AVZ Discussion 2022

[Frank]

Lithium boom pits Wall Street against the wonks​

Mark Burton and Annie Lee

There is a fight brewing in the lithium market, after a controversial forecast from Goldman Sachs Group analysts set off a backlash among some of the industry’s most prominent experts.
Lithium is a vital component of electric vehicle batteries, which means the outlook for supply, demand and pricing is increasingly consequential.
For years, a small group of niche consultants has dominated the conversation in a commodity that some say will become as important as oil in the coming century. Now, with prices surging and demand booming, they’re increasingly sharing the stage with Wall Street titans like Goldman.
The bank made headlines when it warned that a searing rally in lithium will go into reverse this year as supply from unconventional new sources overwhelms demand. Credit Suisse Group also joined in predicting a correction. But specialists including London-based Benchmark Mineral Intelligence are loudly pushing back.
The rift matters because both groups play important roles in the burgeoning electric vehicle industry. The niche consultancies offer tailored research to miners, battery makers and car companies that guides decisions about whether to invest in new projects; Wall Street banks – and the investors who read their research – help determine whether they can afford to do so.
Benchmark disputes Goldman’s forecast that a flood of new production is on its way, and that prices will crater as a result. The consultancy still sees prices retreating from recent sky-high levels, but takes a more pessimistic view on the scale and timing of new supply.
The mining industry is famously bad at hitting its production targets and lithium has added risks due to the highly complex technical processes involved in making the final products used in battery packs, Benchmark says.
‘‘You’ve got this additional hurdle arising because it’s not a commodity, it’s a specialty chemical,’’ Daisy Jennings-Gray, a senior price analyst at Benchmark, said by phone.
‘‘It’s a two-stage concern combining the traditional problems that the mining industry has faced with the additional challenges that a specialty chemical producer might face.’’
The spat may seem trivial, but the stakes are high for those who rely on the forecasts, given lithium’s critical role in the electric vehicle revolution and the fight against climate change.
If the deficits persist and prices spike further, it could cause car makers’ margins to collapse, and potentially slow the mass rollout of electric vehicles.
But if prices slump, miners could scrap major new projects, setting the stage for even larger spikes and deeper deficits in the 2030s, when sales of electric vehicles will need to outstrip those of conventional cars if the industry is going to have a hope of hitting its net zero targets.
‘‘The lithium industry in its current form is very young, and so it’s difficult to say with confidence how responsive miners will be in bringing on new supply,’’ said Peter Hannah, a senior price development manager at Fastmarkets, a price reporting agency and industry consultancy.
‘‘A lot of it hinges on technology that we’ve never really seen before, and so there a lot of variables to consider, and each one could prove each of us wildly wrong, one way or another.’’
Of course, disagreement among analysts is common in commodities markets, but the scale of the divergence is particularly acute in battery metals such as lithium, where supply and demand are both growing at a breakneck pace.
While a market like copper typically grows by 2 per cent to 4 per cent a year, lithium analysts are anticipating growth of more than 20 per cent for supply and demand between 2021 and 2025.
That means minor differences in analysts’ assumptions – for example about the chemical composition of batteries or the timing of new mining expansions – can have a big impact on their supply-and-demand estimates. It’s an issue cropping up in other battery metals such as cobalt and nickel as well.
In lithium, expert consultancies say that the wayfarers from Wall Street are far more likely to overlook the nuances of the industry in conducting their research. Joe Lowry, the founder of specialist advisory firm Global Lithium, has frequently taken to Twitter to call out perceived shortcomings in research by banks.
Matt Fernley, the London-based managing director at Battery Materials Review, an industry researcher, said the sell-side reports were ‘‘massively over-estimating’’ the ease of adding new supply, and failing to consider the complexity of bringing new assets into production and the qualification requirements.
‘‘The lithium industry needs to raise hundreds of billions of dollars of capital for expansion over the next 10 to 15 years,’’ he said. ‘‘A lot of that needs to come from equity and that’s going to be difficult if equity prices are depressed because of such reports.’’
BLOOMBERG

Battery metal buzz counters financial market angst at mining’s big show​

The turmoil that rocked financial markets this week has done little to shake the optimism around global mining, if the signs of exuberance on display at one of the industry’s biggest gatherings in years are to be believed.

Thousands of people from all areas of the industry converged at the Prospectors & Developers Association of Canada gathering this week in Toronto, a global hub for mining capitalism, to strike deals, generate buzz and network after more than two years of pandemic restrictions put an end to most big industry gatherings.

“There was massive pent-up appetite for getting out in person and seeing people” and “phenomenal dialogue between various groups,” PDAC President Alex Christopher said in an interview during the last in-person day of the gathering.

“I’m sure there is a lot of business going on right now.”

Even a stocks selloff that pushed US equity markets into bear territory and warnings of recession by market pundits did little to dampen the enthusiasm of those who make a living finding and extracting minerals from the ground.

“The vibe is exciting, especially in the battery metal space,” said Chris Gale, executive director of Perth, Australia-based Latin Resources Ltd., as he navigated through the crowds in downtown Toronto’s cavernous convention center, exchanging pleasantries with familiar faces along the way.

“It’s great to have everyone in the same room and the same time.”

Gale said his team had 12 meetings in three days to get the work done surrounding the development of a lithium project in Brazil.

The conference helped reaffirm the excitement around battery metals, he said, even after a market rout that has seen his company’s stock slump about 70% from an April peak.

Attendants of the annual PDAC event shared the collective realization that the world desperately needs more supplies of raw materials including those critical metals—lithium, nickel, cobalt and copper—needed for batteries, electric vehicles and cleaner technologies that are considered key in a global push to shift away from fossil fuel.

Miners, battery manufacturers and automakers are racing to control more supplies of such metals amid looming shortages and skyrocketing demand from EVs.

BloombergNEF expects that all known global reserves of lithium, cobalt and nickel—along with a huge contribution from metals recycling—could be exhausted if the world wants to zero-out road transportation emissions by 2050.

“That’s the excitement at PDAC—the beginning of a massive bull run for metals and mining,” said Trevor Walker, chief executive officer of Fronter Lithium Inc., which has a project in northern Ontario.

Battery metals were one of the themes at the conference.

In an impromptu poll among Canada’s top mining bankers during a panel discussion at one packed session, two said they expected lithium prices to outperform other commodities in the next year on the back of rising consumption and supply shortages.

The bankers expected big money to come to the battery-metals sector as generalist investors, who have largely stayed on the sidelines, gain awareness of the supply constraints for the minerals needed for the energy transition.

The focus on such industrial metals took some of the shine off precious metals in a conference that tends to draw its fair share of gold bugs and bullion producers from around the world.

“There’s a little more enthusiasm around battery metals,” Alamos Gold Inc. CEO John A. McCluskey said in an interview from his company’s booth in the sprawling trade floor, which drew 864 exhibitors—a sellout—ranging from minerals explorers, service firms and consultants to countries and mining technology firms.

“I don’t see the same amount of enthusiasm in gold and silver” due mainly to macro issues such as the strength of the dollar.

Still, the conference did draw the top executive of the world’s largest gold company, with Newmont Corp.’s CEO Tom Palmer doing a keynote speech to a crowded room on Tuesday.

PDAC marked his third face-to-face industry conference this year.

“You can do so much on a video conference,” Palmer said in a Wednesday interview.

“But the people-to-people interaction is still a very important part of influencing the culture and managing our business.”

www.mining.com/category/battery-metals/

Food for thought on the Road to Mining Manono

Frank

 

[JAG]

Exactly, we would be no better than HC shitposters or Twitter trolls if we rely on anything that isn't market knowledge.

Don't forget were having a nationwide $2 party either, who do we make the honourary guest Mousey or Ol' Hot?



Love a good quote from a facist dictator, even if it's posted by a JAFA

The Mouse still owes a 20c party for a lot of people

 

[BEISHA]

View attachment 9451

 

[CashKing]

Cash it's so quiet, have you heard anymore?

No mate & look's like AVZ are waiting until everything is sorted and we are back trading before announcing anything material..

 

[TheCount]

Exactly, we would be no better than HC shitposters or Twitter trolls if we rely on anything that isn't market knowledge.

Don't forget were having a nationwide $2 party either, who do we make the honourary guest Mousey or Ol' Hot?



Love a good quote from a facist dictator, even if it's posted by a JAFA

At $2 I'll pay for Boatman's ticket to join... Economy, back of the plane next to the loos of course....

TC.

 

[JAG]

LMFAO....Its Linda Bruce Aka Trading Girl back.........

 

[Winenut]

For those that have had past experience with Linda on the crapper I get more than a whiff of an odour that the Trading Tranny is back

Look out for RetroGirl if you happen to be visiting the asylum

Push a few select buttons there and I reckon she'll show her true self pretty quickly

Just a heads up

Cheers!

 

[Winenut]

LMFAO....Its Linda Bruce Aka Trading Girl back.........

View attachment 9466

Damn you Jag!!!

Beat me by 3 mins

 

[JAG]

Damn you Jag!!!

Beat me by 3 mins

Someone throw a........at her please

 

[Bray]

God knows some people are doing alright with the market, like big Clive Palmer currently parked up just off Yeppoon in his 121ft cruiser while I’m having a fish

 

[cruiser51]

God knows some people are doing alright with the market, like big Clive Palmer currently parked up just off Yeppoon in his 121ft cruiser while I’m having a fish
View attachment 9471

What's happening with his Titanic II??
Did the Chinese put too many listening devices under his bunk?

 

[cruiser51]

Someone throw a........at her please

Much better to let her die due to lack of attention.

 

[CashKing]

Much better to let her die due to lack of attention.

She may be removing herself it seems lol...

 

[Frank]

That will work, its the perfect size for when they strip the overburden.

Lol So true, It's not Funny, but so close to the truth it's absolutely Fabulous, Bring it On and Load me Up Disco

 

[DiscoDanNZ]

LMFAO....Its Linda Bruce Aka Trading Girl back.........

View attachment 9466

What's the backstory with her? I was avoiding the crapper way back when she was around.

God knows some people are doing alright with the market, like big Clive Palmer currently parked up just off Yeppoon in his 121ft cruiser while I’m having a fish
View attachment 9471

I was halfway there in Hervey Bay on the weekend, pick me up and I'll come for a fish

Any whales other than Clive around?

What's happening with his Titanic II??
Did the Chinese put too many listening devices under his bunk?

He had to sell it to pay for the billboards he was using to buy no seats at the election.

 

[JAG]

What's the backstory with her? I was avoiding the crapper way back when shim was around.


I was halfway there in Hervey Bay on the weekend, pick me up and I'll come for a fish

Any whales other than Clive around?


He had to sell it to pay for the billboards he was using to buy no seats at the election.

I'll tell ya over a beer at $2 mate........fn one of the best stories on the crapper

 

[Winenut]

Much better to let her die due to lack of attention.

Yeah but nowhere near as much fun!

 

[Winenut]

I'll tell ya over a beer at $2 mate........fn one of the best stories on the crapper

Sign me up for that one

 

[JAG]

Her last email to me.......fucking piece of work

 

[DiscoDanNZ]

I'll tell ya over a beer at $2 mate........fn one of the best stories on the crapper

$2 Trannies? I'm curious...