High Voltage: In 2023, there’s only enough battery grade lithium for VW and Tesla
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Each week our High Voltage column wraps all the news driving ASX battery metals stocks with exposure to lithium, cobalt, graphite, manganese and vanadium.
Unexpected EV subsidy changes, vague model launch dates, as well as macro events like trade wars makes forecasting lithium supply and demand a difficult task, writes battery metals researcher and corporate advisor Rodney Hooper.
But Hooper is clear on this – in 2023 there will only be enough battery quality lithium available to meet the equivalent of Tesla’s (1.32 million) and VW’s (1.9 million) EV sales targets.
There will be no lithium chemical supply remaining for anyone else, Hooper says, which is a problem because we know that carmakers will be rolling out about 400 to 500 EV models globally by 2023.
This shortfall will be a paticular problem for European original equipment manufacturers (OEMs), who are staring down the barrel of some pretty hectic C02 liabilities if they don’t go EV by ~2021.
In an environment where low lithium prices are prompting chemical convertors to postpone production increases, Hooper says battery manufacturers and car makers are shooting themselves in the collective foot for short term gain.
“OEMs continue to push for lower battery cell and pack prices to make EV sales profitable,” he writes.
“This is understandable given the high capital costs associated with a shift in production platforms from ICE [internal combustion engines] to EVs.
“Scale is central to the ‘learning curve’ and lower battery costs; however, whilst raw material cost containment also plays a role, lithium is the ‘irreplaceable element’ of a Li-ion battery and if OEMs are hoping to pay $10,000/t instead of $12,000/t, thereby saving ~$1.70 per kWh they may pay a higher price in the future in the form of CO2 emission penalties and higher lithium prices.”
“Into 2020 we will see VW, Porsche, BMW and the list goes on and on – the EV reaction to the Tesla onslaught” @CanaccorGenuity’s Reg Adams at the #Benchmark2019 World Tour in Sydney pic.twitter.com/39WRMfzYVQ
— Benchmark Minerals (@benchmarkmin) September 16, 2019
This week marks the start of the Australian leg of Benchmark Mineral Intelligence’s 5th annual World Tour.
Price reporting agency Benchmark was passionate about the EV thematic before it was cool.
Now, they are considered the yardstick for everything lithium-ion battery to EV supply chain-related – all the other reporting agencies are just competing for second place.
Stockhead will head down this Friday to find out where battery metals prices are going. Stay tuned.
Our contingent of ASX-listed lithium producers bounced back this week after a prolonged hammering – led by Altura Mining (ASX:AJM) +15%, Galaxy Resources (ASX:GXY) +2%, Orocobre (ASX:ORE) +3%, and Pilbara Minerals (ASX:PLS) +2%. May it continue.
AVZ Minerals (ASX:AVZ) was up 8% after announcing a definitive feasibility study (DFS) for its monster Manono lithium and tin project in the Democratic Republic of Congo would be completed in early 2020.
Also up on no news was advanced lithium plays Liontown Resources (ASX:LTR) +15%, and ioneer (ASX:INR) +10%.
At the other end of the spectrum was embattled graphite producer Syrah Resources (ASX:SYR), which turned heads with another production downgrade.
Syrah pointed to a significant build-up of inventory in the Chinese market, which is now affecting price negotiations and contract renewals.
The net result was a “sudden and material decrease” in the weighted average price for natural flake graphite, to $US400/t ($583/t) from $US457/t in the June quarter.
In response, Syrah announced it would be cutting production to reduce costs. The share price slumped by around 30 per cent, leading a wave of selling across ASX-listed graphite stocks last week.
But if you’re worried, here’s a tip from our friends at Benchmark:
#Graphite: a lot of misinformation about prices crashing.
To confirm, as @benchmarkmin subscribers will know, there hasn’t been any crash in the *prevailing market price* for flake graphite. There has been a dip since Feb ‘18 but all flake prices are higher than in ‘16 and ‘17
— Simon Moores (@sdmoores) September 10, 2019
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: