Chris Ellison-backed Patriot Battery Metals says lithium industry can take on China

Bridget Carter

18 hours ago.

Updated 14 hours ago

The Australian Business Network

The boss of the Chris Ellison-backed Patriot Battery Metals believes that the lithium industry is able to take on China in the downstream part of the market, but the way to do it is to build the best mines for the commodity in the world.

Patriot, discussed as a perennial takeover target for other industry groups like Pilbara Minerals, has seen its share price fall to close to one third of the level it was trading at a year ago and its market value now at about $300m.

That’s as the price of battery grade lithium carbonate has fallen to $US11,825 a tonne from $US 36,975 a year ago, down 68 per cent, with demand for electric vehicles, which require lithium batteries, in the short term now lower than expected.

Patriot’s managing director Ken Brinsden, who previously ran Pilbara Minerals, said China was protecting itself from having to pay $US50,000 a tonne or $US5000 a tonne for spodumene by lowering the equivalent cost for raw materials.

It was in China’s interest to supress price and stop investment in the west and there was no logic in waiting to see how the market resolved, because China would get better at what they are doing.

“The longer you delay the change, the more uncompetitive the west becomes.”

Mr Brinsden said at the Diggers and Dealers conference in Kalgoorlie that one way support could be offered for the industry would be to set prices in Australia to stimulate upstream development.

But he said while China had been successful in back filling the market, the country was supplying a lower quality product and actually needed the supply of lithium from the west, which was of a higher quality.

Mr Brinsden said in China, electric vehicle penetration was about 30 to 40 per cent and growing, and they were now a cheaper option that traditionally fuelled vehicles.

“In the west, we definitely have a competitive advantage in terms of access to raw materials and that is what we should capitalise on to compete with China,” he said.

“To me, this is a key point and this has been missed in terms of the west’s thinking in terms of inspiring these new supply chains.”

Patriot, backed by Mr Ellison, a billionaire, and Albemarle as shareholders, is a hard rock lithium exploration company and has the Corvette Project in Qubec, Canada, which is expected to be a large and high quality raw material supplier for the future of lithium-ion battery supply chains excluding China.

The Corvette property ranks as one of the top 10 largest lithium pegmatite resources in the world.

Earlier this year, Patriot announced that it would end its agreement with Albemarle to enable the company to explore a broader range of strategic partnerships within the downstream lithium sector.

Mr Brinsden said if China grew the market for batteries, and costs fell, there would be a tipping point where they became globally cheaper.

But he believed static energy storage would be a more important market in the future than electric vehicles for lithium producers.

He said with the world’s best mines, connected to chemical capacity, it was the way to compete with the Asian superpower.

“I’m saying build the chemical facilities off the back of the world’s best mines and that’s the way to compete with a competitive product to China.

“China has got a competitive advantage in terms of the chemical piece, and they have done incredibly well there, but they haven’t got the right raw materials to feed them.

“It’s just so happens, the west’s mines ship them product to China.”

“If that wasn’t the case and you had the western mines feeding the western chemical facilities, then the time you produce that battery grade chemical, you could say I’m competitive with China – you could.”

Mr Brinsden said the west was not really thinking about that model, and this was a shame.

The Inflation Reduction Act incentivised competition for electric vehicles and batteries, but China was light years ahead in those areas.

But he said they were not light years ahead in terms of raw materials, and that was where the west should focus its attention.

“What the industry is talking about is how we are differentiating ourselves from the China supply chain, that is a real and live conversation in the industry, it’s just that equities markets don’t necessarily agree with today’s world of lithium.”

Mr Brinsden said in the industry, there was still a medium and long-term view about the direction that the industry was taking, and there had to be a lot more growth outside China, and there was discussion about how to make that work, but he added it was a tough industry.

“China has a best part of a decade’s lead as a result of the west sitting on their hands and the time to change the game is now and should have happened already,” he said.

“China is in such a dominant position that it represents a huge threat to a lot of industries in the west and the least of which is the car industry.”