Monsters of Rock: Even the banks are taking notice of lithium these days

There was a time when lithium was more foreign to the big banks than a heel wrestler waving his crazy passport to draw the cascading boos of a redneck crowd.

Bank finance? No chance, unless you locked it in at stonkingly high, risky rates.

Now the electric vehicle metal is on the minds and lips of virtually every one in the world of big finance.

And the Commonwealth Bank is getting in on the act, presenting a base case that sees lithium demand rise 4.2 times by 2030 to 3.125 million lithium carbonate equivalent tonnes.

That may seem small by context of other commodity markets like iron ore (~1.5Bt), aluminium (~60Mt) and copper (~25Mt).

But none have its astonishing demand growth profile. The idea of copper demand doubling to 50Mt by 2050, a growth rate of a few per cent each year, is scary enough given a dearth of new discoveries.

In lithium, that compound annual growth rate will be a remarkable 20% on BloombergNEF and CBA estimates.

That’s in the base case. Even the low demand case of 2.45Mt represents a demand lift of 3.3x 2022 levels, or a CAGR of 16%. An upper high demand case registers 5.1x demand growth (23% CAGR).

“Bloomberg New Energy Finance (BNEF) estimates that the upfront purchase cost of EVs will fall to ICE levels across a number of jurisdictions and vehicle sizes from 2025 to 2030,” Commbank metals man Vivek Dhar said.

“Energy storage applications in the power sector are also expected to increase substantially in coming years. Batteries provide numerous benefits to power grids beyond storing variable solar and wind power.

“However, as wind and solar power expand, there will be an increasing need to store this power for use at a later period.

“The most popular Li-ion batteries today have a significant variance in raw material needs. However, the lithium required across the different battery chemistries is fairly similar for every unit of energy deployed.

“Even by 2030, while there may be technological advances that reduce the lithium required for every unit of energy deployed by 5-10%, a shift away from Li-ion batteries looks unlikely. Demand for lithium will therefore be largely driven by climate ambition.”

Risks for new technology

By 2030 passenger EV lithium demand is forecast to rise almost four times from 408,000t in 2022 to 1.534Mt in 2030, with energy storage demand to lift 3.1x to 125,000t and commercial EV lithium needs to climb 10.5x to 372,000t, and CAGR of 34%.

And that’s in a low demand case aligning with warming of 2.6C above pre-industrial temperatures.

In a high demand case aligned with BNEF’s Net Zero Scenario, total lithium demand would rise 5.1x to 3.8Mt, over 2.5Mt for passenger EVs alone.

Upside and downside risks to these scenarios, according to Dhar, largely come from changes in battery technology.

While the rise of so-called solid state batteries could boost LCE demand by 0.5Mt in 2035, increased penetration of sodium ion batteries could see between 300,000-1.7Mt of demand come out of the lithium demand model by 2035.

How aggressive the development and uptake of Na-ion battery chemistries is remains a mystery though.

Under BNEF’s economic transition scenario, their market share rises from 1% in 2035 to just 3% in 2030 and 4% in 2035.

In an aggressive uptake scenario it could be as high as 40% by 2035.

“The key risks to our outlook are linked to emerging battery technologies. Upside risks are driven by the commercialisation of solid-state batteries,” Dhar said.

“These batteries move away from liquid electrolytes and ultimately enable next generation anode technology. The most relevant for lithium demand is the use of lithium metal as the anode.

“Downside risks to our outlook are driven by the emergence of sodium-ion batteries.

“These batteries use sodium in place of lithium, and while they have glaring disadvantages to Li-ion batteries at present, technological advances could see sodium-ion batteries expand significantly by the back end of this decade.”

Diamonds are forever for Michael O’Keeffe

There was plenty of negativity on today’s market action here.

No need to rehash, aside to say things got even worse for the large cap miners, with the materials sector down 1.24%.

There were some obvious winners lower down the rungs of the ASX mining ladder, with Delta Lithium (ASX:DLI) up more than 30% on some wide, high grade lithium hits at its Yinnetharra project, near where Fortescue Metals Group (ASX:FMG) has fingered some ground to go exploring for the stuff.

They may not have inspired huge share price moves, but a couple other miners had announcements that caught the eye.

Tsingshan backed Nickel Industries (ASX:NIC) seems to be growing like one of those dinosaur sponges when you pour water on it.

It’s begun the commissioning of its Oracle Nickel Project power plant in the Indonesia Morowali Industrial Park in Central Sulawesi.

It’s a key step to expanding production from the 70% owned project’s four RKEF lines, which have been restricted to 80% of nameplate due to power limits on the IMIP grid.

They plan to hit 130% of nameplate – not a typo – pretty soon.

Elsewhere, Michael O’Keeffe of Riversdale and Champion Iron (ASX:CIA) fame has taken a fresh step towards turning his Burgundy Diamond Mines (ASX:BDM) into a major player in the niche world of ASX diamond stocks.

His shareholders voted up a deal and US$150 million placement ($231 million) to secure the Ekati diamond mine in Canada, once owned by BHP (ASX:BHP).

Burgundy will acquire Arctic Canadian Diamond Market NV, which managers the supply chain, sorting, preparation, marketing and sales of rough diamonds from Ekati.

“We are pleased to have received overwhelming support from our shareholders for our proposed acquisition of the Ekati Diamond Mine in Canada,” BDM exec chairman O’Keeffe said.

“This is a terrific endorsement of our innovative strategy, with our vertically integrated business model now completed and in place to capture margins across the full value chain.”