Spodumene Prices, page-1800

If you thought listening to OEM's whinging about high battery metal prices was painful to hear over the past little while, well be prepared for 1st quarter of 2022. A few problems arising for battery material groups outside Asia/China, are having a tough time at the moment. Based on the trends of 2 years back, they have developed and geared up for production of high nickel (NCM) cathodes, while this year, resurgence of LFP cathodes is starting to rock the boat. Johnson Matthey exited the chain last month, now Umicore being brutally honest, admitting customers have scaled offtakes for NCM materials back to minimums for the foreseeable future (next 2 years).

Obviously cost of battery materials is the issue (nickel, cobalt, manganese + others + cost of energy included ), and from what I have read, Umicore's contracts with OEM's are on "fixed" cost basis. So, one could conclude that all roads lead to China/Asia's supply chain dominance for a few more years, given lower wages, less regulation and of course, economies of scale.

In this cycle (and very quickly I might add), the share of profits have shifted upstream to the miners and converters. While whole supply chain requires a decent profit margin to remain efficient and avoid bottlenecks, the problems associated with large investment downstream relative to upstream over the past 3 years is now coming home to roost. As BMI says, companies, countries and OEM's outside China have invested heavily in demand and ignored supply, which bodes well for China OEM's, who will be shipping batteries in the form of made in China EV's to ROW.

And to end my Friday morning rant, given the current high mining company valuations, risk of investing to secure supply is also very high, unless you mount a take over, and thus, receive supply at cost of production. Yesterday, VW announced an increase of $17 bill investment into electrification. That is a sign their bout of flinching freckle syndrome lingers, and will likely induce same symptoms for other legacy OEM's, thus expect more investment announcements from the later....