Frank
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Move over gold, lithium is the safe haven now
Lithium stocks continue to outperform the broader metals cohort as investors look desperately for a place to stash their cash.Lithium prices continue to climb new heights and experts aren’t shocked one bit
A commodities expert says its unclear what China can do to put the brakes on lithium prices with EV sales continuing to grow, as Pilbara Minerals sets yet another record price for lithium raw materials.Last week’s ninth auction on the Pilgangoora miner’s Battery Material Exchange bidding platform scored a haul of US$6988/t for a 5000t cargo of 5.5% pure spodumene concentrate.
Given pricing is typically done on a 6% Li2O (lithium oxide) benchmark, the actual take effectively was US$7708/t as the processor who bought the more than $50 million package will need to remove more waste.
That is processed into one of two general lithium chemicals for electric vehicle batteries, lithium hydroxide or lithium carbonate, both fetching more than US$70,000/t in the domestic market in China.
It’s an extraordinary outcome given PLS was selling contracted spodumene, the lithium rich concentrate produced at hard rock deposits in WA, for less than US$500/t this time in 2020, a mark of how quickly the EV sector has grown.
Clearly converters in China and elsewhere in South East Asia remain far more worried about securing supply than their material costs, with EV sales continuing to expand.
“The continuing escalations in prices for both lithium salts and spodumene are a clear reminder that we are still very much in the grips of a major supply shortage, which shows little sign of abating in the near-term,” Fastmarkets senior price development manager Peter Hannah told Stockhead.
Hannah is hardly shocked by the scale of this month’s escalation, which pounded like a pogo stick from August’s implied price of US$7,012/t.
“I don’t think we should be too surprised. These prices are merely a reflection of market conditions and what the marginal buyer is willing to pay,” he said.
“So long as there is still an incentive to produce EVs at these price levels there is no real reason for them to fall until we see a meaningful supply response.
“Demand destruction is a potential concern, but for the time being EV demand is still being driven by affluent early-adopters, and there are still long queues for most EV models.”
Fastmarkets currently says lithium carbonate is selling domestically on China’s spot market at a mid-point of 517,500 RMB and hydroxide for 515,000 RMB, ~US$72,600/t and US$72,500/t respectively.
At prices above 500,000RMB per tonne Chinese authorities have tended to ring the bells on “stablilisation”, a bit of a code word for when the Communist Party thinks prices of commodities sold into the country from Australia like lithium and iron ore are too damn high.
This is again unsurprising and something Hannah says it is unclear whether China will be able to get a handle on.
“I think China’s MIIT has something of a line in the sand at the 500,000 yuan per tonne level, as we’ve seen comments urging stabilisation whenever prices have touched that level,” he said.
“We are already through that level in the domestic market though, and what it can actually do to subdue prices is unclear.”
Back in red hot lithium form
The hammering local lithium stocks copped in the wake of Goldman’s wrecking ball report has given way to their biggest boom yet.Lithium partnerships aplenty as car manufacturers race towards EV transition
Against the backdrop of sky-high lithium prices, which saw EXW China (battery) amounts top US$71,575 recently – lithium partnerships are beginning to pop-up all over the shop as carmakers and battery manufacturers catch on to the idea that there is simply not enough of the stuff to go around.As Stockhead deputy editor Reuben Adams reported, we need more than 300 new mines to feed a 500% increase in battery demand by 2035 – for lithium specifically, this means roughly 74 new lithium mines with an average size of 45,000 tonnes.
Securing access to critical minerals for batteries has therefore become ever more important amid the global automakers expedited transition to EVs.
One recent example of this is South Korea’s electronics giant LG Energy Solution who signed partnership agreements with three major Canadian miners to lock in lithium and cobalt supply last Friday.
In a bid to establish a battery supply chain within North America, LGES revealed collaborations with NASDAQ listed Electra Battery Materials Corporation and Snow Lake Resources as well as with TSX player Avalon Advanced Materials Inc at a ceremony held in Toronto, Canada.
Two non-binding MoUs were signed with Snow Lake Resources and Avalon for a stable supply of lithium while a binding term sheet was locked in with Electra for 7,000t of cobalt sulphate for three years starting in 2023.
Avalon will supply LGES with lithium hydroxide(11,000 tons per year) for five years initially, starting in 2025 whereas Snow Lake will supply lithium hydroxide (20,000 tons per year) for ten years once production starts in 2025.
As a leading global manufacturer of lithium-ion batteries, LGES has been at the forefront in securing key raw materials for EV battery production, inking multiple agreements and MoUs with various suppliers.
More Food for thought on the Road to Mining Manono
Cheers
Frank
and move over going to work or something 
