Market analysts are questioning whether lithium producer Galaxy Resources could be about to strike an offtake agreement with BMW amid a rush by car companies to gain access to the raw materials needed to make electric car batteries.
BMW is said to have put out requests to various suppliers, fuelling the speculation.
This follows reports from Europe earlier this month that BMW was close to signing a 10-year supply contract for lithium and cobalt.
It would make sense if the company involved was Galaxy. The Australian listed miner is supposedly signing a deal regarding its Sal de Vida operation in Argentina to lock in an offtake agreement with a strategic partner that would provide funding or secure volumes so the project could be fully funded.
Industry analysts say the current demand for such offtake agreements is booming.
Demand for cobalt, nickel, manganese and graphite, also used to make cars, is also said to be high.
Galaxy’s Sal de Vida deposit is one of the world’s largest undeveloped lithium brine deposits, with strong expansion potential.
Galaxy was the best-performing stock of the ASX 200 in 2016 with a 330 per cent share price gain. It rallied from a base of about 15c in August 2015.
GXY Price at posting:
$3.21 Sentiment: Buy Disclosure: Held
