preparing for an impending boom, page-60

While I think talk here regarding FYI reviving Alcan is a bit over the top considering relative revenues, I also think talk of EV sales flopping is completely incorrect. EV's are undoubtedly outperforming ICE vehicles and will grow exponentially until they completely dominate the market. The only real competition at this stage might be hydrogen but I think EV's have too much of a head start and are building too much critical mass with the resultant cost efficiencies to be threatened by hydrogen any time soon. HPA will remain a big growth sector even without EV's through LED's, semiconductor substrate and other uses. Pricing is much harder to predict with at least one or two new producers of scale in FYI and A4N likely to enter the market in a few years but continuing demand growth will later overwhelm that new supply again according to industry forecasts. I think its better to be conservative on pricing for now in case both FYI and A4N enter what is still a relatively small market within months of each other. You just need to look at what happened to graphite prices when SYR began production to see why it's best to be conservative. I prefer to work on $17,000 to $20,000 per tonne for HPA rather than current pricing but will be happy to be proven too conservative. $15,000 should be a base case if that is the cost of production for current producers. Both FYI and A4N will do well even if prices fall that low temporarily and will prosper as prices climb again. Off take agreements might add some price stability. Potential for lower prices is why I think ATC are struggling to finish their financing. If the market accepted their higher DFS pricing assumptions, I think they might have finished their financing more than a year ago.

"Northvolt’s plans show confidence in the potential of Europe’s electric car market. The market for the cells, the basic components of electric vehicle battery packs, may grow to at least 250 billion euros ($296 billion) by 2025, according to European Commission estimates. Western Europe’s electric vehicle sales pulled ahead of China’s last month, helped by subsidies in Germany and France that have been raised during the coronavirus crisis."

https://www.bloomberg.com/news/articles/2020-08-17/northvolt-gets-german-loan-guarantee-to-build-battery-cell-plant?utm_source=url_link