Lithium Miners News For The Month Of September 2020

Sep. 28, 2020 5:58 AM ETALB, ALTAF, AMVMF, FMC, GALXF, ILHMF, LAC, LIT, LTHM, OROCF, PILBF, RDRUY, RRSSF, SQM, TSLA, PDDTF, PLL, AKE:CA, LAC:CA, ILC:CA17 Comments

Summary

  • Lithium prices were mixed for the past month.
  • Lithium market news - EU sounds alarm on critical raw materials shortages - Needs 18x more lithium by 2030, 60x by 2050. BMI is tracking 167 megafactories (2,697GWh) by 2028.
  • Tesla expects significant (battery) shortages in 2022 and beyond. WoodMac - Nearly 800 kt LCE of additional lithium needed next 5 years.  Morningstar - Falling lithium prices provide buying opportunity.
  • Lithium company news - Albemarle to partner with DoE on lithium research projects. Tianqi Lithium posts $101 mln net loss in H1 as prices plunge.
  • I do much more than just articles at Trend Investing: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

Welcome to the September 2020 edition of the lithium miner news. September saw lithium prices mixed and some big market news. Most notable was the EU saying they will need 18x more lithium by 2030, 60x by 2050 to meet their climate targets. The lithium megafactory number hit 167, and Elon Musk said Tesla (TSLA) aims to reach 3TWh pa of battery capacity by 2030 and mine lithium using just salt and water from clay? Based on the 3TWh just for Tesla that would mean Tesla alone would need 2.7 million metric tons of lithium demand pa by 2030, or 9x 2019 total global production, again just for Tesla!

Lithium spot and contract price news

During September, 99.5% lithium carbonate China spot prices were up 0.75%. Lithium hydroxide prices were down 1.43%. Spodumene (5% min) prices were unchanged.

Fastmarkets (formerly Metal Bulletin) reports 99.5% lithium carbonate battery grade spot midpoint prices cif China, Japan & Korea of US$6.75/kg (US$6,750/t), and min 56.5% lithium hydroxide battery grade spot midpoint prices cif China, Japan & Korea of US$9.00/kg (US$9,000/t).

Benchmark Mineral Intelligence has August global weighted average prices at US$6,128 for Li carbonate, US$8,774 for Li hydroxide, and US$375 for spodumene (6%).

Lithium carbonate & hydroxide, battery grade, cif China, Japan & Korea

Source: Fastmarkets

Lithium demand versus supply outlook

On August 31 The Financial Times reported:

EU sounds alarm on critical raw materials shortages. The EU’s over-reliance on imports of critical raw materials threatens to undermine crucial industries and expose the bloc to supply squeezes by China and other resource-rich countries. The document is part of an urgent focus in Europe on security of imports of vital goods. The emerging strategy prioritises securing the supply of a list of raw materials critical to European industries through exploration, investment and improved recycling. The EU estimates that to meet its climate neutrality goal, it will need up to 18 times more lithium and five times more cobalt in 2030. The forecasts rise to 60 times more lithium and 15 times more cobalt by 2050.

The EU also added lithium to their critical materials list

Source

On September 3, Reuters reported:

Striving for green recovery, EU adds lithium to critical materials list.

BNEF updated Li-ion battery demand outlook (June 2020)

Source: Bloomberg New Energy Finance [BNEF]

Benchmark Mineral Intelligence lithium demand v supply forecast 2020

Source: Benchmark Mineral Intelligence

2019 to 2030 'battery' demand increase forecast for EV metals as the EV boom takes off

Source: Courtesy BloombergNEF

Benchmark Mineral Intelligence - Simon Moores's - forecasts

Source: Benchmark Mineral Intelligence Twitter

Lithium market and battery news

On August 26, The Korea Herald reported:

EV fires with Chinese batteries expose technology gap... GAC’s Aion S sedans are powered by CATL’s NCM (nickel cobalt manganese) 811 batteries, which contain 80 percent nickel, 10 percent cobalt and 10 percent manganese inside cathodes -- one of the four key components of lithium-ion batteries including anodes, electrodes and separators... The higher the ratio of nickel inside cathodes, the greater energy density lithium-ion batteries achieve, but less stable they become... “The yield rate of CATL’s battery factory is reported at 45-55 percent, meaning that almost half of CATL’s batteries are defective,” an industry source said. “There could have been an issue when CATL tried to increase the ratio of nickel.”

On September 3, Barron's reported:

Another EV stock is coming. This time it’s all about the batteries. Solid-state lithium battery maker QuantumScape is becoming a publicly traded entity through a merger with special purpose acquisition company, or SPAC, Kensington Capital Acquisition (ticker: KCAC).

On September 9, Simon Moores wrote on LinkedIn:

The rise of the battery megafactories has been fascinating to watch. From the early days of 2015 when we were discussing the prospect or up to 3 super sized lithium battery plants...We now have 167 of these Megafactories in the pipeline to 2028 with a cumulative capacity of 2697GWh. Benchmark Mineral Intelligence data. Not all will make it. But this is what’s in the pipeline for being planned, constructed and built. Around half of these are already in production.

On September 10, Inside EVs reported:

Ex-Tesla engineer says solid-state batteries are a 'False Hope'. We know that because of a white paper he released with the other co-founder of Sila Nanotechnologies, Gleb Yushin. In that document, both men also predict that the future lies in lithium-ion. They believe it will reach a price of $50/kWh in the next five to ten years. That would happen with the help of two new kinds of cathodes, based either on metal fluoride or sulfur. The white paper says that pairing them with silicon anode may lead to the $50/kWh price by 2030 and $30/kWh by 2040. Also, according to the paper, solid-state batteries face several technical difficulties that would be very challenging to overcome. Apart from dendrite formation, their solid electrolytes would be prone to micro-cracking, for example.

On September 11, Mining Weekly reported:

Battery metals to boom despite widespread Covid-19 disruption. Battery metals, including lithium, vanadium, copper, cobalt, nickel, lead and graphite, are increasingly used in larger-scale battery storage products and in components used to transmit and distribute electricity. In terms of EVs, the focus is on electric-only EV development and roll-out. The progression of the EV will also shift development away from the concept car and towards the mass production of EVs for daily use. “All these will be enormous drivers of the demand for lithium, cobalt, nickel and vanadium, but above all copper.”

The battery boom will lead to a battery metals boom

Source

On September 11, Mining.com reported:

Eight mines the size of Glencore’s Katanga needed to meet battery metals demand – report. Nearly 800 kt LCE of additional lithium would need to come online in the next five years to meet the needs of the battery sector, a new report by Wood Mackenzie states... electric vehicle market requiring over 1 million tonnes LCE in 2025. Similarly, the report states that the cobalt market would have to double by 2025. “To put this into perspective, to meet the incremental demand from EVs through 2030, an additional eight mines the size of Glencore’s Katanga would be required,” the document reads. “Wood Mackenzie’s AET brings electric vehicle [EV] uptake forward by ten years and sees EVs make up around 40% of passenger car sales by 2030. This considerably accelerates the demand for batteries and the raw materials that go into them.”

On September 15, The Korea Herald reported:

LG Chem adds Amazon to battery customer list. The Korean battery maker will supply the same cylindrical batteries that power Tesla electric vehicles to Amazon’s automated robots in operation within the retail giant’s warehouses starting from 2023.

On September 17, Reuters reported:

LG Chem plans to separate battery business as electric cars take off. LG Chem said the new business, to be launched in December, aims to achieve a revenue of 30 trillion won ($25.5 billion) or more in 2024, from an expected revenue of 13 trillion won this year. The new wholly owned subsidiary, tentatively named “LG Energy Solutions,” will include LG Chem’s small batteries used in smartphones and laptops and its energy storage systems, as well as its car batteries.

On September 17, Investing News reported:

Simon Moores: What to expect at Tesla’s Battery Day and beyond. But Tesla’s ambitions and future plans will not come to pass without hurdles. “Raw material availability should raise the alarm bells for Tesla considering their rapid Gigafactory expansions in Berlin, Shanghai and Austin,” Moores said. In fact, unlike when the Gigafactory 1 in Nevada started, there are now 167 more gigafactories or battery megafactories competing for the same raw materials, as per Benchmark Mineral Intelligence data. “Today, Tesla’s sway of industrial power has diminished somewhat, both with the competition of new battery plants being established and a lack of new raw material in the pipeline that will be available.” For Moores, both quantity and quality of lithium, cobalt and nickel will be Tesla’s biggest hurdles to get right. Graphite anode and manganese will also come with their own sourcing challenges. “There is no doubt now that regardless of how well Tesla’s vehicles continue to sell, raw material availability will be the primary slowing factor on the company scaling.

On September 22, Reuters reported:

Tesla's (TSLA) Musk sees no immediate boost from 'Battery Day' tech unveil. Tesla Inc CEO Elon Musk said improvements to be unveiled at the electric-vehicle maker's "Battery Day" event would not reach "serious high-volume production" until 2022. Tesla expects significant shortages in 2022 and beyond, Musk cautioned, adding it intended to increase cell purchases from Panasonic 6752.T, South Korea's LG Chem 051910.KS, China's CATL 300750.SZ, and possibly other partners.

On September 23, Morningstar reported:

Falling lithium prices provide buying opportunity... We appreciate Tesla's goal to secure its raw materials supply. However, we disagree with the claim that Tesla will be able to supply all its own lithium. Finally, we view Tesla's 2030 production target, of three terawatt hours of battery capacity by 2030, as a positive for lithium demand. This translates to roughly 2.7 million metric tons of lithium demand, which is 9 times 2019 lithium demand. This is also 800,000 metric tons above our global 2030 lithium demand forecast of 1.9 million metric tons, which includes Tesla and other battery producers. Even if Tesla was to produce some lithium, we think greater demand would sop up the new supply, leaving our long-term lithium price forecast intact."

Note: You can view the official Tesla Battery Day video here. Here are some of my notes and my quotes related to Tesla planning to mine lithium in Nevada. Tesla also say they plan a nearby cathode facility to be fed by EV battery metals (not metal sulphates). Also it was a bit strange that a lithium deal with Piedmont Lithium [ASX:PLL] (PLL) was announced on Battery Day.

The Tesla lithium facility would produce a lithium metal using a new Tesla process (acid free, saline extraction from lithium clay ore) at a 33% reduced cost and it would be a 100% electric facility co-located with the Tesla cathode plant. Or as Tesla says we can use "table salt to extract the lithium from the ore... Just mix salt with the clay, add water, and the salt comes out with the lithium". Musk does not say how he plans to separate the salt.

On September 24, Reuters reported:

Tesla's Nevada lithium plan faces stark obstacles on path to production. Tesla Inc's plan to produce lithium for electric vehicle batteries close to its Nevada Gigafactory faces stark challenges from the outset, including an onerous permitting process, uncertain access to water and questions about unproven methodologies. Chief Executive Officer Elon Musk told shareholders on Tuesday Tesla has secured rights to 10,000 acres in Nevada where it aims to produce lithium from clay deposits using a process developed internally. In Nevada, Tesla plans to mix clay with table salt and then add water, which it says causes a reaction where the salt would leach out with lithium, which can then be extracted. The plan drew backlash almost immediately, with critics describing Musk's plan as too simplistic and light on details. "If producing lithium in commercial amounts at battery quality grades from clay was feasible, why isn't it already being done?" said Berry. Any lithium project from Tesla would require an intensive application process for necessary permits that could stretch on for years.

Lithium miner news

Albemarle (NYSE:ALB)

On September 2, Seeking Alpha reported:

Albemarle to partner with DoE on lithium research projects. The company says the first project, in collaboration with Argonne National Laboratory, will conduct research to enable the "development of a novel technology" that eliminates steps in the current process by going directly from lithium chloride to lithium hydroxide. The second project, in partnership with Pacific Northwest National Laboratory, will "accelerate the commercialization of high-energy cathodes for extended battery life in the electric vehicle application.

On September 15, Seeking Alpha reported:

Albemarle Investor Presentation - Slideshow. Albemarle's lithium strategy now is "to adapt capacity to demand".

On September 22, Albemarle announced: "Albemarle Corporation to release third quarter 2020 earnings results on Wednesday, Nov. 4, 2020."

Sociedad Quimica y Minera S.A. (NYSE:SQM)

No news for the month.

Investors can read the company's latest presentation here.

Jiangxi Ganfeng Lithium [SHE:002460] [HK: 1772], Mineral Resources [ASX:MIN], International Lithium Corp. [TSXV:ILC] (OTCPK:ILHMF)

4-traders reported Ganfeng Lithium had news of an executive resigning and of placing new H shares on the HKSE.

(Chengdu) Tianqi Lithium Industries Inc. [SHE:002466]

On August 30, 4-traders reported: "China's Tianqi Lithium posts $101 mln net loss in H1 as prices plunge." Highlights include:

  • "Tianqi makes 697 mln yuan H1 loss, near low end of guided range.
  • Total losses in past 12 mths hit $1 bln as lithium prices slump.
  • Firm struggling to repay debt taken on to fund SQM stake buy."

Livent Corp. (LTHM)[GR:8LV] - Spun out from FMC Corp. (NYSE:FMC)

No significant news for the month.

Orocobre [ASX:ORE] [TSX:ORL] (OTCPK:OROCF)

On August 28, Orocobre announced: "Orocobre Limited announces FY20 results, Memorandum of Understanding with Prime Planet Energy & Solutions and equity raising." Highlights include:

  • "Promising FY20 full year result despite significant pricing and COVID19 impacts.
  • Olaroz Stage 2 to deliver a significant reduction in cash costs and step up in volumes.
  • Orocobre has entered into a non-binding MOU with PPES, a joint venture between Toyota Motor Corporation (Toyota) and Panasonic Corporation (Panasonic), for a sizeable long-term contract which would, if a binding agreement is executed on the anticipated terms, minimise Orocobre's exposure to spot prices and significantly improve the customer mix.
  • The Equity Raising delivers financial flexibility to support Stage 1 ramp up and Stage 2 development through a range of operating and pricing environments, as well as capital for future growth initiatives."

FY20 Results

  • "... COVID-19 related operational restrictions throughout the second half of this year have impacted costs, production volumes and Olaroz Stage 2 Expansion activities, and continue to do so.
  • Statutory consolidated group net loss of US$67.1 million for FY20 is down from a profit of US$65.4 million in the previous corresponding period [PCP]. The underlying net loss after tax for the group is US$22.0 million after adjustments for impairment, foreign exchange and other one-off items."

Upcoming catalysts include:

  • H1 2021 - Olaroz Stage 2 (42.5ktpa) commissioning.
  • H1 2021 - Naraha lithium hydroxide plant (10ktpa) commissioning (ORE share is 75%).

You can read the latest investor presentation here.

Galaxy Resources [ASX:GXY] (OTCPK:GALXF)

On August 27, Galaxy Resources announced: "2020 half year financial report." It includes an FY 2020 net loss of $22.191 million.

Upcoming catalysts include:

2020 - Construction progress at SDV. James Bay FS.

2022 - SDV Stage 1 production commencement target.

Investors can read my recent article "Galaxy Resources Plan To Be A 100,000tpa Lithium Producer By 2025", and my CEO interview here, and the latest company presentation here.

Pilbara Minerals [ASX:PLS] (OTC:PILBF)

On August 27, Pilbara Minerals announced: "Full-year financial report June 2020." Highlights include:

  • "Results for the 2020 Financial Year [FY2020] reflected soft market conditions in China and weaker customer demand for lithium raw materials.
  • Moderated production strategy deployed from September 2019 Quarter onwards to preserve cash and working capital, delivering an improved cash gross margin in the second half of FY2020 of $13.7M despite further deterioration in price received (first half FY2020: cash gross margin loss of $1.8M).
  • EBITDA loss of $33.9M before non-cash inventory write-down of $21.3M, depreciation and amortisation of $16.4M and net financing costs of $27.6M.
  • Statutory net loss after tax of $99.3M.
  • 90,768 dry metric tonnes [dmt] of spodumene concentrate produced, with 116,256 dmt shipped following draw down from existing stockpiles, underpinning sales revenue of $84.1M.
  • Significant improvement in lithia recoveries achieved, supporting lower unit cash operating costs, which are now trending towards a target of US$320-350 dmt CIF China, when combined with increased plant run time.
  • $111.5M equity raise (before costs) completed to strengthen balance sheet.
  • 30 June 2020 cash balance of $86.3M and working capital of $91. 6M.
  • Binding commitments received in July 2020 from BNP Paribas and Clean Energy Finance Corporation [CEFC] for a new US$110M secured debt facility to refinance the existing Nordic Bond facility, reduce funding costs and improve financing cashflows."

On September 15, Pilbara Minerals announced: "Financial close achieved for new low-cost US$110m debt facility to replace existing Nordic Bond."

Upcoming catalysts:

2021 - Stage 2 commissioning timing to depend on market demand.

Investors can read my article "An Update On Pilbara Minerals", and an interview here.

Altura Mining [ASX:AJM] (OTC:ALTAF)

On September 24, Altura Mining announced an Operations and Corporate Update. Highlights include:

  • "Commercial levels of production maintained with September quarterly production expected to be in the range of 43,000-45,000 wet metric tonnes [WMT].
  • Four shipments, totalling approximately 48,000 dry metric tonnes (dmt) sold to long-term offtake partners.
  • Discussions ongoing to optimise debt structure and strengthen overall balance sheet."

Investors can read a company presentation here.

AMG Advanced Metallurgical Group NV [NA:AMG] [GR:ADG] (OTCPK:AMVMF)

No news for the month.

Upcoming catalysts:

2020/21 - Progress on lithium projects in Zeitz, Germany and in Zanesville, Ohio, both in the planning stage.

?2021--> - Stage 2 production at Mibra Lithium-Tantalum mine (additional 90ktpa) planned.

Neometals (OTC:RRSSF) (Nasdaq:RDRUY) [ASX:NMT]

No significant news for the month.

Lithium Americas [TSX:LAC] (LAC)

On August 27, Lithium Americas announced:

Lithium Americas and Ganfeng Lithium complete the Caucharí-Olaroz JV transaction... On closing, Ganfeng Lithium subscribed for new shares of Minera Exar for cash consideration of US$16 million increasing its interest from 50% to 51%, with Lithium Americas owning the remaining 49%. In addition, Lithium Americas received US$40 million in cash from the proceeds of a non-interest-bearing loan from Ganfeng Lithium... “Caucharí-Olaroz is approximately 50% complete and represents one of the few large-scale lithium operations currently in development globally. We are coordinating closely with the Province of Jujuy to ensure we operate responsibly and safely as we gradually restart construction activities. The health and safety of our workers and the communities close to the project is our top priority.”

Upcoming catalysts:

  • 2020 - Cauchari-Olaroz plant construction.
  • Q4 2020 - Thacker Pass DFS.
  • ~Mid 2021 - Cauchari-Olaroz lithium production to commence and ramp to 40ktpa.
  • 2023 - Possible lithium clay producer from Thacker Pass Nevada (full ramp by 2026). Also any possible JV announcements prior.

NB: LAC owns 49% of the Cauchari-Olaroz project and partners with Ganfeng Lithium (51%).

Investors can read my article "An Update On Lithium Americas."

Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) - Price = US$37.22.

The LIT fund was slightly lower in September. The current P/E is 34.8. My model forecast is for lithium demand to increase 3.4 fold between 2020 and end 2025 to ~1.1m tpa, and 6.2x this decade to reach ~2.3m tpa.

Source: Seeking Alpha

Conclusion

September saw lithium prices mixed but remaining very low. Several lithium miners including leader Albemarle have reported making a loss. This leads to the fact that lithium prices must soon rebound or there will be less and less lithium supply as miners cut supply. Meanwhile demand forecasts continue to rise significantly as the EV boom accelerates led by Tesla.

Highlights for the month were:

  • EU sounds alarm on critical raw materials shortages. The EU estimates that to meet its climate neutrality goal, it will need up to 18 times more lithium and five times more cobalt in 2030. The forecasts rise to 60 times more lithium and 15 times more cobalt by 2050.
  • Striving for green recovery, EU adds lithium to critical materials list.
  • BMI - Simon Moores - We now have 167 of these Megafactories in the pipeline to 2028 with a cumulative capacity of 2697 GWh.
  • Ex-Tesla engineer says solid-state batteries are a 'False Hope'.
  • Battery metals to boom despite widespread Covid-19 disruption.
  • WoodMac - Nearly 800 kt LCE of additional lithium would need to come online in the next five years... sees EVs make up around 40% of passenger car sales by 2030.
  • LG Chem plans to separate battery business as electric cars take off.
  • Simon Moores - "There is no doubt now that regardless of how well Tesla’s vehicles continue to sell, raw material availability will be the primary slowing factor on the company scaling."
  • Tesla expects significant (battery) shortages in 2022 and beyond. Tesla's Nevada lithium plan faces stark obstacles on path to production.
  • Morningstar - Falling lithium prices provide buying opportunity.
  • Albemarle to partner with DoE on lithium research projects such as methods for going straight from lithium chloride to lithium hydroxide, and high-energy cathodes for extended battery life for EVs. Albemarle's lithium strategy now is "to adapt capacity to demand."
  • Tianqi Lithium posts $101 mln net loss in H1 as prices plunge.
  • Orocobre has entered into a non-binding MOU with PPES, a JV between Toyota Motor Corporation (TM) (Toyota) and Panasonic Corporation (OTCPK:PCRFY) (Panasonic).
  • Galaxy Resources reports an FY 2020 net loss of $22.191m.
  • Pilbara Minerals reports a Statutory net loss after tax of A$99.3m.
  • Lithium Americas and Ganfeng Lithium complete the Caucharí-Olaroz JV transaction.

As usual all comments are welcome.

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Disclosure: I am/we are long GLOBAL X LITHIUM ETF (LIT), NYSE:ALB, JIANGXI GANFENG LITHIUM [SHE: 2460], JIANGXI GANFENG LITHIUM [HK: 1772], SQM (NYSE:SQM), ASX:ORE, ASX:GXY, ASX:PLS, ASX:AJM, AMS:AMG, TSX:LAC, TSXV:NLC, ASX:AVZ, ASX:CXO, ASX:NMT, TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.

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