High Voltage: The lithium supply squeeze will push carbonate prices above $US40k. Here’s why
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Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, and vanadium.
Prices for lithium carbonate have just reached new highs on the back of limited supply and sustained lithium-ion battery demand in China, Benchmark Mineral Intelligence says.
Benchmark’s EXW China (battery) grade of lithium carbonate rose by 26.5% to RMB 160,000/tonne ($24,800) in the final two weeks of September 2021.
This surpasses the previous high of $24,750/tonne for battery grade lithium carbonate assessed on 30 March 2018 “and marks a new era for the lithium industry”, Benchmark says.
But this parabolic move is just getting started, according to Benchmark boss Simons Moores.
Strap in for 2022 and beyond.
Certain grades of lithium are in shortage. Prices of lithium carbonate now at all time highs & rising @benchmarkmin
Yet global 2021 market – pretty balanced. Next year is when shortage really hits
Lithium Rollercoaster 2.0 is just getting started https://t.co/R1wfLw7ucu
— Simon Moores (@sdmoores) October 9, 2021
In 2019, Moores said he was asked whether lithium prices in the next price surge would ever reach the highs of 2016.
“My response was this time it would be more aggressive,” he said in this tweet.
“Instead of the late 20s, prices in China would exceed $40,000/t.”
Here are three reasons why.
1.“This time there are more buyers than in 2016,” Moores says. “There are still not enough sellers: miners, refiners. Demand for lithium is outstripping the rate supply is growing by double. The wall of EV demand for lithium continued to build, esp 2026 and beyond.”
2. “Right now, the lithium industry is responding in real time, in many ways, and isn’t addressing a massive demand issue that we face towards the latter end of the decade,” Moores says. “For this massive investment would be needed or DLE [direct lithium extraction] breakthroughs to help close the supply demand gap.”
3. “Lithium carbonate price today in China is $28k tonne high end, mid-point $24k,” Moores says. “This is the top end of what we experienced 4/5 years ago and there’s a long way to go before this price surge runs out of steam … I don’t feel we are even halfway through yet.”
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This South Africa based vanadium project developer has scored a $4.6m investment at 10.4c per share – a massive 64% premium to the 30-day average share price (VWAP).
The cash comes from Raubex (JSE:RBX), an international infrastructure development, mining services and materials supply group.
A separate agreement would also see Raubex subsidiary ‘SPH Kundalila’ provide contract mining services to VR8.
With $6.1m in the bank, VR8 is now fully funded through definitive feasibility studies (DFS) and up to Final Investment Decision at the flagship ‘Steelpoortdrift’ vanadium project.
Steelpoortdrift is one of the world’s largest deposits, located within the famous, vanadium-rich Bushveld Complex.
A recent pre-feasibility study indicates the Steelpoortdrift project “is well positioned to become a significant high volume and low-cost producer”.
POS has several “capital-efficient” options for restarting production next year at its Black Swan nickel project in WA, according to MST Access senior research analyst Michael Bentley.
The most economically attractive option for the company is to refurbish the 1.1-million-tonne-per-annum capacity processing circuit and “fill the mill” to maximise nickel production, Bentley says.
A final investment decision is slated for May 2022, with first concentrate production targeted for December the same year.
“Our valuation remains at A$0.21 and is based on the restart of Black Swan,” Bentley said in a recent research update on Poseidon.
“We are yet to incorporate the full Golden Swan resource, Silver Swan tailings or Silver Swan infill into our valuation as we await the announcement of the Golden Swan resource.
“We see further upside from these additions.”