High Voltage: Chinese lithium sellers hoarding units ‘in expectation of stronger price rally’
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
“We have skills that don’t work anymore, and we have jobs that need to change. We are literally virtually reshaping our company, like every part of our company.”
Ford CEO Jim Farley said that in July, but the quote could be attributed to any legacy automotive company right now.
Amid the costly EV production ramp-up, car makers are trying to cut costs wherever possible.
Ford has now laid off 3,000 staff as part of a US$3bn cost cutting and restructuring program launched earlier this year.
In March, Ford split its EV and internal combustion engine (ICE) vehicles into two units.
Ford Model e is dedicated to EVs, software and connected vehicle tech and Ford Blue continues to build out internal combustion vehicles.
Ford Model e will focus on rapid growth over profit. Ford Blue, meanwhile, will be the profit centre.
The company’s recently announced second quarter results beat Wall Steet estimates, with adjusted operating income more than tripling to US$3.7 billion.
Which sounds good, until you realise Ford plans to spend US$50bn on the EV rollout by 2026.
Mike Ramsey, a Gartner analyst, told the New York Times it was likely that other automakers would also have to shed jobs to adapt to the electric future.
“With EVs you don’t need engineers who build engines and transmissions and exhaust systems,” he says.
“Many of the people and skills they need for EVs are not the one they have now. So, I’m sure most car companies are facing vast pressures to realign their work forces.”
Quick @FastmarketsRN #lithium price update🧵:
🔋-grade #carbonate prices in domestic #China market closing in on the 500k yuan/t level on the back of #Sichuan power crunch⚡️& Q4 restocking demand. Seaborne markets quiet for now but sentiment shifting as supply concerns increase. pic.twitter.com/63RmrFEDrB
— Peter Hannah (@PHmetals) August 19, 2022
Lithium producers in the Sichuan province — home to factories of some of the world’s biggest companies and the producer of about half the country’s lithium — have either suspended production or lowered their operating rates in response to the power crunch, sources told Fastmarkets.
“Fastmarkets editorial reports that at least two significant producers in Sichuan have suspended lithium production, while another has halved output due to the heatwave-driven powercrunch,” Fastmarkets analyst Peter Hannah says.
“The province accounts for ~30% of China’s lithium supply & relies on hydro for ~70% of its power.
“Consumers are recently actively restocking… for production in Q4 and are worried that supply may further tighten if power rationing lasts longer.
“Some sellers are holding on to whatever units they have in hand in expectation of a stronger price rally.”
The power restriction policies were due to be reconsidered after August 20 but hard to see much changing, Hannah says.
“Chongqing registered a record 45C yesterday!” he said August 19.
“I guess in the climate change era we’ll get used to the weather becoming the most important news segment…”
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Last week, Conico reported thick zones of sulphides in the first hole of a campaign at the Mt Thirsty JV project, just south of Galileo Mining’s recent Callisto discovery.
Partners Conico and Greenstone Resources (ASX:GSR) are in the first phase of a program targeting extensions to a recent palladium-platinum-gold-copper-nickel (PGE) discovery by Galileo (ASX:GAL) – just 200m from the Mt Thirsty boundary.
The pair, who each hold a 50% stake in Mt Thirsty, yesterday revealed the first hole completed had intercepted 65m of disseminated sulphides.
This included 43m of disseminated sulphides in ultramafic rocks from 190m; 3m of heavily disseminated sulphides in sediments from 233m, and 19m of heavily disseminated sulphides in fluid altered ultramafics from 236m.
The results are significant, as they are interpreted to intercept the same geological horizon as GAL’s Castillo discovery just over the tenement boundary.
Last year, the explorer formerly known as Frontier Resources secured a couple of WA rare earths and high purity alumina projects to complement the recent acquisition of the ‘Murraydium’ ionic clay (IAC) hosted rare earths project in South Australia.
The Lyons rare earths project adjoins the Hastings Technology Metals (ASX:HAS) world-class ‘Yangibana’ deposit, which is set to be the next REE producer outside of China by 2023.
The company is now prepping for a maiden drill program at Lyons, which is set to kick off early September.
The drill program will hit high priority targets located within the Gifford Creek Carbonatite Complex, host to Yangibana and Dreadnought Resources’ (ASX:DRE) multiple discoveries.