High Voltage: Ignore short term market noise, the ‘perfect storm’ for rising battery metal prices is here
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Our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium.
The structural shift from fossil fuels to green energy is all but locked in. Now the issue becomes – how do we get to net zero emissions by 2050? What materials are needed and where will they come from?
According to an article in The Economist, Far East Capital analyst Warwick Grigor reckons the market for key minerals needed for clean energy production will need to expand seven-fold in order to meet targets for 2030 and 2050.
That is a lot of lithium, nickel, copper, graphite, rare earths and cobalt we need to find from somewhere.
“Will there be another surge in commodity prices on top of the doubling of lithium prices and 70% increase in copper prices that we have seen over the last year?” Grigor asks.
“Will prices rises lead to boosts in supply, or are there practical issues of supply expansion that mute the price response?
“Can new projects be fast-tracked in a world that is being strangled by red tape and compliance, not to mention social issues?”
Bringing these issues to the stock market will provide plenty of room for swings in sentiment, Grigor says, with bursts of enthusiasm for particular commodities promising to deliver good short term trading profits.
“That means money will roll from one commodity to another, but the underlying long term trend should be more consistent,” he says.
“Rather than considering the trade cycle and swings in supply and demand, analysts will need to focus more on the supply, or lack of it, while demand continues to rise ferociously.
“That sounds like a perfect storm for rising commodity prices.”
Workers are on strike at Vale’s Canadian Sudbury operations, a significant global producer of copper, nickel and cobalt for lithium-ion batteries.
In 2009, workers went on a year-long strike, with operations suspended from July 2009 to July 2010.
Mined nickel production fell from 85,000t in 2008 to 44,000t in 2009 and 22,000t Ni in 2010, Roskill says.
“If there is no satisfactory outcome to the strike by the end of the year, and based on previous quarterly production, we estimate that production loss would be significant for the remainder of the year,” Roskill says.
“While Vale has been engaged with the employees through their labour council, there is a considerable gap between what Vale is offering and what the employees are demanding.”
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The beleaguered stock has clawed back a portion of the massive losses suffered when its San Jose lithium project permit application in Spain was cancelled.
The Infinity share price is still down 52% since early April.
Nickel-cobalt project developer AUZ has identified a potential copper-gold porphyry at the ‘Flemington’ project, located in the Lachlan Fold of NSW.
The main exploration focus at Flemington is its growing cobalt-scandium-nickel resource, but this discovery could add another string to the company’s bow.
Australian Mines says this anomaly sits in the same rocks (age and type) as the tier one ‘Northparkes’ and ‘Cadia East’ mines nearby.
A field reconnaissance program of the IP anomaly is underway, “with the intention of undertaking a reverse circulation (RC) drill program over this emerging copper-gold target zone from next month”.
Gold focussed Firefinch is due to come out of a trading halt over the next couple of days to announce a development partner for its advanced Goulamina hard rock lithium project in Mali.
Results of a Definitive Feasibility Study (DFS) in October 2020 placed Goulamina among the world’s highest quality and largest undeveloped lithium deposits, Firefinch says.
The feasibility study revealed a pretty good set of numbers with a pre-tax net present value of $1.7bn and a reasonably low all-in cost of about $313 a tonne.
Since completion of the Goulamina DFS, there have been unsolicited expressions of interest in Goulamina relating to partnership and offtake opportunities, the company says.
“We genuinely believe there is no value for the lithium reflected at all in our stock price at the minute,” says Firefinch managing director Michael Anderson.
Has Ardea made a significant nickel discovery in WA?
Last week, the stock announced a semi-massive nickel sulphide hit of 1.1m @ 4.78% Ni, 0.16% Cu, 0.47g/t Pt, 0.20g/t Pd from 366.9m at ‘Emu Lake’, 70km from Kalgoorlie.
Data shows a potential channel of thick nickel sulphides below this drillhole, the company says.
“The available geophysics is showing there is potential for such a channel to exist below AELD0002 which could extend for a considerable length in a similar fashion to the Silver Swan channel,” managing director Andrew Penkethman says.
“It is interesting to note that earlier surface EM surveys have not been able to detect these sulphides, demonstrating the potential to open up a previously untested, albeit deeper, search space at Emu Lake.”
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