23.1.2024 It was a boom that promised fabulous riches for countries with large deposits of these raw materials. It just so happened that Australia found itself, once again, the lucky country with bountiful supplies.
But the recent boom looks to have been something of a bubble, yet another example where enthusiasm and expectations overrode reality. Suddenly, the prices for each of these materials has unravelled in spectacular style...
It's been a common story in resources for centuries. A sudden price hike based upon forecasts of huge demand feeds through to a massive lift in exploration and production until suddenly, everyone realises there's a glut...
It seemed like a sure bet at the time
The dire announcements have been coming thick and fast.
Nickel projects that only recently were given the green light have been put on hold while the value of existing mines are being written down.
Lithium miners, meanwhile, are in a world of pain with many explorers and junior operators facing the prospect either of collapse or the task of looking for something else.
Even established, large scale operators like Liontown and Azure — both of which now are within the orbit of Gina Rinehart — are feeling the heat. Both have been beaten up by investors who have been spooked by the sudden collapse in the price of the raw material as the chart below for lithium carbonate prices graphically illustrates...
Mrs Rinehart late last year built a 19.9 per cent stake in Liontown which she used to thwart a $6.6 billion takeover bid from American giant Albermarle.
While that left Liontown scrambling to raise cash to independently fund development of its massive Kathleen Valley lithium deposit, a banking syndicate including Australia's big four quickly rode to the rescue with a $760 million finance package.
On Monday, however, that financing was pulled, sending Liontown's share price tumbling 21 per cent. At just 94c, it is way below the $3 a share Mrs Rinehart paid last year for the stock, leaving the company's fate and its future in her hands...
Meanwhile, nickel prices this week hit their lowest levels in three years, having halved in the past 12 months, prompting a wave of shutdowns and curtailed expansion plans.
In response to the forecasts of higher demand, Indonesia – with the help of Chinese investment –dramatically increased production, sending prices crashing.
One of the most prominent victims is another iron ore magnate, Andrew Forrest. Just six months ago, his private company Wyloo splashed out $760 million for three mines near Kambalda in Western Australia. This week, he decided to shut them.
The nickel collapse has threatened the viability of BHP's Western Australian nickel operations and just a month ago another producer, Panoramic Resources, was put into the hands of administrators...
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