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Brinsden sees no end in sight to lithium run

Pilbara Minerals boss Ken Brinsden believes there is still further room to lithium to continue its stunning 2021 rally (reports MiningNews).

21st October 2021

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Spodumene prices were below US$400/t just a year ago, sparking a fight for survival for Pilbara and others.
Pilbara was one of the companies to survive and become stronger.
"It hurt but we learned some valuable lessons," Brinsden told The Boom in a Room Investor Conference on Friday.
But even bullish Brinsden couldn't have foreseen the "extraordinary" rally in prices in 2021.
Pilbara stunned the market last month when it announced the second auction via the digital Battery Metal Exchange platform has attracted a winning bid of $2240 per dry metric tonne for an 8000 tonne cargo of 5.5% spodumene.
On a pro-rata lithia basis, inclusive of freight costs, the price is roughly equivalent to a price of $2500/dmt for 6% spodumene (CIF China basis), a record high.
Brinsden said demand had been brought forward due to government stimulus and a move towards net zero emissions.
"The next phase, which I would argue is already happening, is the change in consumer behaviour," he said.
While Australia remained a "laggard" on electric vehicles, offshore consumers had a growing range of options to purchase EVs.
Macquarie's tracks the six largest EV markets in Europe and found plug-in sales in September of 176,000 vehicles was up 53% month-on-month and 42% year-on-year.
On Friday, JP Morgan increased its 2030 EV penetration rate forecast from 45% to 62%.
"This has led to a significant upgrade to our 2030 lithium market demand to 3.4 million tonnes of lithium carbonate equivalent (from 2.2Mt)," it said.
"We had already foreseen a deficit market, and our new demand outlook requires even more supply growth."
Pilbara's Pilgangoora mine is one of the world's largest hard rock operations, with FY22 guidance of production of 460,000-510,000t and shipments of 440,000-490,000t.
With the recent restart of the Ngungaju plant and debottlenecking of the Pilgan plant, capacity will rise to 540,000-580,000t per annum.
"We're getting ourselves ready with the expectation that Pilgangoora will be one of the go-to mines for future expansion capacity," Brinsden said.
For now, Pilbara will enjoy the increased margins.
"This part of the cycle is resulting in much more margin for the miner," Brinsden said.
"I'd like to think that situation is with us for a little while yet."
Data from two separate pricing agencies on Friday showed the strength in lithium prices.
According to Benchmark Mineral Intelligence, prices for both lithium carbonate and hydroxide are up by another 16% this month.
Fastmarkets has the 6% spodumene price at $2250/t.
Brinsden sees a "wholesale re-rate in the value of spodumene".
"I like to think of it as the new normal," he said.
He didn't rule out spodumene rising to $3000/t.
"Chemical prices are going up so spodumene should go up anyway," he said.
"Every man and their dog are chasing spodumene."
Pilbara will sell 30-40% of production - or all the spodumene produced from Ngungaju - on the spot market, where it is attracting higher prices.
The next step is renegotiating offtake.
Despite the run in the spot market, contract prices are closer to $1100/t.
"Our view is offtake is going to be a lot higher than that," said Brinsden.
Shares in Pilbara were up 2.4% to A$2.13, valuing the company at $6.3 billion.
Macquarie lists Pilbara as its top pick with an outperform rating and $2.90 price target.