The drum beats are getting louder. Each time I take some time out to read an article or two, I inevitably find something pointing to an impending period of industry consolidation. After all, we've had the boom and now the bust. We've seen players squeezed out of existence - A40 and Nemaska to name just two.
We are now seeing some swapping of assets or % share of assets - take MIN/ ALB or Gangfeng/ LAC as examples.
What we haven't seen just yet (or since MIN took out KDR) is a meaningful takeover/ acquisition of an entire entity. I believe it's just around the corner. And, most probably, more than one takeover.
The most recent article to prick my interest is this one:
https://seekingalpha.com/article/43...al-ganfeng-indicates-value-unlocking-in-storeThe key extract from this article (for me) was the following:
"...
Even though lithium is a raw material for batteries, it pretty much occupies the space reserved for critical components like engines and transmissions which are mostly produced in-house. As such, it is not entirely out of the question that at least some automakers will contemplate establishing direct JVs, if not outright acquisition, with lithium suppliers. Tesla (NASDAQ:TSLA) could be one for sure, Musk has indicated his desire to make the automaker as "vertically integrated" as possible, and the company is already testing waters producing its own battery cells.
GM (NYSE:GM) already has some in-house battery production and just announced to invest USD2.3 billion in a JV with LG Chem. Earlier this month, GM confirmed the widely-anticipated return of the Hummer nameplate under the GMC brand. The iconic model will be an electric vehicle with a massive battery that can propel the truck to 60mph from standstill in just 3 seconds. This is another reminder that much like mobile phones, the batteries of electric cars are going to be bigger and more powerful...."
If Tesla decide to pursue this strategy of vertical integration, then GXY is an ideal fit in terms of geographic diversity, product mix (brine + hard rock or hydroxide + carbonate) and ramp-up timeline (existing production capacity with new supply coming on line in 2022 and then 2023/24).
I just get the sense that Elon Musk would love to spring a surprise on the shorters (let's just say for a bit of revenge) and who better to spring a surprise with than the most heavily shorted stock on the ASX.
Yep, a storm is brewing and I sense that the impact will be felt across the whole Galaxy!!
