Ann: Quarterly Activities/Appendix 4C Cash Flow Report, page-121

I 'borrowed' the below link from the peer site. I will thank the poster in due course. See what can be achieved by working together not against each other

From the below article it can clearly be observed that South Korean battery companies in general find it hard to release their cash due to current uncertainties.

In my opinion we need to be very careful in blaming the AUZ board for not obtaining finance. It seems from the below at least that it is a widespread issue.

Always easy to blame someone else. Maybe if we knew everything the board has not done that bad after all?

It is quite impressive in my opinion that we are still talking to LG Energy Solution!

Maybe not so good a time for a board spill?

I will leave that up to individual investors.

Please read in its entirety as all of it seems relevant. I have highlighted a couple of sentences.

All in my opinion and not investment advice.


https://hotcopper.com.au/posts/64611376/single

ft.com

Asianbattery makers jeopardise raw materials access by delaying deals

ChristianDavies and Song Jung-a in Seoul and Nic Fildes in Sydney November 5 2022

6-7minutes

Receivefree Energy sector updates

We’llsend you a myFT Daily Digest email rounding up the latest Energy sector newsevery morning.

Someof Asia’s biggest battery makers are jeopardising their access to sufficientraw materials by holding back on direct investments in producers in Australiathat supply them.

Industryinsiders told the Financial Times that more deals need to be signed in orderfor South Korean companies — including LG Energy Solution, SK On and SamsungSDI — to secure supplies of minerals to make electric-vehicle batteries,including graphite, lithium, nickel and cobalt.

“Weare not seeing anywhere near enough deals being completed,” said Ross Gregory,executive director of electric vehicle consultancy New Electric Partners andchair of the Australian Chamber of Commerce in Korea. “It’s inevitable that theKorean cell makers need to invest more to secure supply.”

Accordingto Benchmark Mineral Intelligence, at least 384 new mines for critical mineralswill be required to meet global battery demand by 2035, with demand for lithium-ionbatteries projected to grow six-fold by 2032. South Korea produces a quarter ofthe world’s EV batteries and is an important partner for Washington, as theBiden administration works to reduce its dependence on China.

Butdespite the US rolling out new tax breaks under the Inflation Reduction Act toboost domestic production and encourage producers like South Korea to work withfree trade partners such as Australia, the necessary dealmaking between thelatter two countries is not accelerating.

TimBush, a Seoul-based EV battery analyst for UBS, said Korean battery makers werebeing cautious because of lingering uncertainty over how the act will beimplemented. He noted the US government had not yet spelt out precisely whatdegree of Chinese involvement in an individual battery’s supply chain woulddisqualify it from receiving valuable tax credits.

“TheKorean battery firms are waiting to see what’s allowed and what’s not allowedbefore pulling the trigger on major investments,” said Bush. “For example, ifChinese processors are not going to be allowed to be involved even in projectsoutside China, the Koreans will have to rethink their strategy.”

Thecritical minerals needed to meet global battery demand by 2035

Mostcritical minerals mines in Australia are still operated by small companiesseeking joint ventures or direct equity investments in individual projects.However, Korean battery makers have been hesitant to sign deals that theyperceive as risky.

“Weare currently evaluating such investment requests but we are trying to becareful. These requests often delay the signing of our long-term supplycontracts with them,” said a Korean battery executive.

Koreanexport credit agencies bear the scars of failed mining ventures in the past.“Our state-run credit agencies often provide funding for developing overseasmines, but these projects are very risky as mineral prices are volatile,” saida Korean energy ministry official.

“Thebattery companies invest in some mining projects if needed, but they remainreluctant to invest much given the growing need to build their own battery andbattery materials plants,” the official added.

AnAustralian banker who specialises in mining deals said Korean companies and lenderswere being too cautious.

“Thereis a frustration around Korean involvement in Australian mineral projectsbecause of a clash with the wheeler-dealer culture of Australian exploration,”said the banker. “There is a real danger of Korea being left behind.”

Thereare some deals going ahead. Last month, SK On acquired a 10 per cent stake inAustralia’s Lake Resources, a long-established lithium developer, as part of a10-year lithium supply deal.

World’sbiggest EV battery manufacturers

Gregory,who advised Lake Resources on its deal with SK On, said part of the Koreanbattery makers’ hesitancy was because they had backgrounds in the chemicalssector rather than in mining.

Henoted that Posco, the Korean steelmaker, had been much more active in makinginvestments in the battery supply chain than LG, SK or Samsung due to itshistory of investing in iron ore and other projects.

Poscoand LGES were both backers of Queensland Pacific Metals, which is developing anickel and cobalt processing plant in Townsville. Last month, Queensland signeda major investment deal with General Motors, a sign that US carmakers areramping up their interest in the Australian minerals supply chain.

Gregoryurged the Australian government to step in and finance more deals, including bytaking direct stakes in projects.

“What’smissing is the government support — China does it, the US is starting to do itbut Australia doesn’t yet do enough,” said Gregory.

“A$20bn-A$30bnshould go into sponsoring not only the exploitation of upstream resources butalso the establishment of a manufacturing industry to process those materials.The industry needs a leg up.”

Butgiven the global scramble to secure resources, some executives believe it isonly a matter of time before Korean battery companies become more aggressive.

Andrew Penkethman, chief executive of ArdeaResources, whose Kalgoorlie Nickel Project hosts the largest nickel-cobaltresource in Australia, said he could afford to wait for the right deal.

“We’ve seen a marked increase in engagement frompotential strategic partners since the Inflation Reduction Act, but people arestill working out how to go about it,” he said.

He said he expected Korea’s battery makers to comearound to the idea that direct investments in projects would be necessary inorder to secure long-term supply.

“We will see an acceleration in deals beingcompleted in the lithium-ion battery sector and ourpatience will be rewarded.”