Ann: Sconi Project Offtake Agreement with SK Innovation, page-284

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Downturn in battery raw materials claims more Australian victims

Melanie Burton
3 Min Read


MELBOURNE (Reuters) - One Australian project to supply materials to the battery sector was put on hold on Friday and another lost its sole customer as a prolonged downturn in prices amid slowing electric vehicle (EV) sales in China darkened the near-term outlook for demand.

FILE PHOTO: An Australian Mines employee walks towards an old nickel mine in Greenvale, Queensland, Australia, that the company is working to restart as part of a plan to produce minerals for electric vehicle batteries. Picture taken April 3, 2019. REUTERS/Sonali Paul/File Photo

Major lithium producer Albemarle, which took control of Australia’s Mineral Resources, moved its Wodgina lithium mine straight to care and maintenance due to “challenging” market conditions.

Also on Friday, an agreement for battery materials mine developer Australian Mines Ltd to supply cobalt and nickel to South Korean battery maker SK Innovation Co Ltd from its Greenvale mine collapsed, with the companies blaming each other for not meeting agreed terms.
Australia has billed itself as a key supplier for minerals critical to future industries like EVs and green power, but developers hoping to add value by moving into battery chemicals production have failed to secure project finance.

“What is happening with these junior battery wannabe companies is a reflection of the current market conditions in that we are at a cyclical low point,” said Reg Spencer of broker Canaccord in Sydney.

“At some point ... Australia is going to have to play a very important role in supplying a quantum of material for EVS given the sheer increase in the volume of material required,” he said, however adding that the downturn could last into late 2020.

SK Innovation as recently as August had confirmed its agreement to purchase 100% of the battery-grade cobalt sulphate and nickel sulphate produced by Australian Mines’ flagship Sconi Cobalt-Nickel-Scandium Project in Greenvale, North Queensland.

Australian Mines was in the process of seeking financing for the mine - planned for start-up in 2022 - on the basis of the SK Innovation deal. Now it says it will continue discussions for offtake agreements with other parties, while also working to secure funding to develop the project.

Australia is the world’s biggest supplier of lithium and has significant nickel and cobalt reserves, all critical to the production of EV batteries.

But China, the world’s biggest EV market, was hit by a change in subsidies mid-year that was exacerbated by the trade war between it and the United States.