High Voltage: Elon Musk thinks robot slaves will be a great business opportunity as Tesla reports record profit
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium.
Elon Musk is continuing to prep us for the robot uprising after saying his robot slaves will be a bigger business than electric vehicles.
Tesla unveiled its Optimus humanoid robot last year and master of the universe/Tesla CEO/Twitter celebrity Musk waxed lyrical about the terrifying, ethically dubious inventions on an earnings call.
“I think actually the most important product development we’re doing this year is actually the Optimus humanoid robot,” he said.
“This, I think, has the potential to be more significant than the vehicle business over time. If you think about the economy, it is — the foundation of the economy is labor. Capital equipment is distilled labor.
“So, what happens if you don’t actually have a labor shortage?”
That thought bubble gets more based.
“I’m not sure what an economy even means at that point. That’s what Optimus is about.”
Is this how we end up trapped in the Matrix?
Musk flagged issues in the energy storage space for expensive base metals like nickel – which recently hit an 11-year high – and cobalt.
Musk thinks all Powerwalls and Megapacks will shift to lithium-iron-phosphate categories as Tesla looks to turn its energy storage division into a “Terrawatt-hour per year business”.
Energy storage deployments were up 32% year on year to around 4Gwh, so to meet Musk’s lofty ambitions he needs a feed source that’s a little more abundant.
“To be clear, we do think that all stationary storage, Powerwall and Megapack … will transition to an iron-based system, basically a non-nickel system,” he said.
“Manganese … could be part of the future, but primarily iron.
“We need something that is formed in a star before a supernova, ideally. So iron is. So that’s because there’s a ridiculous amount of iron on Earth as there is a ridiculous amount of lithium.
“So, you can really expect all stationary storage to transition to iron over time. And like I said, with manganese is like a wildcard.”
Battery metals producers can be buoyed however by the rapid growth and profitability of the EV market.
Tesla generated a US$2.2 billion profit in the December quarter, up 760% on the US$270 million income generated just 12 months earlier.
In that time revenues from the automotive segment have risen 71% to US$15.97 billion, with total revenue up 65% to US$17.72b.
The result has put paid to criticisms of the EV sector as unprofitable.
“While EVs were often deemed structurally unprofitable due to expensive batteries, we were convinced that manufacturing innovation, purpose-built vehicles and factories would solve cost concerns,” the company said in its results Wednesday.
“In Q3-2021 (the last widely reported quarter), Tesla achieved the highest operating margin across all volume OEMs.
“Cost (COGS) per vehicle dropped to ~$36,000 in both Q3 and Q4 2021.
“We believe our current projects, including large castings, structural battery pack, 4680 cells and many others, should help us continue to minimise our product cost.”
GWR Group (ASX:GWR) , a junior miner which rode the Chinese steel wave to glory and back during the great iron ore boom of 2021, is flipping the script.
The company recently announced it would resume exports of some iron ore from the Wiluna West iron ore mine it paused late last year, but yesterday revealed it is changing tack.
The WA miner announced a deal to buy 70% of the Prospect Ridge magnesite project in Tasmania from Jindalee Resources (ASX:JRL) for $250,000 cash and $750,000 in GWR shares, and raised $2m from investors to back investigations at the project.
Australia produces no magnesium at the moment but rates the feather-light metal, a key material in the aluminium sheeting that lightweights cars, as a critical commodity. Around 90% of mag supply is based in China.
GWR call magnesium the “green metal”, though we couldn’t find evidence of the use of this phrase anywhere else (in a very quick Google search mind you). ‘Green’ is certainly a word chairman Gary Lyons is keen to get out there.
“The GWR team has reviewed a number of projects to that will move the company into the ‘green sector’, and we believe the advanced Prospect Ridge Magnesite project provides an excellent opportunity to enter the ‘green’ global magnesium market whilst enabling GWR to apply our experience in bulk commodity mining and tap into our network of offtake partners and end users,” he said.
“The Prospect Ridge Magnesite project has had a substantial amount of work undertaken, including diamond drilling, metallurgical test work, environmental and aboriginal heritage surveys and feasibility studies.
“We believe it may have the potential to be a low capex DSO operation which is close to a significant deep-water port in Tasmania and the GWR team will be funded to accelerate the project with the aim of adding significant shareholder value.
“The project will provide GWR with the opportunity to enter the ‘green’ and EV space with potential for exposure to the high-capacity, fast charging, rechargeable magnesium-ion battery market.”
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The reborn Altura Mining has had little to report, but has seen its shares charge 40% in the year to date, prompting a speeding ticket from the ASX last week.
Its Fish Lake Valley project is in the US lithium industry’s version of God’s Country, located midway along the 550km stretch from the Nevada cities of Las Vegas and Reno and just a few hundred klicks from Tesla’s Nevada Gigafactory.
30km as the crow flies is the Silver Peak mine owned by lithium chemicals giant Albemarle and Argosy’s (ASX:AGY) Tonopah project is only 20km away.
Back in November, Altura commissioned Recion Technologies to conduct a lab-based evaluation program to assess the Fish Lake brine’s suitability for direct lithium extraction, a form of processing gaining more favour among lithium proponents including 2021 boom stock Lake Resources (ASX:LKE) and Rio Tinto (ASX:RIO), which will assess the process at its newly acquired Rincon project in Argentina.
WA explorer ESR struck two broad zones of massive (the highest-grade stuff) and semi-massive (almost as good) nickel-copper sulphides below the old ‘Carr Boyd’ underground mine, it announced on Monday.
It was worked between 1972 and 1976 by BHP predecessor Western Mining Corporation before being mothballed due to low nickel prices.
Work will now focus on identifying where, and how far, this mineralisation is going “so as to exploit [its] further potential”.
It yesterday added to that line of investigation with downhole EM surveying “(extending the) potential of (the) new zone below T5 nickel-copper deposit,” with modelling indicating the mineralisation remains open to both the north and south.
“T5 continues to provide an exciting opportunity for Estrella to extend the footprint of the high grade nickel sulphides we have intersected in recent drilling at depth,” Estrella MD Chris Daws said.
“The refinement in how we utilise DHEM surveys to guide us is evolving and we are gaining an understanding of the capabilities and limitations in identifying the mineralisation.
“The latest round of surveys at depth unequivocally informs us that the limit of the T5 mineralisation is yet to be found.”
In 2020, an intersection at T5 pushed ESR into #5 spot on Stockhead’s Best Performing Resources Stocks of 2020.
The ESR share price has drifted badly since that rerating event in 2020. It’s fallen back from those heady days and is now trading at a market cap of ~$40m, up 55% over the past month.