Ground Breakers: Lithium prices send battery metals stocks on a mission to the moon

Lithium stocks were the toast of the terrace today as West Australian lithium miners led the ASX materials sector to a 0.79% gain after one of the main price reporting agencies recorded lithium carbonate prices smashing the 500,000 Yuan barrier for the first time in China.

That was around US$71,315/t on Friday, according to Asian Metal, although other agencies have reported them higher.

That’s a more than tripling of prices over the last year according to Bloomberg, with continued shortages of supply for the lithium ion battery input showing why miners are trading at record highs right now.

Some which mine other commodities, like $13 billion iron ore and mining services play Mineral Resources (ASX:MIN), are even looking at spinouts, with analysts suggesting Chris Ellison’s company could extract more value ($17b) from a lithium spinout than its entire business.

The news also coincided with a visit to Australia by American lithium giant Albemarle, which divulged that it was looking to double the production capacity of its US$1.2 billion plus lithium hydroxide plant in Kemerton in WA’s South West.

Albemarle’s lithium president Eric Norris told The Australian prices would remain high this decade.

“It’s unlike any market that any of us have ever participated in the chemical industry or in the mining industry,” he said.

“The sheer magnitude of the shift that came out of the pandemic – from consumer preferences to government policies in China, the US and Europe – to incentivise the adoption of electric vehicles has been incredible. And then that’s been followed through by every single major automotive manufacturer around the world.”

Cue a run for local stocks.

Pilbara Minerals (ASX:PLS) lifted 5.01% to $4.81, the aforementioned MinRes was up 4.13%, IGO (ASX:IGO) gained 3.78% and Allkem (ASX:AKE) rose 2.92%.

A small rebound in gold prices and shift in mood after last week’s US inflation and Chinese data-led carnage provided a trampoline in general for miners.

Copper and base metals plays OZ Minerals (ASX:OZL) and South32 (ASX:S32), coal miner Yancoal (ASX:YAL) and goldies Northern Star (ASX:NST) and Newcrest (ASX:NCM) were among the winners.

Ground Breakers share prices today:

What about the mid-tiers?

Energy was a disappointment, following the rest of the market down 0.68%, with Origin Energy’s (ASX:ORG) decision to dump its Beetaloo Basin tenements in a $60 million sale to junior Tamboran Resources and its substantial shareholder Bryan Sheffield the big talking point.

It still believes in gas, but Origin says it will be focusing its attention on developments aligned with its “strategy and ambition to lead the energy transition”.

Origin will retain a royalty and gas sale agreement for future production.

“We believe gas will continue to play an important role in the energy mix and it remains a core part of our business,” Origin CEO Frank Calabria said of the decision.

“Notwithstanding the prospectivity of any of these permits, typically the experience in progressing these types of projects is that the exploration and appraisal phase can be uncertain, and it can be capital intensive to bring projects into production.

“Ultimately, we believe Origin is better placed prioritising capital towards other opportunities that are aligned to our refreshed strategy.”

Meanwhile, lithium explorer Lake Resources (ASX:LKE) was a big winner in the mid-cap space, up over 13% on a positive update on pilot plant testing at its Kachi brine project in Argentina after news of a dispute with tech partner Lilac Solutions knocked the ASX 200 company down a peg last week.

Fellow miners Core Lithium (ASX:CXO), Sandfire Resources (ASX:SFR), Iluka Resources (ASX:ILU) and Gold Road Resources (ASX:GOR) were also in the green.