High Voltage: Lithium market recovery starts to gain traction
Link copied to
Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel and vanadium.
It’s well-known in Australia’s mining fraternity that lithium prices have been stuck in a bear market for the past two years.
There are encouraging signs that the market is on the turn, however, as the fanfare around electric vehicles (EVs) grows louder.
Fund managers are cottoning on to the lithium market’s price recovery and are starting to manoeuvre into ASX lithium stocks.
James Stewart, resources portfolio manager at Ausbil Investment Management, is one market expert sensing a change in fortune.
“Anecdotally, lithium producers are suggesting pricing has increased slightly in recent weeks and months, and demand from customers has stabilised and is increasing,” Stewart says.
Another sign of a market turnaround is some industry consolidation in the ASX lithium sector, which could streamline capacity.
“The potential acquisition represents a logical consolidation of two neighbouring operations to unite the greater Pilgangoora orebody, unlocking tangible synergies in both the short and long term,” said Pilbara Minerals managing director, Ken Brinsden,
Lithium prices are trading at $US9 per kilogram, and half the levels of only two years ago when prices were at $US20/kg, according to the London Metal Exchange.
At the LME’s virtual global gathering in October, (LME Week), attendees were upbeat about lithium’s prospects.
New models of EVs are appearing in the market, providing more consumer choice, and sales are gathering momentum.
Some pundits took this as a welcome sign that investor interest is starting to increase in lithium miners and explorers.
Added to this, the UK government shocked oil markets this week with its proposal to outlaw sales of petrol and diesel cars from 2030.
Prime minister Boris Johnson brought forward the ban date from 2040 to 2035, and now to the end of the decade.
The move is aimed at boosting sales of EVs to achieve the UK’s goal of net zero carbon emissions from its economy by 2050.
At a lithium industry gathering in China this week, sentiment toward the sector was described as “positive”.
China’s consumption of lithium refined products was reported to have grown at an average rate of 24 per cent since 2015.
As a result, the market is forecast to reach 810,000 tonnes LCE by 2025, including 640,000 tonnes in China’s EV industry.
This level of demand is based on EV sales of 16 million units by 2025, and rising to 35 million units by 2030.
“The global EV industry is expected to shift from being policy-driven to demand-driven between 2020 and 2025, with this trend expected to accelerate once EVs maintain an up-front cost advantage over traditional internal combustion engines,” said research firm Roskill which attended the lithium event in China.
Here’s how a basket of 105 ASX stocks with exposure to lithium, cobalt, graphite, nickel, and vanadium are performing:
Scroll or swipe to reveal table. Click headings to sort.
Stockhead’s battery metals weekly top 10 is, once again, dominated by nickel sulphhide plays like Auroch, Estrella, St George, and Chalice.
Chalice Gold Mines (ASX:CHN) said this week it has secured three private properties at its Julimar nickel-copper-pge project.
The properties cover a combined area of 945 hectares, including one that covers ~85 per cent of the Gonneville intrusion.
The intrusion is host to the company’s major nickel-cobalt-copper-pge discovery located 70km north-east of Perth in WA.
Securing the properties is considered an important milestone for the project and is significant in de-risking its development.
Vulcan Energy (ASX:VUL) said in a presentation released this week that Europe is the fastest growing market for lithium.
Europe is also the fastest growing lithium-ion battery production centre in the world, it added.
The company’s lithium hydroxide project in Germany’s Upper Rhine Valley is well-placed to meet this demand.
Estrella Resources (ASX:ESR) said in an update on its Carr Boyd project that it had started drilling an area of high-grade nickel sulphide mineralisation.
The drilling is occurring at its T5 prospect located 1km from the historic Carr Boyd mine, and detailed drone aerial reconnaissance is being undertaken at the site.