Monsters of Rock: Wesfarmers all in on lithium as WA approves Mt Holland project

Want to know how hype lithium is right now?

Retail and industrial giant Wesfarmers (ASX: WES), one of Australia’s biggest corporations, is all on board, after receiving ministerial approval for the Covalent Lithium joint venture in WA with Chile’s SQM.

Enthusiasm is returning to the sector, and not for just any reason.

As Stockhead‘s Emma Davies reports, Benchmark Mineral Intelligence is the latest pricing agency showing strong gains for the battery metal.

Battery grade carbonate pricing is now up 101% in 2021, with prices between $13,325-$13,950/tonne, and averaging $13,650/tonne.

Hydroxide prices are up 85.7% YTD, and robust demand and limited supply are expected to continue to push up them higher.

It was a spot of bright news for the majors on a day when Rio Tinto (ASX: RIO) and Evolution Mining (ASX: EVN) dragged the iron ore and gold sectors by underwhelming with production results from the June Quarter.

UBS called Rio’s second quarter “even weaker than we expected”. Savage.

Its 76Mt of iron ore shipments were 9% below consensus.

Arch-nemesis BHP (ASX: BHP) meanwhile closed at a record high of $51.87.

The bank’s sell rating on Rio, which is still trading near record highs on stellar iron ore prices, is predicated on the downside risk of a slide in the iron ore price to US$100/t over the next 12 months and US$75/t by 2024.

If you’re in it for the dividends though you may want to hold fire. UBS expects a $4.90 per share payout including 50% of earnings and a $1bn special.

Materials threatened to go red for the first time this week but clawed its way back to a negligible gain. ASX200 was even.

WESFARMERS (ASX: WES)

As mentioned Mt Holland and the Kwinana lithium plant are go after Wesfarmers and SQM received State ministerial approval.

Wesfarmers got out of mining a few years ago by selling its coal assets before making a triumphant return into the future minerals space by acquiring Kidman Resources in 2019.

Now the approvals are in the bag Wesfarmers said construction and development has commenced.

The $1.9 billion project will produce around 50,000tpa of lithium hydroxide with first production due in the latter half of 2024.

Wesfarmers added 0.5% or 31c to close the day at $58.92, with around half of those gains coming after the Mt Holland announcement.

Wesfarmers share price today:

ANGLOGOLD ASHANTI (ASX: AGG) and KIRKLAND LAKE GOLD (ASX: KLA)

It was a mostly red day for gold miners as prices came off marginally, but the internationals performed strongly with dual-listed AngloGold and Kirkland Lake both up over 1.5%.

Both are dual-listed with overseas exchanges and trade in light volumes in Australia.

Anglo owns the Sunrise Dam and Tropicana gold mines in Australia, while Kirkland Lake owns the high grade Fosterville Gold Mine in Victoria.

AngloGold Ashanti & Kirkland Lake Gold share price today:

LYNAS RARE EARTHS (ASX: LYC)

Lynas owns Mt Weld, the largest rare earths mine, outside of China and is one of the largest neodymium-praeseodymium suppliers in the world.

It posted a 1.82% gain today on no news. The big focus at the moment is on its plans to build downstream facilities in Kalgoorlie and overseas in the US.

Better rare earths pricing helped it to a nine-fold increase in profits in the first half of FY21, so its June results will be watched closely.

Lynas share price today:

ALS LIMITED (ASX: ALQ)

Lab rats ALS are exposed to the commodities sector as a major provider of assaying and geochemical analysis services to the exploration sector.

In their recent full year result ALS reported its underlying EBIT margin from commodities was up 199 basis points to 27.6%, reflecting the underlying strength of the mining sector.

ALS was up 2% or 24 cents to $12.48 today.