Monsters of Rock: Elon Musk sends lithium league flying with another dramatic oversimplification
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On each of these earnings calls Tesla CEO and Master of the Twitterverse Elon Musk says something that makes you wonder if his fortune really is all just dumb luck.
“I would really like to encourage, once again, entrepreneurs to enter the lithium refining business.”
“You can’t lose,” is his latest kernel of genius. “It’s a licence to print money.”
Sure, once you’ve drilled out your resource, gone through years of environmental studies, approvals, convinced the local community who want you to piss off to stick a lithium plant in their back yard, found workers with the requisites to staff the thing and secured financing in a bear market.
The world’s second biggest mining company Rio Tinto (ASX:RIO) couldn’t get it done in Serbia and the world’s largest lithium bearing pegmatite in the DRC is locked up in an ownership dispute instigated by China Inc.
The comment is, like many of his Twitter posts, a dramatic oversimplification.
But lithium chemical and raw material prices are still, evidently and obviously, high, generating huge profits for existing miners.
And Musk is still better than most at stimulating unbridled excitement from the meme-loving hordes.
His comments, and news Tesla’s June was its most productive month ever, sent local lithium shares flying.
Sayona (ASX:SYA) was up more than 19%, Liontown (ASX:LTR) up 11.21% after securing Lycopodium (ASX:LYL) to do the EPCM work at its Tesla-supplying Kathleen Valley mine and Core Lithium (ASX:CXO) rose 7%.
Pilbara Minerals (ASX:PLS) hit its highest share price in over a month, up 3.23% to $2.56.
Alumina Limited (ASX:AWC) has collected its latest tasty morsels in the form of the dividends from its non-operating AWAC JV with Alcoa.
The ASX-listed company says its distributions for the first half of 2022 came in at $162 million, $25m up on the previous corresponding period, with another $39m cheque delivered after the end of the second quarter.
AWAC’s second quarter margin rose from $88 to $99/t on higher prices, which averaged US$418/t and reached over US$530/t in March.
Alumina CEO Mike Ferraro says the medium term outlook for the alumina market remains positive, with his estimates of aluminium demand outside China rising.
“The anticipated growth in aluminium metal consumption driven by de-carbonisation is favourable for the alumina industry,” he said.
“Over the next five years, the expected and potential increase in primary aluminium production is 6.3 million tonnes per annum outside China.
“This would require around 12 million tonnes per annum of extra
alumina. It is questionable, given the current status of refinery expansion projects outside China, whether 12 million tonnes could be brought into operation within five years.”