..What does it take to get there? More industry consolidation - the big players are in no hurry to make acquisitions but will wait for these protracted low lithium prices to force producers on the margin to be in such weak cashflow position that they could begin to accept much lower solicited takeover valuations.
..highly indebted lithium players like LTR are at the mercy of their financiers (LG), and ought to be more prudent to make a CR when its stock price is at higher levels. The longer they wait, that option narrows as stock prices fall further on continued poor industry outlook. It makes no sense for ALB or any American lithium player to consider buying LTR again, and even our Rio sidestepped local lithium players to acquire Arcadium and Rincon with mines in Argentina. The logical acquiror for LTR IMO is a Chinese EV battery maker e.g CATL except there are 2 issues: (1) LTR nor Gina nor our Govt would allow it to be sold and its shareholders would not want that as well (2) it is not a low cost producer. In due time over the longer run, when American lithium supplies come onstream, LTR may have to look elsewhere to sell its output. UBS downgrades MinRes, IGO
Nicola Blackburn
UBS has returned to an underweight rating on lithium stocks, arguing markets are overestimating the level of short-term cost support and the long-term price of the product against an ongoing backdrop of oversupply.
The investment bank also trimmed its long-term price for spodumene by 8 per cent to $US1200 a tonne, pointing to a weaker demand outlook.
In a research note, UBS Analysts said outperformance from battery energy storage systems would be insufficient to offset what it forecasts to be weaker demand for EVs. That is despite its expectations for further supply cuts across the sector that may help buoy prices.
The investment bank also downgraded its rating on lithium plays IGO, Liontown Resources and Pilbara Minerals to sell and Mineral Resources to neutral.
