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Mining
Australian miner Pilbara Minerals (ASX:PLS) has sounded a serious warning to forecasters that the time of high lithium prices is still at hand, demolishing its record price for spodumene.
A bid of US$6350/dmt for a 5000t shipment of 5.5% Li2O lithium concentrate was so appealing PLS accepted the offer ahead of a planned sixth Battery Material Exchange auction today.
If the product had been sold at the benchmark spot grade of 6% Li2O it would have cost an astonishing US$7017/dmt, 6.5% higher than the equivalent price of a cargo sold at auction by PLS last month.
It comes not long after a bearish note from analysts at Goldman Sachs, predicting lithium chemical prices would fall almost 80% to US$16,000/t by next year, sent shockwaves through the market and prompted a major sell off in ASX listed lithium companies.
Pilbara Minerals’ incoming managing director and CEO Dale Henderson said the market remains in rude health.
“This is an exceptional outcome which provides further evidence of the unprecedented demand for battery raw materials being experienced across the global lithium-ion supply chain at this time,” he said.
“Contrary to recent suggestions that the market has peaked, the evidence we are seeing at the coal-face with our customers, including this pricing outcome, suggests that demand remains incredibly strong, with a continued healthy outlook for the foreseeable future.”
All eyes will now be on a seventh auction due to be held in the second week of July.
The bulk of the downstream lithium and EV supply chain is headquartered in China.
The manufacturing power’s Covid lockdowns and waning economic growth have savaged demand for base metals and iron ore in recent weeks, with the price of Australia’s key bulk commodity tumbling 25% in eight trading sessions to Monday.
Yet lithium prices have been largely untouched despite concerns from mainstream analysts and brokers that the good times can’t last.
A number of analysts specialising in lithium, EVs and battery metals have been quick to argue the market is heavily undersupplied, with demand continuing to accelerate.
Outside of a slowdown in lithium carbonate pricing in April, battery chemicals have been steady and remain near record highs.
Fastmarkets reported mid-point prices this morning of US$75/kg for lithium carbonate and US$73/kg for lithium hydroxide, while spodumene concentrate is fetching US$6,290/t on the spot market.
RBC Capital Markets mining analyst Kaan Peker said the result was positive for miners who sell spodumene, the lithium rich concentrate produced by Australian hard rock miners.
“Whilst we have seen lithium chemical prices marginally soften recently (given Chinese lockdowns/vehicle sales and global supply increasing), the above-mentioned spodumene price achieved suggests that Chinese refiners are still making profits,” he said.
“Given the lockdowns, Chinese domestic precursor and cathode demand in April and May was poor; however, we are seeing a gradual recovery from June and we anticipate continued strong demand for the month of July.
“We expect the spodumene material auction will become more commonplace outside of China, improving the margins of mine operators.”
Mincor Resources (ASX:MCR) says it has defied the inflationary post-pandemic economy to bank first cash from its Kambalda nickel operations some 8% under budget.
The re-emerging nickel miner will stash net proceeds of $25.3 million from BHP (ASX:BHP), which processed 1003t of nickel in concentrate from initial supplies of ore from Mincor’s North Kambalda and Cassini mines.
The ore is trucked by Mincor to BHP’s 55-year-old Kambalda concentrator, built by WMC at the onset of the first Australian nickel boom in the late 1960s.
Due to shortages and rising demand from the battery market, nickel prices are at strong levels of around US$24,500/t, more than three times prices in February 2016 when Mincor went into care and maintenance.
It marks the official restart of the operations as a commercial entity, with the project completed for $98 million, below the previously disclosed budget of $107m.
Ramp up at the mines is now the focus, with the first stope opened up at the northern operations on the Kambalda Dome last week.
Mincor says an accommodation at its Cassini mine is also expected to be completed early in the December quarter, with the cost to come in a bit under its $15 million guidance.
“Receipt of first nickel sales is yet another outstanding achievement for the company as we complete our return to the global ranks of nickel producers,” Mincor MD David Southam said.
“We are also particularly pleased that we have achieved this milestone, including the development of two underground mines, below our peak funding estimate. This is a tremendous result in one of the most challenging operational environments in recent memory, and is testament to the dedication and efforts of our people and our contracting and operating partners, such as BHP – all of whom have been aligned to the successful resumption of high-quality nickel production in Western Australia.”
Southam said Mincor is continuing to invest in exploration, with a resource at the so called “Golden Mile” target due in July.
Mining
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