High Voltage: Could ASX battery metals stocks in Chile benefit from a new trade deal?
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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.
Late last week, the European Union (EU) and Chile inked a fresh trade partnership deal.
Chile is the world’s top copper producer and the second largest lithium miner –two metals intrinsically linked to the energy transition currently underway.
In 2020, it was responsible for 40% of global lithium supply and around 80% of all EU lithium imports, for example.
The new agreement could give the EU – the world’s #2 EV market — greater access to these battery metals as it looks to pivot away from China-dominated supply.
It is also designed to make it easier for European companies to invest in the country.
“We have today taken our already close partnership with Chile to the next level,” EU Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis says.
“This agreement will create new opportunities to support economic growth on both sides, underpinned by much stronger protection of the environment and climate, labour rights, gender equality and food systems.
“99% of trade will be tariff-free. Our new trading rules will ease investments and also provide greater opportunities for SMEs on both sides.
“This modern, dynamic agreement reflects our shared ambition of building greener economies, including cooperation on raw materials and clean sources of energy.”
This deal, if it does what it says on the bottle, could be beneficial to a small handful of ASX exploration and development stocks.
The company wants to begin construction at the 100%-owned Maricunga project in Chile very soon; it just needs the money.
“LPI is continuing with its project financing process, which is being assisted by Canaccord and Treadstone,” it said November 4.
“Several expressions of interest in relation to debt and equity funding have been received, which are being reviewed by LPI management and its advisors.
“The process will progress as expected during the upcoming months, with updates provided to shareholders in due course.
An updated definitive feasibility study on Maricunga envisaged average earnings before tax of $US324m from 15,200tpa of LCE production over 20 years.
An operating cost of $US3,718 per tonne could mean big profit margins at current lithium prices above $US70,000t.
The project will cost ~$US626m to build.
HCH is a building a monster at its flagship Costa Fuego development, which has a current resource of 927Mt at 0.45% copper equivalent.
A new resource upgrade is coming, to be followed by a project PFS.
In April, Hannam and Partners modelled a 25-year mine life at 23.3Mt throughput to generate net present value of US$1.7 billion and internal rate of return of 27%.
Capital intensity and cash costs were expected to be low at US$11,490 per tonne and US$1.47/lb respectively.
“We are pleased to see this very progressive framework agreement between the EU and Chile,” HCH managing director Christian Easterday told Stockhead.
“Not only does it remove tariffs on 99% of trade between the two, but it represents a great step forward by Europe to secure critical future facing metal supply.
“Agreements like this highlight Chile’s growing importance as the next “Saudi Arabia” of energy, positioned as a global leader in the supply of copper, lithium and hydrogen, critical to the electrification and decarbonisation of the world.”
Here’s how a basket of ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, magnesium, manganese, and vanadium is performing>>>
Battery metals stocks missing from our list? Shoot a mail to [email protected].
Reach Resources (ASX:RR1) picked up rocks containing high-grade REEs, niobium and tantalum at its Skyline and Critical Elements projects, both in WA.
Corazon (ASX:CZN) discovered spodumene (lithium) bearing pegmatite at the Miriam project in WA’s Goldfields region.
And the stock formerly known as Twenty Seven Co has rebranded as Everest Metals (ASX:EMC) with a focus on lithium, gold and base metals in Australia.