Battery minerals will be a hot topic at Diggers & Dealers. Ahead of Australia’s leading mining forum, JESSICA GABITES spoke to two local lithium leaders about why the market is as strong as ever, despite recent jitters.
When a bearish Goldman Sachs report came out last month warning the lithium bull market was over, the headlines sent the market into a spin.
Lithium stocks tumbled in the wake of the global investment firm’s predictions, which were echoed by financial services company Credit Suisse, the latter predicting a lithium surplus by 2025.
However, despite the controversial opinions, industry experts still believe the lithium outlook is bright and the enormous demand for the battery mineral will continue for many years to come.
Managing Director of lithium exploration and development company Winsome Resources Chris Evans, who recently presented at the Fastmarkets Lithium Supply and Battery Raw Materials 2022 convention in Phoenix, Arizona, said positive sentiment for the commodity was reflected at the event.
“The view on lithium is still very strong,” Chris explains.
“Despite what Goldman Sachs claims, no one in the industry knows how supply can meet the demand. About 300,000 tonnes of lithium carbonate equivalent needs to be brought online every year to meet the predicted demand,” he says.
“As many industry experts including major lithium producers have continued to say in recent weeks, comments from the likes of Goldman Sachs and Credit Suisse are based on assumptions about Africa and China flooding the market while prices are high. The fact is that offtake partners are looking to more trusted and stable jurisdictions like Canada and Australia to meet their demands.”
Winsome Resources has projects in Quebec, Canada and is focused on high quality spodumene concentrate, suitable for conversion across multiple battery applications. The company is aiming for a maiden resource at its flagship project Cancet next year, with exploration activities taking place there and at several more of the company’s Quebec projects.
“While prices will no doubt settle to more sustainable levels, the fact is that current predictions maintain that seven to nine times more lithium is needed by 2030 to meet global demand for battery manufacturing,” Chris explains.
“Demand still far outweighs supply and I envisage the ‘new normal’ in minimum pricing for lithium products will be well above the lows we saw in the last lithium downturn.”
While it is used to fuel our mobile phones, laptops and other devices, what’s really driving interest in the world’s lightest metal is a surging demand for electric vehicles and battery power storage.
Although lithium gets a lot of airplay, there is a variety of other metals which are also critical to the production of EVs, including cobalt, nickel, copper, zinc and graphite.
Last month, countries including the United States, Canada and Australia formed The Minerals Security Partnership, focused on securing the supply of critical minerals, including lithium, nickel and cobalt.
Meanwhile, US President Joe Biden announced a $3 billion investment focused on boosting the US supply of lithium ion batteries through a bipartisan infrastructure package. Biden had previously announced a goal of having EVs make up over half of all vehicle sales by 2030.
Lithium is currently on the US and Canada’s critical mineral list. In 2021, Canada announced its goal of 100 per cent emission vehicle sales by 2035.
“With five projects in Quebec, Winsome is perfectly placed to play a leading role in the province’s internal battery materials supply chain,” Chris says.
“Quebec is at the forefront of the North American push to develop its own EV battery supply chain, with lithium being one of the key base ingredients needed to make this happen.
“From Winsome’s perspective, both the Canadian and US governments have committed to shoring up domestic and allied critical mineral supplies – and from Joe Biden’s perspective, that allied supply is heavily focused on Australian and Canadian companies.”
Closer to home, the Australian Government recently announced a proposal to cut the tariffs and remove fringe benefits tax on electric cars from 1 July 2022, which would make EVs more accessible for the general population.
Chris’ positive outlook for lithium is echoed by Ron Mitchell, Managing Director of Global Lithium Resources.
“Goldman Sachs is entitled to its opinion, however as an insider and having worked in this industry for more than 11 years, I have never observed such strong demand fundamentals, which suggests the market is only getting started,” he explains.
“Lithium is classified as a critical mineral and accordingly, will be one of the most strategic commodities over the next 100 years. Lithium has few substitutes as it relates to the energy transition for e-mobility applications and will continue to dominate the rechargeable battery space for many decades to come.
“Global Lithium is focusing on developing two advanced, highly prospective lithium exploration assets located in two of the most mining friendly jurisdictions on the planet – the Pilbara and Goldfields regions of Western Australia.”
On the back of a collective 80,000m RC drilling campaign, the company hopes to deliver an upgraded mineral resource to the market by the end of the year.
Battery minerals is expected to be a hot topic at this year’s Diggers & Dealers Mining Forum, which runs from August 1 to 3, 2022, in Kalgoorlie.
“Critical minerals such as lithium will absolutely feature strongly at Diggers & Dealers,” Ron explains.
“Governments from around the world have recently been visiting Western Australia, forging relationships between allied and likeminded nations around future critical minerals supply security.
“If you consider the strong fundamentals and physical market pricing for a range of battery metals, I expect the investment appetite will be significant. It’s a great opportunity to buy into some brilliant projects which are significantly undervalued.”
According to Benchmark’s Lithium Forecast, Australia is expected to mine nearly half of the world’s lithium and WA has been voted the most attractive mining jurisdiction in the world for mining investment by the Fraser Institute (April 2022).
Ron says WA has proven its ability to efficiently explore, develop and mine high quality lithium resources to become the leading exporter of the commodity in the world.
“WA supplies about 50 per cent of the world’s total lithium in the form of spodumene concentrate and is the most recognised and well branded lithium jurisdiction in the world,” he says.
“The State is stable politically and geologically, has great infrastructure and is close to the major battery markets.
“Lastly WA is host to a combination of world renowned sophisticated technical and commercial expertise. The communities of WA understand and recognise the importance of the resources sector and accordingly are generally supportive of mining projects.”