Running discussion on SP, page-54486

It is a great time to be in the lithium sector with a stock that majority owns the high-grade Tier 1 Manono Lithium+ Project that in time will contain 40% of the World’s hardrock spodumene bearing lithium resources, up from the current +20% …


Mineral Resources was the standout among the major miners on the news the $8 billion company and US chemicals giant Albemarle plan to restart the Wodgina lithium mine in the Pilbara.

The operation was mothballed just one week after Albemarle tipped around $2 billion into Chris Ellison’s MinRes in 2019, and has sat waiting for a rebound in the lithium market.

MinRes shares rose 9% on the back of the news, with the company aiming to resume production from the first 250,000tpa train at Wodgina (which has a total capacity of 750,000tpa) in the September Quarter of 2022.

The rebound in lithium has come and then some this year, with radical investment in lithium chemical conversion in China and uptake of electric vehicles driving a rush for raw battery materials.

Prices for spodumene and downstream chemicals are at record levels.

China’s shift and investment in green technology is likely to continue to rise as the world’s largest carbon emitter revealed plans to cut fossil fuel consumption to less than 20% of its energy mix by 2060 in a cabinet document on Sunday.

Lithium prices have been on a remarkable path in 2021, rising more than 300% from the depths of despair to all time record highs in response to an electric vehicle sector booming faster than anyone has predicted.

While the crash of 2018 and 2019 forced supply out of the market, spodumene prices have spiked, setting the scene for the restart of operations mothballed in the crash.

The largest of those was Wodgina, which 60-40 owners American lithium major Albemarle and ASX-listed iron ore, lithium and mining services giant Minerals Resources announced today would restart from the September quarter next year.

The 750,000tpa mine in the Pilbara, one of the world’s largest, was shut in November 2019 in response to collapsing lithium chemical and spodumene prices.

It was incredibly bad timing for Albermarle, which closed a US$1.3 billion deal to buy its stake in the mine just one week before the decision to turn the lights off was made.

But the lithium industry has rebounded quicker than anyone would have thought, with lithium producers among the top performing ASX-listed stocks this year.

Lithium prices charge to record levels

Underpinning MinRes and Albemarle’s decision to refire the Wodgina mine is an astonishing move in prices for both hard rock spodumene concentrate and battery chemical lithium hydroxide and lithium carbonate.

Price reporters Benchmark Mineral Intelligence said in their mid October report prices for battery grade lithium carbonate were up 322.5% year to date to US$28,675/t, with technical grade carbonate up 372.6% to US$28.375/t.

Lithium hydroxide prices are 252.7% higher at US$28,400/t, with a hockey stick shaped recovery seeing prices rise in the order of 16% a fortnight.

Spodumene prices have been similarly bullish. Fellow Pilbara producer Pilbara Minerals recently sold an 8000t shipment of sub-6% spodumene for US$2240/t in an online auction on its Battery Materials Exchange platform.

Meanwhile Orocobre reported last week its pricing will more than double for spodumene from the Mt Cattlin lithium mine in WA from US$779/t to $US1650/t.


Tesla’s ditching nickel and cobalt for LFP batteries

Tesla’s confirmation that it will adopt lithium iron phosphate chemistry batteries for its high volume, standard range Model 3 and Model Y electric cars marks what could be a wider shift away from the more expensive nickel cobalt aluminium (NCA) chemistry.

While LFP batteries were already in use for its cars made in China, its adoption outside of the world’s most populous country has been limited due to intellectual property restrictions.

This relates to a series of key LFP patents managed by a consortium of universities and research institutions that reached an agreement with Chinese battery makers a decade ago, which excused them from pay a licensing fee — provided that the batteries were only used in China.

These patents are due to expire in 2022, which neatly explains Tesla’s timing for its LFP moves.

LFPs are cheaper than NCA or NCM (nickel manganese cobalt) cells — mainly because they don’t require scarce and price-volatile metals such as nickel or cobalt.

They also have much longer useful lifetimes, though this is offset by lower energy densities.
However, while LFP cells hold less power, this is not as big as a drawback as it may seem as they are also less volatile, meaning that less space is required for cooling and structural protection.

It marks a notable shift in the outlook for EV supply chains, given that Tesla built 228,882 Model 3 and Model Y vehicles in the third quarter of 2021 (compared with just 8,941 of its premium Model S and X models).

Other manufacturers moving to LFP

And it’s not the only company making that move.

Ford has also flagged that it will use LFPs in some commercial vehicles while German giant Volkswagen plans to use LFPs

This could mean increasing use of LFPs for entry-level electric vehicles.

In turn, the use of nickel-based cells may be geared towards higher-end performance vehicles, as most consumers are likely to be satisfied with slightly lower driving ranges in exchange for lower cost.

Why Tesla may roll out a $15,000 electric car by 2025

Electric vehicle leader Tesla may take advantage of its trillion-dollar market value and its world-leading margins and deliver a no-frills $US15,000 ($A20,000) EV as early as 2025, according to a new report from respected analyst Adam Jonas from Morgan Stanley.

The analysis, issued a day after Tesla reported another strong quarterly profit, notes that Tesla is already the most valuable and highest margin major car company in the world, and also wants to become a “cost leader” in EVs.

“We believe Tesla could bring to market a vehicle at a $15k price point or less, likely this decade… if not before 2025,” Jonas writes in the report. And he argues it could do this through manufacturing innovation, such as the new “giga-press” and by sheer scale, producing at more than one million units per plant.