Monsters of Rock: PLS warns investment is key to keep Australia on top in lithium race

• PLS boss calls for ‘targeted investment’ to keep Australia’s leadership in lithium supply race
• Whitehaven takes aim at Queensland coal royalty … again
• Big miners fall as gold stocks take a hit

Pilbara Minerals (ASX:PLS) Dale Henderson has warned of the competition brewing in the lithium industry as miners continue to deal with a prolonged downturn.

He says Australia is facing increased competition with overseas operators as prices remain in the doldrums for the electric vehicle and battery metal.

Those comments came in the context of a positive quarterly report from the Pilgangoora lithium mine owner, which is changing its name to PLS, as it latched onto higher prices and better than expected production to lift revenue 30% QoQ to $251m.

PLS produced 224,800t of 5.3% SC5.3 spodumene, with realised prices rising 24% to US$742/t and FOB operating costs down 11% in US dollar terms to US$353/t. At the same time, its cash balance fell 13% to $852m amid mild pricing though in part due to the timing of shipments.

Shares rose close to 5% on the open and have more than doubled in the past six months.

But managing director Dale Henderson said price appreciation – related to mine shuts in China a couple months back – remained too low for the long-term sustainability of the industry.

He said ‘global geopolitical dynamics continue to highlight the importance of secure and resilient critical minerals supply chains’.

“Australia has an incredible opportunity to expand its role in the global lithium and energy transition supply chain, but the race for market share is well underway,” Henderson said.

“Other jurisdictions are moving fast with coordinated policy and public investment to attract capital and downstream manufacturing. To remain competitive, Australia must match that ambition through targeted investment and shared infrastructure that lowers the cost for all across the industry and helps to ensure our position in this global race.”

Critical minerals race

Global EV sales were up 9% QoQ and 26% YoY in the September quarter, led by China.

But there are concerns about America’s EV slowdown with Donald Trump’s right-wing policy agenda now setting in in the White House.

Lithium projects weren’t the key focus of a US$8.5bn critical minerals deal between the US and Australia announced this week, with the focus turning on rare earths and gallium, commodities critical to Trump’s investment priorities in military technology and AI.

The ‘short term noise’ from the end of America’s Inflation Reduction Act EV incentives this year had some impact on PLS’ refining JV with South Korea’s POSCO.

The Gwangyang facility has moderated production amid the slowdown in the US market, with spodumene offtake trimmed for CY26 to 150,000t, well below the maximum 315,000t in the offtake deal.

PLS says that will enable it to reallocate spodumene to customers in areas of higher demand.

Lithium is in line to potentially benefit from government equity investments and floor pricing, with competitor Liontown Resources (ASX:LTR) already nabbing a $50m share placement from the National Reconstruction Fund.

Henderson was more circumspect about ideas like floor pricing, which have become popular in other sold off battery metal markets like rare earths.

“At this stage we’ve been inputting our ideas to government and in particular the group tasked thinking through the strategic reserve,” he said.

“They’re taking views around floor pricing and what that could mean – the pros and cons.

“As to the idea around floor pricing the devil’s in the detail, there could be positives if it’s deployed the right way, but equally there could be bad, unintended consequences if not rolled out the right way.

“For us we’ve been very much advocating for the shared infrastructure aspect, that’s a very sensible business case and hard to dispute.”

Spot spodumene prices were at US$870/t for 6% material yesterday, with lithium carbonate fetching US$10,473/t. Despite a run up in prices from cyclical lows in July and August, prices are currently only slightly up year to date.

Higher recoveries, up from around 71% to 78% were a standout for analysts, with Argonaut lifting its price target 6% to $3.70. PLS shares are trading at $3.10.

Whitehaven takes aim at coal royalties … again

In a bit of deja vu, because to be frank, this talking point won’t be going away, Whitehaven Coal (ASX:WHC) MD Paul Flynn called for another rethink on Queensland’s tiered royalty regime.

Hit by a weak Aussie dollar and rising costs, a string of marginal met coal mines have been put on care and maintenance for the loss of something like 1000 jobs in recent weeks, as met coal prices remain too subdued to justify investment on a number of sites.

Not included in those are Whitehaven’s Blackwater and Daunia mines, which are going strong.

But with choices coming up on further investments in either the Winchester South mine in Queensland or Vickery project in NSW, Flynn says the royalty regime will factor into its development decisions down the line.

While thermal coal is running at just US$105/t against top of the line coking coal prices close to US$190/t, lower grade met coal products cop a discount and the tiered royalty system currently leaves Aussie miners exposed as prices creep.

It’s come as Flynn admitted Chinese steel exports were hampering expected production growth out of India, now the key market for Aussie met coal sales.

“The industry has had some constructive meetings with the Government. I’ll say constructive in the context that everybody’s trying to be constructive, despite the fact that the whole dynamic is not particularly useful from an investment perspective,” Flynn said.

“You’ve seen various quotes with people’s effective tax rates – that’s obviously federal and state based when they aggregate that together – that’s not particularly good, I think you’ve seen one quoted 67 or 68% … ours is about 57% if we try and do that calculation on the same basis.

“Nothing’s changed and we obviously want to promote change in order to trigger more investment. And I think the government wants more investment, so that’s the obvious policy setting that needs to be varied in order to trigger that investment.

“If you’re US$5 away from exposure to the 40% threshold … at the same time, people are going broke, clearly that’s not a super profits tax that’s actually a no profits tax.“

Whitehaven’s ROM coal project fell 15% to 9Mt, with equity sales down 1% to 5.9Mt in the September quarter, around 50-50 between its Queensland and NSW operations.

The average sales price at its QLD mines clocked in at $200/t Aussie, realising 75% of the benchmark, with thermal coal sales in NSW at A$175/t, 105% of the Global Coal Newcastle grade price.

Net debt increase $200m to $800m in a quarter with higher outflows including the full year dividend and high Queensland capex to take advantage of the drier weather.

The ASX 300 Metals and Mining index fell 2.51% over the past week.

Which ASX 300 Resources stocks have impressed and depressed?

Making gains 

Pilbara Minerals (ASX:PLS) (lithium) +19.6%

Alcoa Corporation (ASX:AAI) (alumina) +8.7%

IGO (ASX:IGO) (lithium) +7.7%

Mineral Resources (ASX:MIN) (lithium/iron ore) +5.3%

Eating losses 

Black Cat Syndicate (ASX:BC8) (gold) -19.7%

Catalyst Metals (ASX:CYL) (gold) -18%

Bellevue Gold (ASX:BGL) (gold) -14.8%

Genesis Minerals (ASX:GMD) (gold) -14.2%

Gold stocks were hammered after two rough trading days including the biggest single day fall in the bullion price since Covid on Tuesday.

Lithium miners rose as spodumene prices ticked up, while Alcoa was buoyed by the announcement of a proposed US$200m injection of Australian Government funding for a gallium JV with Japan’s Sojitz at its Wagerup alumina refinery.

The US Government also plans to tip in an equity investment and secure offtake for the plant based on the early details of the Trump-Albanese critical minerals deal.