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Kiran Morzaria, CEO of Cadence Minerals #KDNC talks the Amapá Iron Ore Project on Vox Markets
Lithium production won’t be able to keep up with longer-term demand
While gold has lured investors from battery metals in the short-term, lithium producers and explorers alike are pointing out current glut fearmongering in the lithium space does not account for longer-term demand, which will be driven by increasing adoption of electric vehicles and energy storage.
Lithium Australia (ASX: LIT) managing director Adrian Griffin told Small Capsthat conventional lithium production will not be able to keep up with demand by 2030.
He said the current fearmongering and analyst claims that lithium is heading towards a glut amid a rapid increase in hard rock production and a slower than expected uptake of electric vehicles does not take into account longer-term market fundamentals.
Mr Griffin added that the current oversupply situation is a temporary aberration.
Managing director and chief executive officer of Pilbara Minerals (ASX: PLS)Ken Brinsden agrees.
Speaking with Small Caps, Mr Brinsden said the lithium sector was undergoing a “rebalancing period” and the “market upset” today will be “short-lived”.
China is the only country that processes lithium into lithium carbonate and lithium hydroxide chemicals required for the battery sector.
Mr Brinsden said the current rebalancing period was a necessary stage so that China could move ahead with refining its processing technologies and building more capacity.
While China is refining its technologies, Mr Brinsden said the rest of the world has continued to “go nuts” for lithium – particularly Korea and Japan which are looking to build downstream lithium processing plants.
New chemical manufacturing capacity will be coming online next year, and electric vehicle adoption continues to grow – creating more lithium demand.
Mr Brinsden pointed out that only five years ago the lithium sector was a boutique market with most of the material funnelled into ceramics, medicine and minor end-uses.
He added that Australia essentially only has four base-load mines and even with planned expansions these mines will struggle to meet even Western Australia’s mounting requirements.
Meanwhile, lithium brine explorer BMG Resources (ASX: BMG) managing director Bruce McCracken also shares the sentiment that long-term demand drivers for the material are “becoming increasingly evident”.
“Lithium is perfect for batteries – it is light and energetic,” he added.
Mr Griffin pointed out the current lithium glut concerns were a result of “misinformation, misinterpretation and misunderstanding”.
“If global demand for lithium-ion batteries grows beyond the pundits’ wildest expectations, which it seems it may, then conventional sources of lithium supply simply will not cope with demand.”
He said to fill this gap, unconventional lithium sources will be needed.
Electric vehicles drive demand
According to Mr Griffin, about 3.5 million tonnes of lithium carbonate equivalent will be required annually by 2030 for use in electric vehicles alone, with about 50 million EVs anticipated to be on the world’s roads.
He pointed out this demand is underpinned by legislative requirements in the EV space, which require all or most vehicles on the road to be electric by 2030 in numerous countries throughout Europe and China.
Mr McCracken added that McKinsey’s latest research reveals that EV demand will “significantly ramp up” between now and 2025.
“This is a trend we see fuelled by a continuous decline in battery costs and higher energy density,” he said.
Energy storage and electronics pressure industry further
In addition to EV driven demand, the industry will be pressured for more lithium as energy storage and electronic products sectors also continue to grow.
When looking at meeting these global lithium requirements, Mr Griffin said current mining and planned projects and expansions will not meet consumption needs longer term.
He pointed out that 200,000tpa of lithium is currently produced and output from these mines will dwindle as they mature.
“New mines targeting lower grades can fill demand gaps, but alternative sources of lithium may prove more attractive as genuine supply shortages put pressure on conventional production.”
Lithium Australia plans to help fill this gap with its battery recycling and proprietary processing technologies that allow the company to develop lithium chemicals from materials generally deemed as waste including spent batteries, lithium mine tailings and other lithium minerals including lepidolite and petalite.
Meanwhile, lithium brine explorer BMG is about to commence drilling at its joint venture in in Northern Chile, with Mr McCracken pointing out and brine operations offer “several advantages” over hard rock including reduced development times and costs.
There are now more electric vehicle charging points than petrol stations in UK
The latest figures have revealed there are 9,300 EV charging stations in the UK compared to 8,400 fuel stations
Electric car owners now have almost 1,000 more places to publicly charge their vehicle than petrol and diesel owners have to fill their tank, in a landmark tipping point for motorists.
The latest figures have revealed there are 9,300 EV charging stations in the UK compared to 8,400 fuel stations.
The crossover has taken place a year before Nissan’s 2016 prediction of August 2020 – a result of the fast-improving infrastructure for electric vehicles in the UK.
Sales of pure EVs are up by 70 per cent this year as buyers take advantage of government grants and perks such a road tax exemption and, from 2020/21, no company car tax.
In fewer than 100 years since Britain’s first fuel station opened at Aldermaston in Berkshire in November 1919, the number of forecourts has peaked, declined and been overtaken by charging stations designed for battery-powered cars.
Almost 80 per cent of UK petrol stations have closed since 1970, while the number of electric vehicle charging locations has increased from a few hundred in 2011, when Nissan launched its LEAF electric car in the UK, to 9,300 in August 2019, according to the charging platform Zap-Map.
More than 1,600 of these locations provide ‘rapid charging’, where a typical EV battery can be charged to around 80 per cent in under an hour.
Kalyana Sivagnanam, managing director, Nissan Motor (GB) Ltd, said: “Many consumers are saying their next car will be electric.
“That means the industry needs to ensure their desires are met with both the car and how it interacts with the world around it – where they can charge and how convenient that is for them.
“This includes how far the car can travel, what technologies it has, where it can be charged and how convenient it is for them.
“We’ve moved beyond the early concerns of range anxiety with EVs now exceeding the vast majority of customer’s daily driving needs.
“The next challenge is for charging infrastructure to keep pace with the number of EVs on the road, and that the experience of recharging is as enjoyable and effortless as that of all-electric driving.”
According to Zap-Map, the charging point platform, two new rapid charge devices came online every day in the last month.
Almost all UK motorway service stations have charging stations installed, with the majority providing a rapid charge option.
The introduction of the new Ultra-Low Emission Zone (ULEZ) in April 2019, has led to increasing numbers of London drivers looking to zero-emission solutions for their commuter or commercial transport needs.
Transport for London has installed more than 1,000 EV charge points in the last year alone, yet supply of conventional fuel within the capital is becoming scarcer.
There are now just four petrol stations within the Congestion Charge zone – with nearly half as many per car as in the Scottish Highlands.
Transport secretary Grant Shapps has just announced plans to install more than 1,000 public charging points on residential streets.
With most electric vehicle owners only need to charge at home, the UK government has proposed the installation of charging points for EVs in all new housing.
Since Nissan unveiled the first mass-market electric vehicle – the LEAF – in 2010, EV technology has continually improved, with the latest models both affordable and practical for the majority of new car buyers.
As a result, the UK is experiencing unprecedented growth in the demand for battery-powered transport.
In 2019, demand for battery electric vehicles is up by 70 per cent overall, with registrations in July up by 158.1 per cent alone, resulting in a 1.4 per cent market share – the highest monthly market share on record
Cadence Minerals (KDNC) Macarthur Minerals (TSX-V: MMS) says FE Limited Exercises Its Option to Earn in on the Pilbara Tenements for Lithium and Gold.
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the announcement today from Macarthur Minerals (TSX-V: MMS) (“Macarthur”) that FE Limited (ASX: FEL) has elected to exercise its option with Macarthur Lithium Pty Ltd (MLi), a wholly owned subsidiary of Macarthur Minerals, that forms part of the Option Agreement to earn-in up to 75% interest in the Company’s gold, copper and lithium tenements in the Pilbara Region of Western Australia, as previously announced on May 14, 2019.
During the due diligence period FEL’s geological team conducted site visits over the tenements. Macarthur will review and prioritise the tenement portfolio along with the associated exploration expenditure.
Cadence holds approximately 10% of the issued equity interest in Macarthur, which is an Australian mining exploration company focused primarily on iron ore, nickel, lithium and gold in Western Australia. It also has a lithium project in Nevada, USA.
The full release can be found at: https://web.tmxmoney.com/article.php?newsid=7248636579664323&qm_symbol=MMS
This news release is not for distribution to United States Services or for Dissemination in the United States.
– Ends –
For further information:
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Qualified Person
Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.
Forward-Looking Statements:
Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified by their use of terms and phrases such as ”believe” ”could” “should” ”envisage” ”estimate” ”intend” ”may” ”plan” ”will” or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward-looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors. Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward-looking statements.
Mining Journal – Iron ore price to incentivise swing production, says BMO
Current iron ore prices of US$100/tonne should be enough to spark activation of about 60 million tonnes of swing production to “balance the market”, according to BMO, with perhaps 40Mt of that coming from China.
BMO director, equity research, metals & mining – international, Edward Sterck, said a restart of Vale’s stalled 30Mtpa Brucutu mine in Brazil could restore 15Mt of production in the second half of this year. But there was no sign of a restart yet.
Global iron ore production has been impacted in the first half of 2019 by Vale’s dam failure at Brumadinho in Brazil, and the continuing legal issues around Brucutu, as well as weather and fire disruptions affecting Rio Tinto and BHP in Western Australia. BMO says shipping data suggests Rio Tinto and BHP are back on track, but Vale continues to struggle.
A need for 60Mt of swing production – US$6 billion of iron ore sales – could open up opportunities for Australian and other producers, though Sterck suggested to Mining Journal that higher production and earnings were “already baked in” to valuations.
“The iron ore price remains above our forecasts, suggesting upside potential to estimates,” he said.
“The high price should outweigh the supply disruption/shortfall [in the first half].”