High Voltage: All the news driving battery metals stocks

Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.

Scroll down for a table showing the recent performance of 200 ASX battery metal stocks >>

INDUSTRY FOCUS

Chinese battery firm GEM has stopped buying cobalt from Glencore, as the price has fallen below that agreed in a three-year deal between the two companies. (Graphic courtesy of Reuters) #cobalt #commodities #resources #mining #china #metals #EV pic.twitter.com/bIziRpT5TW

— Gavin Wendt (@MineLifeReport) December 14, 2018

Cobalt spot prices are in the doldrums — and Chinese battery maker GEM is no longer buying from miner Glencore because of it.

This is because the market price has fallen below the agreed level under a contract signed when cobalt was peaking earlier this year.

Vanadium prices are settling down – and hopefully stabilising — with consultancy Mastermines reporting a Chinese spot price of $US19.50/lb for V2O5 flake, down from a recent peak of about $US37/lb.

And lithium prices have held up in the second half of the year – despite all the nay-saying, according to Benchmark Minerals Intelligence.

After the Q2 2018 drop, lithium prices have held up. Also reflected in average industry contract prices. @benchmarkmin pic.twitter.com/21nHEpz7KC

— Simon Moores (@sdmoores) December 16, 2018

Transforming Australia into a major battery hub

Many believe that booming global demand for lithium-ion batteries gives Australia a “once in a generation” opportunity to become a major battery processing, manufacturing and trading hub – but it needs to get a move on.

Australia has all the raw materials needed to produce batteries.

This potentially gives the country “significant global supply-chain advantages”, a new Australian Trade and Investment Commission (Austrade) report says.

According to Future Smart Strategies, Australia earns only $1.13 billion, or 0.53 per cent of ultimate value of its exported lithium ore.

An estimated $213 billion of value is added overseas through electro-chemical processing, battery cell production, and product assembly.

The Austrade report says critical components in advanced battery production — precursor, anode, cathode, electrolyte — can be made here.

But the critical gap in the supply chain is Australia’s lack of battery manufacturing technology, which is why we need one of the world’s big battery cell manufacturers to set up shop Down Under.

Austrade reckons we need to do this through incentives.

• Subscribe to our daily newsletter
• Bookmark this link for small cap news
• Join our small cap Facebook group
• Follow us on Facebook or Twitter

A $2 billion 15GWh gigafactory in Townsville is already being developed by an international consortium called Imperium3, led by Boston Energy and Innovation, graphite company Magnis Energy Technologies (ASX:MNS), and US company Charge CCCV.

Magnis investor relations director Travis Peluso says labour costs will be “miniscule” for a large-scale Australian lithium ion battery maker, with raw materials like lithium, cobalt, manganese, and graphite usually making up 80 per cent of the cost.

With a project of Imperium3’s scale and size, labour costs are a very small portion of the overall cost of producing a battery cell, he says.

“The labour cost component in [battery] manufacturing is miniscule,” he says.

“It’s certainly under two per cent, probably closer to one per cent of the cost.”

Labour costs are one of the key barriers to entry for large scale manufacturing in Australia, but in battery-making a high level of automation takes care of much of the process.

“When you look at the cost of producing a battery cell, around 80 per cent of the cost is in those raw materials,” Mr Peluso says.

“There are cost advantages in sourcing those raw materials, like lithium, locally.”

SMALL CAP SPOTLIGHT

Over the past 12 months only 30 stocks have come out ahead, with Argentina-focused explorer Galan Lithium (ASX:GLN) and China Magnesium (ASX:CMC) two standouts up 204 per cent and 114 per cent over the year.

Vanadium explorers Tando (ASX:TNO), Technology Metals (ASX:TMT), and Australian Vanadium (ASX:AVL) also performed well, up 76 per cent, 70 per cent, and 55 per cent respectively over the past year.

Change of plans — @NorthernCobalt will now look at drilling the Running Creek #copper #cobalt prospect ASAP — even during the wet season, when a lot of exploration programs go into hibernation #ASX #ausbiz $N27 https://t.co/WMYfsVBj01

— Stockhead (@StockheadAU) December 14, 2018

It’s been a slightly better week in the lead-up to Christmas for battery metals-facing stocks on the ASX.

Of the ~200 battery metals stocks on our list, about 67 lost ground, 58 were ahead and 64 were steady.

This week’s standout performers included Metals Australia (ASX:MLS) up 33 per cent to 0.4c, TNG (ASX:TNG) up 29 per cent to 12c, and High Grade Metals (ASX:HGM) up 27 per cent to 1.4c.

But Northern Cobalt (ASX:N27) topped the charts, up 38 per cent to 9c.

On Friday, Northern Cobalt told investors its “Running Creek” prospect had become a priority target after an IP survey identified what could be a huge copper and cobalt deposit at depth.

Investors loved the news, sending the explorer up almost 30 per cent to 8.5c by midday.

Induced Polarisation (IP) is a geophysical method used to identify the electrical chargeability of minerals below the earth’s surface, which helps explorers focus their drilling programs.

Northern Cobalt managing director Michael Schwarz told Stockhead the company had changed its plans and would drill Running Creek as soon as possible.

“We are pretty excited about this anomaly because it seems to be [directly linked] to the [existing] copper and cobalt mineralisation,” he said.

“The mineralisation could be both deeper and of a larger scale than we had previously thought.”

Here’s a table of ASX battery metal stocks with exposure to lithium, cobalt, graphite, manganese and vanadium>>>

Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop