Electric car boom drives rush to mining's $90bn heartland

Rising Chinese demand for lithium-ion batteries needed for electric vehicles and energy storage is driving significant price gains and an asset boom in Australia, already the world’s largest lithium producer. The fast-developing hub is drawing investment and deals from global producers as well as chemical-to-battery manufacturers in China, the top consumer.

“There are serious companies investing and people are starting to lock up the biggest, long-life resources. The question is -- who’s next?” Simon Moores, managing director of Benchmark Mineral said by phone from London. Though on a smaller scale, “it’s a land grab like in the petroleum industry when BP, Shell and others rounded on the Middle East in the 1960s and 1970s,” he said.

Jiangxi Ganfeng Lithium, which has interests in projects in countries including Ireland and Argentina, holds about 43% of Australia’s Mt. Marion operation and in May agreed a supply and investment pact with Pilbara Minerals for a mine development. Battery maker Shaanxi J&R Optimum Energyin July struck an agreement for future output from Altura Mining’s project.
“It’s the most significant expansion in lithium supply ever, and we are still undershooting demand,” said Chris Reed, CEO of Neometals, a partner with Ganfeng and Mineral Resources in the Mt. Marion operation. Reed is scheduled to speak Wednesday at the close of the three-day Diggers and Dealers mining forum in Kalgoorlie, Western Australia.

Prices of lithium carbonate, the primary base-chemicalproduced by the industry, more than doubled in the 5 years to 2016, according to UBS Group. The material advanced 9% to average $13 625 a metric ton in June from the previous month, on continued tight supply, even as Australian exports rise, according to Benchmark Mineral.
“We don’t see any price fall in the next three years,” Benchmark’s Moores said. “When you look at all the battery plants being built and the plans for EVs, even if only about 25% of those are realized, we’re still going to be short of lithium. It’s a unique once-in-a-generation situation.”

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