Paladin Energy was the company making its totally predictable departure, driven into administration by a combination of excessive self-confidence (hubris) and a failure to understand that uranium supply entered glut conditions a decade ago and remains there today.
Volvo, the once famous Swedish car maker which is now Chinese controlled, was the lithium star with a bold forecast that it will only be producing electric and electric-hybrid cars from 2019 which is less than two years away.
Other telltale signs were blowing in the breeze all week and it would be a very brave company manager to believe that the trend will reverse any time soon, if ever.
France, in a typically Gallic fashion of doing things its own way, joined Volvo by outlining a plan to end the sale of petrol and diesel cars by 2040.
The writing is clearly on the wall with the changes underway in the energy world just the start of a powerful shift that will be painful for some energy producers and consumers – and a money-making opportunity for others.
Mistakes will be made by both sides of the change shift with some companies and countries moving too soon and others moving too late.
South Australia and Victoria are Australian states which have moved too soon down the renewable energy road and are paying a hefty price for the premature closing of coal-fired power stations.
A late dash by South Australia to save itself from economic catastrophe by embracing a lithium battery storage solution might, with a bit of luck and a stiff following breeze, save the day, but whatever happens the state is a case study in bad energy planning.
Paladin is the flipside of the same story, moving too late by sticking with a high cost uranium project which was unable to compete with cheap supplies of the nuclear fuel flowing out of countries such as Kazakhstan and Canada.
Lessons abound in what’s happening as the once low-key renewables energy sector led by solar and wind gathers believers and attracts the most important element required by any business which hopes to succeed; investment capital.
The flow of money is always the best guide for picking winners and losers in business. Good ideas attract capital. Bad, or outdated ideas, suffer capital withdrawal, or the ultimate sanction: closure.
What happens next is as predictable as the failure of Paladin, a company which had a share price of more than A$10 in 2007 but now has no share price at all.
On the losing side of the energy revolution will be high cost producers of yesterday’s fuels. Low cost producers of coal and uranium will survive, but they will become the niche not the norm. Low profit players in the energy market, struggling to raise capital and battling to post profits.
The winners will be today’s niche producers of energy metals such a lithium, cobalt, graphite and nickel.
Like two ships steaming towards each other a cross-over will occur, not immediately, but inevitably because of that critical capital-supply factor and mounting environmental pressure.
Perhaps the best example to capital being freely available for the new generation of energy metals was a decision of the Clean Energy Finance Corporation, an Australian government agency, to invest in a recent capital raising by lithium project developer, Pilbara Minerals.
That investment came within days of the Volvo announcement of its shift to electric cars, France going a step further, and Neometals, a lithium producer announcing that it had scored a 12% increase in the price of lithium sold to a Chinese client.
Not everyone will agree with how Dryblower is seeing the future. True believers in uranium will be annoyed that they’re being lumped into the same category as Paladin, but the test of their position is to prove they can raise the capital to fund for their projects – and that their projects can be profitable.
And all this before what could be the biggest change of all in the world of mining capital; the entry of the so-called “ethical funds”, those funds which have strict guideline as to where they can invest, and where not, such as no coal, uranium, tobacco of other forms of pollution.
New energy is different and the metals which lies at its heart, such as lithium, cobalt and graphite, are rare examples of mining which is acceptable to ethical funds.
Following the money has been a maxim that has always believed in, and the way money is moving today – being withdrawn from old energy and invested in new – is the best indication as to where future profits will be found. Try to be there, if you can.
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