RC or diamond core into the Vulcan target on Venture’s behalf.

Voltaic Strategic Resources (ASX:VSR)

Voltaic has received firm commitments for a $7m placement to accelerate exploration programs at the Ti Tree lithium and Paddys Well Rare Earth Elements (REE) projects in the Gascoyne Region of Western Australia.

At Ti Tree, the company plans to follow-up on the intersection of multiple thick pegmatites at the Andrada prospect with widths of up to 58m of continuous pegmatite from surface.

At Stockhead we tell it like it is. While Lithium Energy, Venture Minerals and Voltaic Strategic Resources are Stockhead advertisers, it did not sponsor this article.