Pic: Mean Girls (2004), Paramount Pictures
Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
During the ICE (internal combustion engine) age, the idea that a carmaker would invest directly in metal and mining operations to ensure supply was unheard of.
As recently as 2019 it was merely a light “topic of conversation”; now, miner and carmaker tie-ups are real and becoming realer every day.
This is the EV age, and things are different. The wild battery metal shortages that analysts like Benchmark were warning us about are here, magnified by unanticipated events like war and COVID.
They have forced carmakers to jump directly into bed with mining companies to consummate supply deals.
China’s largest electric carmaker BYD recently became the second automaker to take a stake in a major lithium miner, Benchmark says.
The RMB 3 billion (~$630m) deal to acquire 5% of Shenzhen-listed Chengxin Lithium is a way for it to secure supplies of the battery raw material following a surge in prices.
The deal was made after it failed to secure “stable” lithium supplies from the market due to rapidly rising lithium prices last year, BYD says.
Following the investment Chengxin said it would provide lithium to BYD at “preferential prices”.
“Gaining preferential lithium pricing through investment should allow BYD to keep its costs under control,” Maynie Yang, analyst at Benchmark, says.
VW recently became the first Western automaker to invest in nickel production in Indonesia, the world’s biggest producer, in a deal for enough nickel and cobalt to make over 2 million EVs.
The German carmaker, alongside producer Huayou Cobalt and stainless-steel maker Tsingshan, will form a joint venture to develop annual production of 120,000 tonnes of nickel and 15,000 tonnes of cobalt.
It will help VW reduce battery costs by 30% to 50% over the long term, VW said.
The deal marks a significant move by the world’s second-largest carmaker to secure the cathode raw materials it needs to expand production of electric vehicles for the Chinese market, Benchmark says.
Nickel is becoming a key concern for automakers since most of the new supply this decade is set to come from Indonesia, a country run on coal-fired power, Benchmark says.
The metal’s high carbon footprint could make it difficult for automakers to meet their emission reduction targets.
“The amount of CO2 produced for a tonne of nickel from Indonesia can be as high as 97 tonnes,” says Bruna Grossl, LCA practitioner at Benchmark.
“That’s made lower-carbon nickel from outside Indonesia a hot – and scarce – commodity, especially following Russia’s invasion of Ukraine.
“The invasion has created uncertainty about whether automakers will accept nickel from Norilsk Nickel, which has a deal to supply metal for electric vehicles to German cathode maker BASF.
“The company, which is led by billionaire Vladimir Potanin, has not been sanctioned by any government.”
Sure makes Aussie based battery metal/critical mineral players look attractive over the short, medium, and long term.
Here’s how a basket of ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, magnesium, manganese, and vanadium is performing>>>
Battery metals stocks missing from our list? Shoot a friendly mail to [email protected]
The near term miners surged last week, led by lithium players Sayona Mining (ASX:SYA), AVZ Minerals (ASX:AVZ), and Lake Resources (ASX:LKE), as well as rare earths project developer Arafura Resources (ASX:ARU).
All up a good week for battery metals stocks on the ASX – 129 went up, 65 went down, and 21 didn’t move.
The explorer has picked up rock chips grading up to 2% lithium during an initial site visit to the ‘Tambourah’ project in the Pilbara region of WA.
Ore grade for hard rock mines is usually around 1-1.5% lithium.
It’s a solid start — these rock chips are from one 200m section of what is potentially a 26km-long mineralised corridor at Tambourah, RGL CEO Julian Ford says.
A follow up reconnaissance trip was due to kick off this week, targeting along strike extension and additional priority target areas.
A small rebound for the struggling tiddler.
Last year, VRC recently acquired of a 70% controlling interest in the Ukraine graphite producer ZG Group, which help “deliver on its strategy to become a key supplier of natural flake graphite products and battery anode material to the growing EV and other graphite markets”.
But Russia’s invasion has disrupted these best laid plans, with the operation currently suspended.
The graphite mine and processing facilities are located adjacent to the town of Zavallya, approximately 280 kilometres south of the Ukrainian capital Kyiv and 230 kilometres north of the main port of Odessa.
“The town of Zavallya is located in a rural area with no military or major infrastructure targets in the region,” VRC said March 17.
“There has been no military action near Zavallya, and at this stage, ZG management see minimal risk to ZG staff, their families and the business assets from the conflict.”
Meanwhile, the company – which has another graphite project called ‘Bunyu’ in Tanzania — is progressing plans to supply coated spheronised purified graphite (CSPG) to a US gigafactory that is expected to commence operations in 2025.
PSG is a value-added product used to make the battery anode.
There isn’t much info about the gigafactory developer — a company called Energy Supply Developers (ESD) — but CEO Jeff Yambrick says it is “committed to … bringing the entire battery supply chain including cell manufacturing to America at our dedicated battery industrial park”.
On a recent call ESD said construction was to kick off in ~6 months. Ambitious.
The company identified a strong 4km by 2km lithium soil anomaly at its Bolt Cutter project, 34km north of PLS’s Pilgangoora deposit.
“To identify an anomaly, from the first systematic sampling ever completed in the area, that is large enough to contain a target of a comparable scale as two significant lithium projects along trend is very promising,” CEO Samuel Ekins said.
“We will commence follow-up field work immediately.”
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