High Voltage: Glencore and Albemarle just gave cobalt and lithium markets a really good shake
Link copied to
Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.
Here’s all you need to know right now.
Glencore blames low cobalt prices for a less-than-spectacular first half of 2019.
In response, the multi commodity giant will mothball the globally significant Mutanda mine in the DRC from the end of this year.
Mutanda produced 27,300 tons of cobalt last year — over 50 per cent of Glencore’s total – so this could really put a rocket under the depressed cobalt market.
Or, at the very least, shake things up a bit.
Similarly, lithium giant Albemarle has scaled back its lithium chemical expansion plans pretty substantially; especially in Australia.
Albemarle will delay 125,000 metric tons of previously announced conversion capacity.
“The potential impact of EV subsidy changes in China, possible shifts in cathode chemistry, excess inventory held in spots along the supply chain and the current oversupply of lithium carbonate in the market has caused some caution in the energy storage value chain,” Albemarle chief executive officer Luke Kissam said in an earnings call.
“All of this has put downward pressure on price, and we expect to see this pressure on carbonate pricing continue in the near-term — but we also expect supply demand dynamics to tighten in 2020.”
Albemarle anticipates the changes will reduce capital expenditures by approximately $1.5 billion over the next five years and allow Albemarle “to become free cash flow positive in 2021”.
But Kissam maintains this isn’t a response to weak demand in the medium term.
“We’re still bullish on demand,” he says.
“We’re at 1 million metric tons, in that range, by 2025 and we still see that based on all the data that we have coming in.
“We will still have the capability out in the years to either buy or build additional capacity.”
Junior lithium explorer Sayona Mining (ASX:SYA) penned a very handy farm-in deal with neighbouring producer Altura Mining (ASX:AJM) in WA’s world-class Pilgangoora lithium district.
Altura can earn a 51 per cent over Sayona’s “attractive” exploration portfolio by spending $1.5m on exploration over three years.
The two companies, which share a number of key board members, see this deal as symbiotic.
“It is rare for such a close alignment of two companies, but this deal is truly one that benefits both, particularly given our priority on advancing our flagship Authier lithium project in Québec,” Sayona managing director Brett Lynch says.
“We can now ensure that our funds are maximised towards the highest likelihood of increased shareholder returns, with the added upside of any potential new discoveries in Australia.”
ScandiVanadium (ASX:SVD) is finally drilling at the Skåne vanadium project in southern Sweden.
Diamond holes up to 125m deep will target a prospective vanadium bearing seam where it occurs near surface at the Hörby target, at the northern end of the project area. Drilling will take three weeks to complete.
Investors approved, sending the stock up 11 per cent for the week.
Vietnam-focussed Blackstone Minerals (ASX:BSX), which is looking to produce battery grade nickel and cobalt, jumped 20 per cent as the nickel price pumped through $US16,000/t and Glencore flagged those massive cobalt production cuts from the end of this year.
As did three of Australia’s most advanced nickel-cobalt laterite project developers – Australian Mines (ASX:AUZ), CleanTeq (ASX:CLQ), and Ardea (ASX:ARL).
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: