High Voltage: ‘It’s easy being green’ as battle to secure battery-grade nickel intensifies
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel and vanadium.
Roskill forecasts the demand for nickel and cobalt chemicals will grow by over 500% and 100%, respectively, between 2021 and 2030 — and the race to secure “green” battery-grade nickel units is intensifying.
LGES — a subsidiary of LG Chem, the world’s #1 producer of advanced batteries for the electric vehicle industry – has now inked a binding offtake with AUZ’s ‘Sconi’ nickel-cobalt project in QLD.
“Seemingly eager to source nickel that is unlikely to attract similar ESG supply chain scrutiny compared to Southeast Asian material, these companies are increasingly locking in supply from alternative sources, including Australia,” Roskill says.
“The Australian nickel industry has seen a flurry of business deals so far in 2021.
“One of LG Chem’s customers, Tesla, recently announced that it had secured a long-term offtake agreement for nickel from BHP Nickel West’s operation.”
Battery metals prices are up considerably since late 2020, but battery makers are also getting hit with sharp price rises and supply shortages for non-active materials, Benchmark Mineral Intelligence says.
“Prices for binder and separator materials, and solvents, began trending upwards in late-2020 and have since seen sustained higher prices and constrained supply,” the pricing agency says.
“Traditionally, these price rises would not substantially affect cell cost reductions, but manufacturers now need to pay close attention to the bill of materials which plays a greater role than ever in total production costs.
“While cell makers face pricing pressure from these peripheral materials, critical raw material prices have increased considerably since late 2020, with Benchmark’s Lithium Carbonate Index up 111.6%, nickel sulphate prices (EXW China) up 25.6%, and cobalt hydroxide prices up 64.2% year-to-date in July 2021.”
Over the past month almost every lithium stock on the ASX finished handily in the green.
While the speculative fervour has now cooled (for now), several lithium players cashed in by raising significant amounts of money to advance their projects.
On August 11, Core Lithium (ASX:CXO) pocketed a heady $91m from big investors at 31c per share – a 13.9% discount to the last closing price.
Together with the $34 million Ganfeng equity investment, Stage 1 project development of the ‘Finniss’ lithium project is now fully funded, with Core on track for first production in late 2022.
European Lithium (ASX:EUR) also placed $6.95m with strong investor support.
On August 13, Galan Lithium (ASX:GLN) completed a $50m institutional placement at $1.15 a share; a small ~10% discount to the last closing price.
Once finalised, that gives Galan a total cash balance of ~$65m to advance its brine assets in Argentina and hard rock projects in WA.
Lithium Power International (ASX:LPI) raised $12.4m from instos at a 10.3% discount to the last closing price on Thursday last week.
And then there’s Sayona (ASX:SYA), which raised about $20m from an oversubscribed share purchase plan after getting applications totalling $68m — more than 13 times the initial target of $5m.
Funds raised from the share placement, together with $45m obtained from a previous placement, will help settle the acquisition of North American Lithium (NAL) and advance the ‘Abitibi’ lithium hub.
It was a more subdued week for battery metals stocks after the bonkers, lithium-led run of the preceding fortnight.
Eight stocks were up, 103 down, and 16 didn’t move post some big cap raises and as punters looked to cash out some of their gains.
Here’s how a basket of ASX stocks with exposure to lithium, cobalt, graphite, nickel, and vanadium are performing>>>
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