Forget your Tesla, even Nvidia's robots are hungry for lithium: PLS boss Dale Henderson

Forget EVs, the next lithium demand boom could come from robots
Pilbara Minerals MD Dale Henderson says lithium price has bottomed after two-year rout
Spotlight falls on juniors prepared to ride out the downturn

Pilbara Minerals (ASX:PLS) boss Dale Henderson says new technologies and digital disruption will only further increase demand for lithium.

Speaking on a conference call yesterday, Henderson said headlines about technology breakthroughs in electric vehicles and autonomy were becoming increasingly common.

“At the core of this disruption is a technology revolution where digital intelligence and electrification are intersecting, they are combining and self-reinforcing,” he said.

“To share some of the recent anecdotes in the space which illustrate this, Jensen Huang, the CEO of Nvidia, described a key part of the future of his company as predicated on several three key growth areas for robots, being agent robots, self-driving cars and humanoid robots.

“Now I note all of these will need batteries, and I also note the distinction Jensen has made that cars are becoming robots.”

Henderson also noted comments made by CATL co-chairman Pan Jian at the World Economic Forum in Davos last week.

“In China, we no longer call them EVs; we call them EIVs — where the ‘I’ stands for ‘intelligent’,” he was quoted as saying.

“The ‘I’ is what truly makes the difference. Without the intelligence aspect, EV penetration in China would never have exceeded 30%.”

Henderson described the comments as being another example of digital influence combining with electrification.

EV ‘freight train’ running

Citing data from Benchmark Mineral Intelligence, Henderson said 2024 was a milestone for lithium, with demand surpassing 1 million tonnes of lithium carbonate equivalent for the first time, up 30% year-on-year.

According to RhoMotion, global EV sales in 2024 of more than 17 million units was up 23% year-on-year, or 3.4 million units.

“EVs themselves moved to a key inflection cost point within the China market,” Henderson said.

“China’s EV market penetration in the second half of 2024 increased to roughly 50% of total sales, resulting in 11 million EV sales, or 64% of global EV sales.”

Henderson noted the rapid growth of Chinese EV manufacturer BYD, which is second in global sales to Tesla.

BYD’s EV sales surpassed Toyota’s in Japan last year and the company has entered the South Korean market this month.

“I think the EV freight train is off and running, and it’s just a question of different adoption rates and different markets,” Henderson said.

“It almost seems inevitable that there’s nothing really standing in its way. It’s just a question of growing pains to move and grow in different markets.”

Has the lithium price bottomed?

Pilbara’s December quarter average realised pricing was US$700 per tonne, on a 5.3% spodumene basis, equating to US$796/t on a 6% basis.

The figure beat analyst consensus forecasts of US$658/t.

“Following recent supply curtailments over the past year across the industry, we note that spodumene concentrate pricing has lifted off the lows of US$750/t that we saw in October last year and is now moving into the range of between mid-US$850s to low US$900s,” Henderson said.

Argonaut analysts noted today that a 10,000t spot cargo was sold by Albemarle Corporation earlier this month for US$921.30/t, citing Platts.

There have also been reports that Chilean lithium major SQM recently auctioned a cargo of spodumene, achieving a price of US$920/t.

“I don’t have any particular insight, but it doesn’t surprise me that on a spot basis, they would realise a premium, and it does obviously signal a potential tightening in the market,” Henderson said.

Analysts from Wilsons are keeping an eye on inventories in light of recent supply cuts.

“We note Fastmarkets’ latest Chinese lithium supply chain inventory update which shows that while overall inventory levels are very high, we have seen what might be the start of a move down in lithium salts inventories (i.e. the ‘start’ of the supply chain, as per this data) owing to production restraint,” they said.

Relief for juniors in sight?

Lithium equities have had a pretty grim 12 months but there are signs of life.

Market leader Pilbara saw its shares jump 3.5% yesterday after the release of its quarterly report, while smaller, newer producer Liontown Resources (ASX:LTR) is up by more than 18% this month after reporting positive cashflow from its Kathleen Valley operation.

The optimism is yet to extend to the junior space, though Astute Metals’ (ASX:ASE) 60% rise last week on a potential lithium discovery in the US was a sign that exploration success in the sector can still excite.

Chariot Corporation (ASX:CC9) listed on the ASX in late 2023 with a portfolio of lithium projects in the US and has remained focused on advancing them.

Managing director Shanthar Pathmanathan told Stockhead the company had supportive shareholders who were willing to be patient.

“We see the long-term play. We like that the demand is still growing, and just because too much supply has come and flooded the market, it doesn’t bother us, as long as demand is growing,” he said.

“So I think our attitude is we will wait this out.”

Pathmanathan, who is Chariot’s largest shareholder, said the company was wary of dilution and was focused on maintaining a strong balance sheet and tight capital structure.

“We don’t want to take on financial damage from this downturn – that’s the key,” he said.

“And if we can come out of this and defend the balance sheet well, I think the next market is ours to take, and the other guys that are surviving, because a lot of our other peers have disappeared now into other commodities.

“I question myself every day,” he laughed. “But we’ve got to stay the course.”

At Stockhead, we tell it like it is. While Chariot Corporation is a Stockhead advertiser, it did not sponsor this article.