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Lithium explorer and developer Lake Resources NL provides an update regarding the Company’s upcoming Extraordinary General Meeting to be conducted on Thursday 14 May 2020
Lithium explorer and developer Lake Resources NL (ASX:LKE; OTC:LLKKF or the ’Company’) refers to the Notice of Meeting released to the Market on 14 April 2020 and provides an update regarding the Company’s upcoming Extraordinary General Meeting to be conducted on Thursday 14 May 2020 at 11:00am (AEST) at Automic Group, Level 5, 126 Phillip Street, Sydney NSW 2000. Shareholders are not permitted to physically attend the meeting due to the Government restrictions on physical meetings and health risks associated with COVID-19 and social distancing measures still currently in place.
Shareholders are able to attend the meeting via virtual means by joining the live weblink. Shareholders who wish to attend the Meeting via weblink must register their attendance with the Company by 11am (AEST) on Wednesday 13 May 2020, the day prior to the Meeting, by emailing the Company Secretary at cosec@lakeresources.com.au and including your Holder Name, Address and HIN or SRN. The Company will then provide you with the necessary details to participate in the Meeting via the weblink.
Shareholders are encouraged to submit any questions they may have of the Company in writing to the Company Secretary at cosec@lakeresources.com.au by 5.00pm (AEST) on Wednesday 13 May 2020, the day prior to the meeting. The Company will also provide Shareholders with the opportunity to ask questions during the meeting. No new presentation will be provided. Shareholders are directed to the recent presentation on the company’s website and the recent webinar.
The Company reminds and encourages Shareholders to submit their proxy form to ensure their votes are cast. Proxy forms must be submitted by no later than 11am (AEST) on Tuesday 12 May 2020.
This announcement has been authorised by the Board.
For further information please contact:
Steve Promnitz, Managing Director
+61 2 9188 7864
steve@lakeresources.com.au
Follow Lake on Twitter: https://twitter.com/Lake_Resources
Follow on LinkedIn: https://www.linkedin.com/company/lake-resources/
Website: http://www.lakeresources.com.au
Click here to connect with Lake Resources NL (ASX:LKE) for an Investor Presentation
VIDEO — John Kaiser: No Upside in Tesla, Lithium Juniors are the Future of the EV Story
Although the lithium market can be tricky to understand, the payoff can be substantial, said John Kaiser of Kaiser Research.
John Kaiser: No Upside in Tesla, Lithium Juniors are the Future of the EV Story youtu.be
Tesla (NASDAQ:TSLA) may be at the center of the electric vehicle (EV) revolution, but the Elon Musk-led company has no upside left. That means investors need to look elsewhere for opportunity.
That's according to John Kaiser of Kaiser Research. Speaking at the Prospectors & Developers Association of Canada (PDAC) convention, he said that lithium juniors have become the place to be.
Referencing a report from Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO), Kaiser said that by 2035, roughy 1 million tonnes of lithium metal equivalent will be needed to support EV demand.
"The brines are going to come up with a big chunk, and Australia's pegmatites will add more, (but) that probably still will take care of only half," he said, noting that he expects companies working in Eastern Canada to step up.
Eastern Canada has suffered setbacks as a lithium jurisdiction due to past issues, including the downfall of Nemaska Lithium, but Kaiser said that the area is similar to Western Australia, where companies have seen success with pegmatite exploration. And in addition to that, it benefits from good access to water.
"Without this lithium becoming a reality, Tesla goes to a buck — it dies," he said.
Kaiser sees the lithium market as a gateway to the mining sector for young people, and said that although it can be tricky to understand, the payoff can be substantial.
"Play a statistics game. Look at the sector, see who's serious. Put together a basket of these lithium companies and treat it like a Silicon Valley startup portfolio where they have dozens of high-risk stories," he said, noting that while there will be failures, there will also be a handful of "superstars."
Watch the interview above for more from Kaiser on lithium and the opportunities he sees in the space. You can also click here for our recap of PDAC, and here for our full PDAC playlist on YouTube.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Housing the world's largest deposits of lithium, Chile's unique geological landscape and climate make it ideal for lithium brine extraction
As the world continues on the path towards a future dominated by clean energy, lithium's importance only continues to grow. Demand for the battery metal has already reached an all-time high, increasing by 400 percent in 2021. What's more, there is every indication that this growth will continue in 2022, with prices increasing by 126 percent in just the first quarter.
Currently, Australia and Chile are the two leading producers of lithium, respectively accounting for 46.3 percent and 23.9 percent of worldwide production. Both countries are jurisdictionally inclined to support the mining sector. However, Chile's potential could one day see it outstrip even Australia where investment is concerned.
Housing the world's largest deposits of lithium, Chile's unique geological landscape and climate makes it ideal for lithium brine extraction. The country thus has a pivotal role to play in meeting demand and establishing a stable global supply chain.
A critical component of sustainability
Climate change is an undeniable problem, one which requires a collaborative effort to address. It is for this reason that governments around the world have all agreed to pursue full climate neutrality by 2050. Because combustion engines represent an inordinate percentage of greenhouse gas emissions, replacing them with electric vehicles (EV) is essential if any nation is to achieve their sustainability goals.
Lithium is used extensively in both consumer and professional electronics. It is also a staple metal in multiple other sectors, including mining, manufacturing and energy storage.
Given its cross-sector industrial importance, the battery metal was already in high demand.
The large-scale manufacturing of electric vehicles has caused this demand to increase exponentially. As multiple automotive manufacturers construct gigafactories to ramp up EV distribution, the need for lithium is growing well beyond our current production capacity.
Investors and mining companies can benefit by turning to jurisdictions like Chile to ramp up supply. The world's migration towards a sustainable future simply cannot occur without lithium.
Lithium: Australia versus Chile
Although Australia houses impressive lithium reserves, the majority of the country's stores occur in hard rock deposits. Mining these deposits is relatively inexpensive, but hard rock lithium operations also tend to have narrow margins compared to other methods. In particular, lithium brine extraction offers higher yields, greater efficiency and a lower overall environmental impact.
Currently, the largest lithium producer in Australia is Pilbara Minerals (ASX:PLS,OTC Pink:PILBF). Its flagship project, the Pilgangoora operation, is situated atop one of the world's largest hard rock lithium deposits. It also jointly owns a pegmatite lithium project with Atlas Iron (ASX:AGO), the Mt Francisco project.
Geography represents Chile's first major advantage over other jurisdictions. Alongside Bolivia and Argentina, Chile lays claim to a geographic region known as the Lithium Triangle. Located in the Andes in South America, it contains an estimated 68 percent of the world's identified lithium resources.
The Lithium Triangle is home to a series of vast salt flats, beneath which sit incredibly lithium-rich brine pools. More promising still is the climate of the region, which is known for being incredibly hot and dry. This represents a considerable boon for extraction operations, which typically rely on evaporative processes.
A powerful investment opportunity
Chile's mining sector has leveraged its arid geography to great effect. The country's Salar de Atacama salt flat is the largest-producing brine deposit in the world. It is also home to several major lithium brine operations.
One of these is owned and operated by Albemarle (NYSE:ALB). Currently the largest business provider of lithium for electric vehicle batteries, Albemarle also operates a lithium carbonate plant at La Negra. According to an Albemarle spokesperson, the company has a long history in Chile backed by a unique contract.
SQM (NYSE:SQM) operates another major lithium brine operation in the salt flat. As the world's largest lithium producer overall, the company recently announced plans to reduce brine extraction in the region by 50 percent by 2030. This announcement came in tandem with a commitment to reduce water usage across all its operations by 40 percent.
Finally, just south of Salar de Atacama is situated the highest-quality lithium pre-production project in Chile. Maricunga is jointly owned by Lithium Power International (ASX:LPI), Minera Salar Blanco and Li3 Energy. Situated just 250 kilometers from Chile's coast, and 170 kilometers from the mining town of Copiapo, it's said to possess characteristics directly comparable to Atacama. Maricunga is also adjacent to Highway 31, which connects Northern Chile to Argentina.
The most significant challenge to Chile's growth, from an investment perspective, is sociopolitical. Although the country has a history of being relatively friendly towards the mining sector, its current government is exploring new legislation that could nationalize both copper and lithium. A new mining royalty bill is also in the works, which could increase tax rates by up to 80 percent.
It's worth noting that not every investor considers the current political climate to be a risk. South32 (ASX:S32), a spinoff of BHP (ASX:BHP), recently invested US$1.55 billion to purchase a 45 percent stake in the Sierra Gorda copper mine, and a lithium auction held by Chile earlier this year saw Chinese manufacturing company BYD acquire extraction rights for 80,000 metric tons of lithium.
Takeaway
Chile is home to the largest, richest and most valuable lithium deposits in the world. For many investors, the high margins and low cost of lithium extraction in Chile more than make up for the potential of a few political speed bumps.
This INNSpired article is sponsored by Lithium Power International (ASX:LPI). This INNSpired article provides information that was sourced by the Investing News Network (INN) and approved by Lithium Power International in order to help investors learn more about the company. Lithium Power International is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Lithium Power International and seek advice from a qualified investment advisor.
Experts in the field weigh in on Goldman Sachs' lithium oversupply call and whether they think it accurately depicts what's happening in the market.
Last week, the lithium market was shaken by a report from investment bank Goldman Sachs (NYSE:GS) saying that the bull market for battery metals was over for now.
Prices for lithium, which increased more than 400 percent in the past year, are expected to drop in the next two years, with a “sharp correction” happening by 2023, according to Goldman Sachs analysts.
They project that lithium prices will fall from current levels to an average of just under U$54,000 this year, from an average of above U$60,000. By 2023, the bank forecast is for an average price of just over US$16,000.
There’s been “a surge in investor capital into supply investment tied to the long term EV demand story, essentially trading a spot driven commodity as a forward-looking equity,” the analysts said. “That fundamental mispricing has in turn generated an outsized supply response well ahead of the demand trend.”
Analysts at the investment bank said investors are fully aware that battery metals will play a crucial role in the 21st century global economy.
“Yet despite this exponential demand profile, we see the battery metals bull market as over for now,” they said, adding that the long term prospects for the metals remain strong.
Following the report, lithium analysts and experts shared their concerns over a call that they say misses the fundamentals of this battery metal market.
Commenting on the Goldman Sachs analysts call on lithium, Rodney Hooper of RK Equity said he strongly disagrees with their findings on both supply and demand.
“My biggest issue with the report is that it will discourage upstream investment in mining,” he told the Investing News Network (INN). “We clearly haven't seen sufficient upstream investment to meet current and future demand.”
Also speaking with INN, Daniel Jimenez of iLi Markets agreed, saying analysts at the investment bank are overestimating supply and underestimating demand.
Goldman Sachs analysts are expecting a global demand of around 1.2 million metric tons (MT) of lithium carbonate equivalent (LCE) by 2025.
“We think that lithium producers have better industry insights and truthful talks with most of the OEMs they supply,” Jimenez said. Top lithium producer Albemarle (NYSE:ALB) is calling for around 1.5 million MT LCE while Chinese giant Ganfeng (OTC Pink:GNENF,SZSE:002460) is expecting around 1.6 million MT during the same period.
“On the supply side they are extremely optimistic in terms of the lepidolite production that could come from China in the coming years, which is also not realistic,” Jimenez said. “Bottom line — we believe it will be just the contrary.”
Similarly, analysts at Benchmark Mineral Intelligence said the industry cannot rely on China’s feedstock to meet the needs of the market.
“Known domestic Chinese spodumene and other hard rock resources are low quality, a key reason why there has been an increasing reliance by Chinese converters on Australia for supply instead,” analysts said in a note. “China’s deposits of lepidolite may have the potential to help bridge the deficit in coming years, but are unlikely to lead to oversupply.”
Forecasting the lithium market not an easy task
Goldman Sachs analysis of the lithium market is not the first one to be called out by experts in the field. Back in early 2018, when prices had been interestingly also on the rise for a couple of years, Morgan Stanley (NYSE:MS) predicted a decline in prices by 2021, with escalating fears of an oversupply in the market.
“We’ve seen this before, we will see it again. Goldman Sachs: you can’t just add up all the lithium mine level potential and make an oversupply call … the speciality chemicals world is more nuanced than iron ore,” Benchmark Mineral Intelligence’s Simon Moores said in a tweet when the recent Goldman Sachs report came out. “It’s why the world doesn’t rely on investment banks for research any more.”
Predicting how the lithium market will perform in coming years is not an easy task. As a specialty chemical, not all lithium is created equal and not all auto and battery makers' needs are the same. There have been countless constraints to bringing supply into the market, and as analysts would often point out, delays are as common for new projects as for producers expanding existing operations.
For Hooper, it is both demand and supply that some analysts usually get wrong.
“The best indicator of battery-grade demand is cathode production,” he said. “Historical analysis shows that demand linked to cathode production has the highest correlation to lithium prices — this indicator flagged a demand/supply deficit in late 2020.”
When assessing the supply side, Hooper does not consider projects until they are fully permitted, financed and under construction. And even then, he allows for a long ramp-up phase and qualification timeline, especially if it's a greenfield project.
“What happens when you use these indicators is that cathode production brings demand forward 6 months and supply adjustments push qualified material out 6 to 12 months,” he explained. “The net result is a structural deficit as analyst forecasts of the supply/demand balance in the market are out by 12 to 18 months.”
In a market like copper, that could mean a few percent of total demand, Hooper added, but in a market like lithium, growing at 30 percent, the difference is “enormous.”
Commenting on the biggest challenge for analysts to determine what will happen in lithium, Jimenez, who before iLi Markets worked at top lithium-producing company SQM (NYSE:SQM), said there is clear excess optimism in capacity increases and production ramp up times.
“Feasibility reports are, based on past experience, very optimistic,” he said. “Furthermore, the confidence that new technologies or resource types will be able to deliver are overly optimistic. In many cases we are talking of unproven technologies that have not been scaled from lab to industrial yet.”
Is the lithium market really facing oversupply?
At the end of last year, INN talked to analysts and experts on the field to get a better understanding of the outlook for lithium, with most agreeing demand would outpace supply on the back of electric vehicle (EV) sales. What has changed since then? Not much.
For Benchmark Mineral Intelligence analysts, the lithium market will remain in structural shortage until 2025.
“The lithium market will balance over the next few years, but it’s unlikely that an unprecedented ramp-up of marginal, unconventional feedstock will fill the deficit,” they said. “It is also unlikely that demand will weaken significantly.”
Similarly, iLi Markets' Jimenez doesn’t think supply will be able to catch up with demand at least until 2026 to 2027 mainly because of the difficulty to bring greenfield projects into production at full capacity.
“Over this period of time, lithium should be the limiting factor in EV sales,” he said. “Even with demand growing very strongly, the investments the industry is making today might yield additional capacity in 6 to 10 years from now that we are not able to see today.”
Another expert echoing these thoughts was RK Equity’s Hooper.
“Aggregate supply may match demand in the years to come; however, battery-grade supply qualified into the battery supply chain won't match EV demand,” he said.
“If OEMs continue to ignore battery raw material supply risks, they will pay the ultimate price soon enough. Signing meaningless binding (but not really binding) lithium offtake agreements with no associated capital flows or permitting assistance attached to them will lead to disappointment.”
As EV demand from around the world enters its rapid growth phase, lithium quality will be critical.
“We haven't seen sufficient upstream investment to cause oversupply for some time,” Hooper said. “The only way we see the market being balanced in the near future is if there is EV demand destruction and that is unlikely.”
Lithium prices expected to remain at steady levels
The lithium price rally has made news headlines around the world since 2021, with the world's largest asset manager BlackRock’s (NYSE:BLK) Evy Hambro, who is bullish on metals needed for the green energy transition, talking about the essential need for lithium into the future.
Lithium pricing is usually a common concern for investors new to the space, with experts generally reminding anyone interested in the battery metal that there’s no single lithium price. Lithium traded at spot prices only reflects a portion of the market. In fact, most lithium is locked up in contracts, which in some cases include fixed pricing.
Combined with existing contracting arrangements set in 2022, prices are very unlikely to crash in 2023 and 2024, according to Benchmark’s Lithium Forecast.
“Benchmark’s view is that contract prices are likely to continue to rise as a lagged effect of the major step-change in spot pricing over late 2021 and 2022 while spot prices will fall, with the two prices coming into more of an equilibrium than they are now,” analysts at the firm said.
Structurally, prices will remain high through 2025 to 2026, at least, iLi Markets' Jimenez said.
“Now high means above US$40 per kilo, which is significantly higher than the incentive price to develop a marginal cost greenfield project,” he said, adding that whether the price will be U$40, U$60, U$80 or U$120 is a difficult call to make.
For the expert, each year the industry will need to grow supply by 200+ kMT LCE per year, which was the total demand of 2017.
“The possibility that greenfield projects suffer delays is high,” Jimenez said. “Probably lithium units will be the bottleneck of the lithium-ion battery supply chain.”
China’s measures to contain COVID-19 have recently hit EV sales, and as a result the need for lithium, although this pullback in lithium demand is seen as temporary.
“When EV demand resumes in H2 2022, as China lifts restrictions, I expect spot and contract pricing to remain firm,” Hooper said.
Even for Wood Mackenzie analyst Allan Pedersen, who sees lithium prices declining by the end of 2022, a “sharp correction” like the one called by Goldman Sachs is not coming.
“We do not forecast a sharp correction but more a 'softer landing' as demand remains strong, providing a cushion for prices,” he told INN.
The research firm is expecting additional supply entering the supply chain both from brine and mineral concentrates to increase supply beyond demand in the short term.
“It is worth noting the surplus is fragile and small changes in electric vehicles forecasts can have a significant impact on the demand for lithium and therefore on the market balance,” he said. “We forecast that the supply surplus for battery-grade lithium chemicals will be less than the market in general as producing high quality battery grade lithium chemicals is difficult.”
Growth in the lithium industry is happening at a rapid pace, with changing market dynamics expected to emerge as a result.
“As the market wrestles between long-term supply security to fuel the lithium-ion economy, and increasingly market-led pricing mechanisms to incentivise supply growth, the era of lithium market volatility is likely just beginning,” analysts at Benchmark Mineral Intelligence said.
Lithium stocks hit — now what?
Following last week’s Goldman Sachs report, top lithium producers saw their share prices plunge. Chile’s SQM was down 5 percent, rival Albemarle declined more than 7 percent and Argentina-focused Livent (NYSE:LTHM) fell around 14 percent following the oversupply and sharp correction in price calls from the bank.
Despite the recent slump, looking at how lithium stocks have performed in the past year paints a different picture — many lithium stocks in the US, Canada and Australia have been on the rise year-on-year on the back of improved market conditions, as the price rally for the battery metal saw many investors turn to the space.
For RK Equity’s Hooper, there is still value in the current market.
“My suggestion would be to look at current or near term producers that have been hit in the latest downturn,” he said. “Shares that are pricing in spodumene or chemical prices that align with Goldman Sachs outlook — which by 2023 sees spodumene concentrate at $1,100 and lithium carbonate ex VAT at US$15.6k/t. We see 2023 average pricing well above those levels.”
Giving his best suggestion for generalist investors who have jumped to the lithium market in recent months, Hooper said they would do well to look at history and decide for themselves how supply and demand have and will evolve over time.
“Will internal combustion engine vehicles sell in any great volumes after 2025 to 2027 given legislation and consumer preferences?” he said. “Then load in a realistic long-term price for lithium chemicals and decide if the company has a low enough valuation multiple and some room for error.”
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
VIDEO — Green Technology Metals: Cashed Up and Pursuing Low-carbon Lithium in Ontario
General Manager Matt Herbert described Ontario as an "undiscovered gem," and spoke about the company's work on its lithium projects in the province.
Green Technology Metals: Cashed Up and Pursuing Low-carbon Lithium in Ontario youtu.be
After making its ASX debut this past November, Green Technology Metals (ASX:GT1) has been hard at work in Ontario, Canada, where it holds three projects covering 35,000 hectares.
Speaking to the Investing News Network at the Prospectors & Developers Association of Canada (PDAC) convention, General Manager Matt Herbert described the province as an "undiscovered gem" with the potential to contribute to the lithium supply chain in an environmentally conscious manner.
"I think the opportunity there is to create some very, very green lithium," he said.
"At the moment, a lot of lithium is mined in Western Australia, (then) shipped to China for processing; from China it goes to European battery markets. I think by the time that lithium arrives where it's supposed to arrive it's left itself a bit of a carbon footprint," Herbert explained during the conversation. "We have a real opportunity here to leverage low-carbon lithium in a place that is really screaming for security."
Green Technology Metals has already seen support from members of the Ontario government, including recently re-elected Premier Doug Ford, and Greg Rickford, who is the province's minister of northern development, mines, natural resources and forestry, as well as its minister of indigenous affairs.
"Both are massive supporters of critical minerals," Herbert said. "Those things are important when you're at the permitting and approval stage, and that's exactly where we're at. We're able to leverage those relationships really well, and there's just no better place to be at the moment."
Watch the interview above for more from Herbert on Green Technology Metals and its plans for the next six months. You can also click here for our recap of PDAC, and here for our full PDAC playlist on YouTube.
Don't forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Green Technology Metals is a client of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
- John Kaiser: Lithium Juniors are the Future of the EV Story ›
- What Do Lithium Experts Think About Goldman Sachs Oversupply ... ›
- Best 5 ASX Lithium Stocks of 2022 - Investing News Australia ›
Experts believe the positive long-term outlook for electric vehicles means lithium demand’s breather could just be temporary.
Lithium prices climbed over 400 percent last year, with other key battery raw materials such as cobalt and nickel also seeing prices rally as demand from the electric vehicle (EV) industry picked up pace.
But by the end of the first quarter, prices started to stabilize as demand took a breather, particularly in China, where the government has imposed lockdown measures to contain a new wave of COVID-19.
“We expect lithium and cobalt prices to peak this year, from dented but still strong demand and supply chain challenges,” Alice Yu of S&P Global Market Intelligence said at a recent webinar.
For the past year, the sharp rise in prices, which has seen lithium increase almost 130 percent year-to-date, according to Benchmark Mineral Intelligence data, has pushed major lithium miners to restart idle capacity and outline expansion plans, with juniors also moving ahead with their projects.
For Yu, supply should ease in H2 and into 2023 as new capacities commission and ramp up. “These will pressure larger price corrections,” she said, adding that she expects the annual price to drop by a third in 2023. “Lower lithium prices will be good news for the downstream and lift some of the demand resistance we have seen so far.”
COVID-19 restrictions are behind the recent demand pullback seen in China, where the measures have impacted the entire supply chain, from the closing of factories to shipping and transportation networks.
“There are also constraints on Chinese lithium chemical exports to Japan and South Korea due to port and logistical challenges stemming from the lockdown,” Yu said.
Overall, Chinese vehicle sales for April plunged almost 48 percent compared to a year earlier due to lockdowns, as per data released by the China Association of Automobile Manufacturers. Meanwhile, sales of EVs and plug-in hybrids in the country plunged 38.3 percent compared to the previous month, but jumped 45 percent year-on-year and more than doubled over the first four months of the year from 2021 levels.
According to the S&P Global Market Intelligence, plug-in EV sales across key markets China, Europe and the US were up 96 percent year-on-year in the first quarter of 2022, despite weaknesses in the overall vehicle market caused by the ongoing computer chip shortage.
The long-term EV sales outlook is positive, which means lithium's recent demand breather could be temporary.
“We don't know how long the lockdowns are going to last in China, but the underlying fundamentals are still there,” William Adams, head of base and battery metals research at Fastmarkets, said at a recent webinar. “The lithium market is very tight. We don't see that easing anytime soon.”
In fact, he added that to some extent the market may have seen some destocking coming into the pullback in prices. “So we could be set up for quite a sharp rebound once we see the end of lockdowns.”
Looking further ahead to mid-decade, in the period between 2023 and 2026, lithium prices are expected to remain above historical levels, and above prices in and before 2021, according to the S&P Global Market Intelligence.
“This is because the market expects a lithium deficit from 2024 onward, so a strong price environment will be needed to incentivize supply,” Yu said.
The high lithium price environment is accelerating product development and restarting idle operations, but whether they will be up and running fast enough is yet to be seen.
“One of the things which has surprised us is how long it has taken for some of the idle supply that was closed down during the weaker period into 2019 and 2020 to be reactivated,” Adams said.
Australia, Chile and Argentina dominate lithium production today, and they will lead the supply expansions, according to S&P Global Market Intelligence.
“At the same time, there'll be more diverse locations of lithium production,” Yu said. “We expect Mexico, Canada and Finland to start or restart lithium production over the next five years, especially as North America and Europe and their PEV supply chains in these regions seek more localized sources of lithium.”
But it has been stated time and time again how long lithium projects can take to ramp up, and how many delays they can suffer, with COVID-19 restrictions just adding to the mix of challenges.
“There's no shortage of lithium, it's all about can you get it? Can the supply chain keep up with the demand side of it in the time that is needed?” Adams said.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Priscila Barrera, currently hold no direct investment interest in any company mentioned in this article.
Description
The securities of Balkan Mining and Minerals Limited (‘BMM’) will be placed in trading halt at the request of BMM, pending it releasing an announcement. Unless ASX decides otherwise, the securities will remain in trading halt until the earlier of the commencement of normal trading on Monday, 4 July 2022 or when the announcement is released to the market.
Issued by
Damian Dinelli
Adviser, Listings Compliance (Perth)
Click here for the full ASX Release
This article includes content from Balkan Mining (ASX:BMM), licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
VIDEO - Green Technology Metals: Cashed Up and Pursuing Low-carbon Lithium in Ontario
General Manager Matt Herbert described Ontario as an “undiscovered gem,” and spoke about the company’s work on its lithium projects in the province.
After making its ASX debut this past November, Green Technology Metals (ASX:GT1) has been hard at work in Ontario, Canada, where it holds three projects covering 35,000 hectares.
Speaking to the Investing News Network at the Prospectors & Developers Association of Canada (PDAC) convention, General Manager Matt Herbert described the province as an “undiscovered gem” with the potential to contribute to the lithium supply chain in an environmentally conscious manner.
“I think the opportunity there is to create some very, very green lithium,” he said.
“At the moment, a lot of lithium is mined in Western Australia, (then) shipped to China for processing; from China it goes to European battery markets. I think by the time that lithium arrives where it’s supposed to arrive it’s left itself a bit of a carbon footprint,” Herbert explained during the conversation. “We have a real opportunity here to leverage low-carbon lithium in a place that is really screaming for security.”
Green Technology Metals has already seen support from members of the Ontario government, including recently re-elected Premier Doug Ford, and Greg Rickford, who is the province’s minister of northern development, mines, natural resources and forestry, as well as its minister of indigenous affairs.
“Both are massive supporters of critical minerals,” said Herbert. “Those things are important when you’re at the permitting and approval stage, and that’s exactly where we’re at. We’re able to leverage those relationships really well, and there’s just no better place to be at the moment.”
Watch the interview above for more from Herbert on Green Technology Metals and its plans for the next six months. You can also click here for our recap of PDAC, and here for our full PDAC playlist on YouTube.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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Housing the world’s largest deposits of lithium, Chile’s unique geological landscape and climate make it ideal for lithium brine extraction
As the world continues on the path towards a future dominated by clean energy, lithium’s importance only continues to grow. Demand for the battery metal has already reached an all-time high, increasing by 400 percent in 2021. What’s more, there is every indication that this growth will continue in 2022, with prices increasing by 126 percent in just the first quarter.
Currently, Australia and Chile are the two leading producers of lithium, respectively accounting for 46.3 percent and 23.9 percent of worldwide production. Both countries are jurisdictionally inclined to support the mining sector. However, Chile’s potential could one day see it outstrip even Australia where investment is concerned.
Housing the world’s largest deposits of lithium, Chile’s unique geological landscape and climate makes it ideal for lithium brine extraction. The country thus has a pivotal role to play in meeting demand and establishing a stable global supply chain.
A critical component of sustainability
Climate change is an undeniable problem, one which requires a collaborative effort to address. It is for this reason that governments around the world have all agreed to pursue full climate neutrality by 2050. Because combustion engines represent an inordinate percentage of greenhouse gas emissions, replacing them with electric vehicles (EV) is essential if any nation is to achieve their sustainability goals.
Lithium is used extensively in both consumer and professional electronics. It is also a staple metal in multiple other sectors, including mining, manufacturing and energy storage.
Given its cross-sector industrial importance, the battery metal was already in high demand.
The large-scale manufacturing of electric vehicles has caused this demand to increase exponentially. As multiple automotive manufacturers construct gigafactories to ramp up EV distribution, the need for lithium is growing well beyond our current production capacity.
Investors and mining companies can benefit by turning to jurisdictions like Chile to ramp up supply. The world’s migration towards a sustainable future simply cannot occur without lithium.
Lithium: Australia versus Chile
Although Australia houses impressive lithium reserves, the majority of the country’s stores occur in hard rock deposits. Mining these deposits is relatively inexpensive, but hard rock lithium operations also tend to have narrow margins compared to other methods. In particular, lithium brine extraction offers higher yields, greater efficiency and a lower overall environmental impact.
Currently, the largest lithium producer in Australia is Pilbara Minerals (ASX:PLS,OTC Pink:PILBF). Its flagship project, the Pilgangoora operation, is situated atop one of the world’s largest hard rock lithium deposits. It also jointly owns a pegmatite lithium project with Atlas Iron (ASX:AGO), the Mt Francisco project.
Geography represents Chile’s first major advantage over other jurisdictions. Alongside Bolivia and Argentina, Chile lays claim to a geographic region known as the Lithium Triangle. Located in the Andes in South America, it contains an estimated 68 percent of the world’s identified lithium resources.
The Lithium Triangle is home to a series of vast salt flats, beneath which sit incredibly lithium-rich brine pools. More promising still is the climate of the region, which is known for being incredibly hot and dry. This represents a considerable boon for extraction operations, which typically rely on evaporative processes.
A powerful investment opportunity
Chile’s mining sector has leveraged its arid geography to great effect. The country’s Salar de Atacama salt flat is the largest-producing brine deposit in the world. It is also home to several major lithium brine operations.
One of these is owned and operated by Albemarle (NYSE:ALB). Currently the largest business provider of lithium for electric vehicle batteries, Albemarle also operates a lithium carbonate plant at La Negra. According to an Albemarle spokesperson, the company has a long history in Chile backed by a unique contract.
SQM (NYSE:SQM) operates another major lithium brine operation in the salt flat. As the world’s largest lithium producer overall, the company recently announced plans to reduce brine extraction in the region by 50 percent by 2030. This announcement came in tandem with a commitment to reduce water usage across all its operations by 40 percent.
Finally, just south of Salar de Atacama is situated the highest-quality lithium pre-production project in Chile. Maricunga is jointly owned by Lithium Power International (ASX:LPI), Minera Salar Blanco and Li3 Energy. Situated just 250 kilometers from Chile’s coast, and 170 kilometers from the mining town of Copiapo, it’s said to possess characteristics directly comparable to Atacama. Maricunga is also adjacent to Highway 31, which connects Northern Chile to Argentina.
The most significant challenge to Chile’s growth, from an investment perspective, is sociopolitical. Although the country has a history of being relatively friendly towards the mining sector, its current government is exploring new legislation that could nationalize both copper and lithium. A new mining royalty bill is also in the works, which could increase tax rates by up to 80 percent.
It’s worth noting that not every investor considers the current political climate to be a risk. South32 (ASX:S32), a spinoff of BHP (ASX:BHP), recently invested US$1.55 billion to purchase a 45 percent stake in the Sierra Gorda copper mine, and a lithium auction held by Chile earlier this year saw Chinese manufacturing company BYD acquire extraction rights for 80,000 metric tons of lithium.
Takeaway
Chile is home to the largest, richest and most valuable lithium deposits in the world. For many investors, the high margins and low cost of lithium extraction in Chile more than make up for the potential of a few political speed bumps.
This INNSpired article is sponsored by Lithium Power International (ASX:LPI). This INNSpired article provides information that was sourced by the Investing News Network (INN) and approved by Lithium Power International in order to help investors learn more about the company. Lithium Power International is a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.
This INNSpired article was written according to INN editorial standards to educate investors.
INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.
The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Lithium Power International and seek advice from a qualified investment advisor.
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