Rather than add to the excellent posts today from @SeeTheWorld ,which perfectly reported the positive Livent and Albemarle quarterlies, and the information they shared about the urgent ordering from their clients going forward, the inadequate state of new supply and the reasons that have underpinned recent weaknesses in price.
This was the positive news that the sector was waiting for.
As I type SQM, Albemarle and Livent are all up again about 5%.
(Before posting I went back and checked pricing again Livent is up 14%. The other 2 are up a very healthy 6 and 7%.)
I’m sure that plenty has been said about what this means for lithium sector so I’d prefer to focus on the amount of cash that has been parked on the sidelines of lithium waiting for a moment like this.
A nervous shorting contingent have nothing to gain from holding off now on closing their shorts and several will potentially take out long positions as well, knowing that there is profit to be made riding the ones that arrived too late back into the red and margin calls and all that.
They were too greedy for too long.
$1.08 will prove to be the shorters’ equivalent of the $4.50 mark that marked the end of an impressive run for the longs.
I wouldn’t be so quick to dismiss today’s rally. It was broadly right across the sector
and it comes after both Nickel and Cobalt have broken out for the same reasons.
We are getting nearer to 2020. The order books are filling. The supply is not there.
I think one of the biggest pools of investment money that is ready to come in is one of the fastest growing segments in investments. This is managed money that is held in funds described as having Global socially responsible, ethical or green investment criteria.
I think these funds have been amassing as lithium has fallen, and are potentially ready to flood back into a battery metals sector poised at the brink of technical and sentiment break-out.
Some recent figures on the amounts of ethical investment cash I am talking about.
“Global socially responsible investments surged 34 per cent to US$30.7 trillion over the past two years, lifted by Japanese pension funds and investor demand amidst growing concern about climate change risk.”
“The study found that holdings in sustainable funds made up 49 per cent of professionally managed assets in Europe at the start of 2018, compared with 53 per cent in 2016.”
https://www.investmentmagazine.com.au/2019/04/global-sustainability-assets-top-us30-trillion/
More about where the 30 trillion is distributed here.
https://www.bloomberg.com/news/articles/2019-04-01/global-sustainable-investments-rise-34-percent-to-30-7-trillion
Funds consist of 18% of all Japanese managed money.
Europe has become the world’s biggest socially conscious investing market.
The first article above quotes a slightly out of date Australian portion
“And in Australia, responsible investment accounted for $866 billion in assets under management in 2018, up 37 per cent from $633 billion in 2016.”
There is already an update on these figures. A report from July 2019 stated that its now nearing 1 trillion.
“Almost half of all professionally managed money in Australia is now classed as responsible investment, representing a meteoric rise for a sector that was still considered niche five years ago.
The Responsible Investment Association Australasia (RIAA) now classes 44 per cent – or nearly $1 trillion – of the $2.24 trillion managed by professional investors as "responsible".
That's up from just 17 per cent of professionally managed money in 2013, when responsible investments accounted for $178 billion.”
https://www.copyright link/business/banking-and-finance/ethical-investments-soar-to-nearly-1-trillion-20190702-p5239b
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So. I got quite a bit of push-back recently when I suggested that shorting green energy stocks had an ethical/moral element to it.
No doubt this post will get me some more of the same.
But hey - don't both to stop and argue with me. I am nobody. Argue with my 30 trillion friends.
Seems quite a few want to keep the ASX as a morality-free play zone and ball pit, where anonymity and profit-at-any-cost rules supreme.
I don't agree.
I don't think you can make a sane argument that your investments and actions don't have a profound impact on the world you leave behind.
Shorters, led by bankers with pro-Oil interests, have created an environment where the finance sector has been unwilling or unable to assist in funding new projects, because of perceived risk.
That has cost the world time it does not have to screw around with.
It means delays to pollution mitigation in the big cities.
It means delays to the replacement of more coal stations with solar + batteries.
Delays is deaths from pollution. Unfortunately it is precisely that simple.
Sorry - is this all a bit too real for this anonymous clubhouse for pointless portfolio boasting and empty brags?
Shorting is responsible for the fact that no new Australian spodumene miners have been able to make any progress towards construction.
Australian hard rock may have several projects still drilling, but none have attracted enough finance to commence building.
A year in and the Pilbara miners still have not finished the commissioning process.
Even if a new Australian hard rock miner was to suddenly get hold of cash and start building now, it would be unlikely to bring any new product to market until 2021 and stop what looks like a turnaround in lithium pricing that should start to start to increasingly reward the producers and processors that are bumping along producing at cost.
Back to the new green investment funds.
I’m not so stupid as to believe that all that "ethical" money that finds itself in the hands of managers tasked with investing it are always doing the right thing, but they certainly are tasked with doing so by their customers and can therefore be held accountable.
It is true that they have not helped out our lithium stocks very much over the last 18 months.
They have simply stood by and watched - but things may change very soon.
I really don't think they are going to stand by and not take a chunk of the action of the H2 rise in battery minerals.
We are ethical investment Ground Zero right here.
Very related to this is something you may have seen.
New York state is taking a ground-breaking and precedent-making case to court against Exxon, accusing it of willingly committing corporate malfeasance and subjecting itself and investors to future associated future risks from environmental damage.
https://www.esquire.com/news-politics/politics/a28636123/exxonmobil-lawsuit-climage-change-new-york/
“On October 23, in a federal court in New York, opening arguments will be heard in one of the most important corporate malfeasance cases of the modern era, rivaled only by the tobacco litigations of the 1990s. The state of New York is suing ExxonMobil on charges that the energy goliath consistently misled its investors about what it knew concerning the climate crisis—essentially lying to them about what it might eventually cost the company in eventual climate-related financial risks, because the company knew better than practically anyone else what those risks were.
From Inside Climate News:
Exxon engaged in "a longstanding fraudulent scheme" to deceive investors by providing false and misleading assurances that it was effectively managing the economic risks posed by increasingly stringent policies and regulations it anticipated being adopted to address climate change, the lawsuit states. "Instead of managing those risks in the manner it represented to investors, Exxon employed internal practices that were inconsistent with its representations, were undisclosed to investors, and exposed the company to greater risk from climate change regulation than investors were led to believe," the lawsuit said.”
This is pretty huge.
You can try to dismiss it as some leftist grand-standing but its pretty bad news for Big Oil.
It suggests that there is a massive liability on the fossil fuel industry to pay for the what has been scientifically proven
and that government now recognises they have a responsibility to hold this behaviour to account.
The same case can be run and re-run until it succeeds, because its based on firm fact
and their actions to threaten and destroy their accusers just makes them more culpable.
If the case is won by NYS then it opens an enormous and potent legal attack vector for a multitude of parties
to take on Big Oil in the courts for a generation, and present them with the bill for at least a portion of the spiralling costs of mitigating the damage that their industry has done, not only via pollution of the environment but also to the climate itself, causing untold billions of dollars of damage to the world economy and wrecking the joint for future generations and the other species we share the planet with.
This is exactly what is spurring rapid action in Europe.
This is not about Tesla and VW quarterlies. It is about wiping the cities clean of fossil fuel emissions
and removing the coal stacks before the communities wake up and start taking governments to court.
To prevent this, the governments have started taking Big Oil to court.
Now wind that back into where I started.
Investors with 30 trillion dollars want to see Exxon lose.
The quicker that the petroleum companies become unviable, the quicker EVs win the parity war with economy of scale, the faster the ICE bans roll out over the world.
Some of these ethical funds could potentially fund class actions and more cases.
Once there is legal precedent set then its just goes completely postal - as per James Hardie.
One case after the other. Fossil fuel dies signing cheque after cash-bleeding cheque.
Perhaps there is time for them to see the writing on the wall and screech to a halt.
The Oil Industry, the Saudis could now do what Norway has done.
The Saudis have already backed Uber and Tesla with their sovereign fund.
That potent combination is the future right there. Now they just need to follow through.
I’m sure the world would agree to back off the law suits if these companies would agree to do a 180 and start addressing the damage they have done. They too have trillions of dollars in funds and they could still come to the realisation that it is not too late for them to transform their business models ASAP, help fund the new battery powered transport and storage systems of the 21st century.
And buy our stock back up to new highs while they're at it.
Go Galaxy.
