High Voltage: WA gov looks downstream in battery minerals strategy; Piedmont Lithium up on sales profits
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Our High Voltage column wraps the news driving ASX stocks with exposure to lithium, graphite, cobalt, nickel, rare earths, manganese, magnesium, and vanadium.
Western Australia is updating its official Battery and Critical Mineral Strategy for 2024-2030 and has released a consultation paper seeking feedback from “stakeholders” – the mining and minerals exploration industry – to help inform the way forward.
These are critical years indeed for the burgeoning battery/critical minerals sector, with the global uptake of electric vehicles (EVs) anticipated to boom – despite slowing demand in the short term.
The state government’s purpose is to, of course, further grow WA’s battery and critical minerals industries, attract investors and maximise value from the sector. And it has a fair idea of how it wants to go about this – but preferably with some solid input from WA’s mining industry experts.
That said, the exploration side of the industry in WA has been doing a pretty good job of attracting investors far and wide on its own already this year.
In the paper, WA Energy Minister Bill Johnston notes: “Western Australia is a globally significant battery and critical minerals processing hub and it is important we do all we can to further capitalise on this incredible opportunity.
“A diversified battery industry is forecast to contribute nearly $17 billion in gross value added and over 61,000 jobs to the national economy by 2030. This is more than twice the value first estimated in 2021.
“Hearing from the industry is critical to ensuring we have the right strategy in place to continue to grow into the future.”
Some of the state gov’s renewed thinking includes placing greater than previous emphasis on the midstream and downstream elements of the battery metals industry in resources-rich WA.
And, for the downstream element at least, this means potentially increasing the level of output when it comes to the processing stage of minerals, such as lithium and nickel, required for batteries.
“Domestic value-adding and manufacturing” is part of the newly energised strat. And “converting exploration activity into producing mines will be integral to WA’s ability to continue moving down the value chain,” reads the paper.
“WA has a long history of upstream activities, such as exploration and mining, with established midstream industries, including lithium hydroxide refining. These successes are creating opportunities to further develop WA’s fledgling downstream industries.”
Upstream and midstream is where most of the action lies in WA, but as AUManufacturing notes, the state has “achieved some success in supporting further minerals processing including of nickel and lithium used in batteries, especially around the Kwinana industrial area south of Perth.”
Per Australia’s broader Critical Minerals Strategy released in June:
“Despite Australia’s credentials, the country has only two operating downstream lithium processing plants:
“Tianqi and IGO’s Kwinana plant in Western Australia, which produced Australia’s first lithium hydroxide in May 2022 with a current production capacity of 24,000 tonnes per annum (tpa); and Albemarle and Mineral Resources’ Kemerton plant, which achieved first production in mid-2022 and which has a current production capacity of 50,000 tpa of lithium hydroxide.
“Comparatively, based on data from Benchmark Mineral Intelligence, China controls around 60% of the world’s lithium processing capacity, and up to 80% of global production of battery grade raw materials – despite hosting only 23% of all battery raw materials.”
Piedmont Lithium (ASX:PLL) has released its Q3 2023 results, and they’re turning battery metal heads.
The company has hit a significant milestone, becoming a revenue-generating force after overseeing its initial customer shipments under an agreement with North American Lithium (NAL).
According to PLL ASX reporting, in the quarter, the company recorded:
• Revenue of US$47.1 million on sales of 29,011 dry metric tons (dmt) of lithium concentrate.
• Gross profit of US$23.8 million, reflecting a gross profit margin of 50.4%.
• Net income of US$22.9 million and adjusted net income of US$16.9 million.
• Diluted earnings per share of US$1.19 and adjusted diluted earnings per share of US$0.88.
• Adjusted EBITDA of US$16.2 million, reflecting an adjusted EBITDA margin of 34.3%.
• Cash and cash equivalents of US$94.5 million at September 30, 2023.
And it’s reportedly on track to deliver full-year shipment guidance of approximately 56,500 dmt of lithium concentrate.
Congrats @PiedmontLithium. Quebec produced #lithium bound for 中国. Let’s hope North America conversion plants become the destination soon. $PLL One question: why is this material selling at a substantial discount to the average WA producer? https://t.co/Enb2jVTaab
— Joe Lowry (@globallithium) November 7, 2023
PLL boss Keith Phillips made note of the performance in the face of slumping lithium spot prices, however:
“While we are pleased with Piedmont’s operational and financial performances, our results were materially impacted by the 45% decline in spot lithium prices during the quarter. Virtually all of our offtake tonnage will eventually be sold under longterm contracts announced earlier this year, but initial shipments are being made on the spot market.
“The benchmark spodumene concentrate price fell from more than US$3,500/dmt at the start of the quarter to approximately US$1,900/dmt today, directly impacting our quarterly results as our spot shipments are settled at the spot price around the time of customer receipt.”
With that caveat in mind, along with slowing EV demand recently, here’s Phillips talking with CNBC’s The Exchange about how he’s bullish on lithium, calling it “an unstoppable trend”, and describing the “whole lithium thematic” as being in “the third inning of a nine-inning game”.
In other words, it’s still early-ish days…
Lithium producer @PiedmontLithium became a revenue-generating company in Q3, despite lithium prices dropping 43% in the quarter.
CEO Keith Phillips says he is bullish on the metal despite slowing EV demand, calling adoption an "unstoppable trend." pic.twitter.com/MBOw7kNeBs
— The Exchange (@CNBCTheExchange) November 7, 2023
Also, we’d like to think lithium’s overall win probability is a bit better than the Aussie ODI team’s about a third of a way into its innings against Afghanistan the other night…
— Carl Capolingua (@CarlCapolingua) November 7, 2023
Quick, someone make an EV called the “Maxi”.
It seems the rush is on globally to buy more of the commodity from China for the moment, before the superpower brings into place its graphite export restrictions in December.
— Samson Li (@SamsonLi7) November 5, 2023
Below, Benchmark analysis provides a visual breakdown of natural and synthetic graphite supply chains.
— Benchmark Mineral Intelligence (@benchmarkmin) November 8, 2023
Here’s a snapshot of ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, magnesium, manganese, and vanadium are performing lately>>>
Biggest gainers, past seven days 🚀
Metal Hawk (ASX:MHK) +114%
Woomera Mining (ASX:WML) +100%
Biggest dippers, past seven days 📉
Allkem (ASX:AKE): Allkem chairman Peter Coleman has quietened hopes for dividends from the lithium producer, saying building scale is the top priority. Josh Chiat has the details in Monsters of Rock, here.
Uvre’s (ASX:UVA) East Canyon project in the Uravan mineral belt and Salt Wash ore producing districts of the Colorado Plateau in southeastern Utah is an early-stage exploration project comprising 231 claims (18.7km2) prospective for uranium and vanadium. Uvre has begun mapping and sampling at the Big Sally prospect. More in a special report, here.
Golden State Mining (ASX:GSM) crushed it on the ASX with a 56% gain on Wednesday after announcing it’s identified numerous pegmatite outcrops “within elevated to anomalous lithium-caesium-tantalum (LCT) geochemistry envelope”. Read more here.
New Age Exploration’s (ASX:NAE) completion of a key cultural heritage survey has paved the way for future drilling at the Quartz Hill project in the Pilbara, where NAE has identified pegmatites similar in style to those hosting some of the world’s biggest lithium mines. More, in a special report, here.
James Bay Minerals (ASX:JBY) is pursuing its strategy of expanding its land position at the La Grande greenstone belt in the James Bay region of Quebec, Canada, by acquiring 12,116ha – a 70% increase. More, in a special report, here.
Bubalus Resources (ASX:BUS) has a tight capital structure, more than $3.6m in cash and projects close to significant, third-party projects, such as Delta Lithium’s Malinda lithium prospect. More, in a special report, here.
Note: UVA, GSM, NAE, JBY and BUS are all Stockhead advertisers at the time of writing. They sponsored recent special reports, but not this article.