High Voltage: Battery metals take centre stage once again in 2021
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel and vanadium.
Since the peak of battery metals hysteria in 2017, spodumene prices have since plummeted from +$US1000 ($1,476) a tonne to well under $US400 a tonne currently.
Other lithium prices also tanked, as did cobalt and graphite.
It wasn’t until EV spearhead Tesla finally showed profitability in late 2019 that people began paying attention to the raw materials supply chain again.
Tesla currently looks unstoppable and bullish battery metals sentiment is re-emerging with a vengeance.
This time there’s a key difference, says Mark Thompson, managing director of emerging anode play Talga (ASX:TLG).
“This boom will be driven by real consumers and governments and the economics of the end product – electric vehicles — not speculation by investors on the raw material supply chain,” he says.
“You now have sales data showing a doubling to tripling of EV sales in almost every market.
“Everyone wants to get exposure to that supply chain again — to get invested in what no doubt will be a long term trend.”
That includes the miners. A number of recent high profile lithium deals in particular bode well for battery metals in 2021.
Producers Galaxy and Orocobre – which are completely exposed to low pricing – showed confidence in the near term outlook by raising $161m and $169m, respectively, to develop their growth projects.
The $3.6bn market cap stock is up 22 per cent over the past week.
The offer price of 36c represented a small 7.7 per cent discount to Pilbara Minerals’ last traded price on 27 October, which was the signing date of the Implementation Deed.
But the stock has been on a tear since then, closing at 88c per share on Friday December 11.
Ausbil believes we are entering an extended resource ‘super cycle’ similar to the one which ended in 2011.
This time, battery metals play a big role, as powerhouses like Europe and China ramp up electric vehicle production post COVID-19.
Anecdotally, lithium producers are suggesting rock bottom pricing has increased slightly in recent weeks and months, and demand from customers has stabilised and is increasing, said Ausbil resources portfolio manager James Stewart in November.
“With delays in new project construction, we could see a market reminiscent of 2017, where EV and battery makers scramble for product as the market tightens, driving commodity and equity markets higher,” he says.
“As such, we have positioned the Ausbil Global Resources Fund long in lithium, leading into expected price increases in Q4 CY2020 and Q1 CY2021.”
Here’s how a basket ASX stocks with exposure to lithium, cobalt, graphite, nickel, and vanadium are performing>>>
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Stockhead updates our list of ASX battery metals stocks to be as accurate as possible for investors. If you spot companies that should be added (or removed) please let us know at: [email protected]