2024 Battery Metals Outlook: Australia Edition
Get expert predictions and explore the key trends shaping Australia's battery metals landscape in 2024 in our exclusive report.
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A Sneak Peek At What The Insiders Are Saying about Lithium
"2023 saw the (lithium) market shift into an oversupply; we now need to wait for demand to absorb that extra supply. We expect the market to remain in a surplus in 2024, although some supply restraint and ongoing good demand should ensure the surplus is manageable."
— William Adams, Fastmarkets
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2024 Battery Metals Outlook: Australia Edition
Table of Contents
Lithium Market Update: Q1 2024 in Review
Lithium Market Update: Q2 2024 in Review
ASX Lithium Stocks: 5 Biggest Companies in 2024
Cobalt Market Update: Q1 2024 in Review
Cobalt Market Update: Q2 2024 in Review
ASX Cobalt Stocks: 4 Biggest Companies in 2024
Graphite Market Update: H1 2024 in Review
ASX Graphite Stocks: 5 Biggest Companies in 2024
Vanadium Market Update: H1 2024 in Review
Manganese Market Forecast: Top Trends That Will Impact Manganese in 2024
Lithium Market Update: Q1 2024 in Review
Lithium prices remained subdued in the first quarter of 2024, well below highs set in late 2022 and 2023. Various factors, including oversupply and weak electric vehicle (EV) demand, kept prices muted over the 90 day period.
Even as a market glut weighs on prices, Fastmarkets is forecasting that lithium supply will increase by 30 percent by the end of the year. The firm notes in a January report that some new supply is being ramped up, while some high-cost output is being cut — it remains to be seen how the current price environment will impact these plans.
"Market participants expect downstream lithium demand to remain relatively weak and with no imminent concerns about supply shortages, we forecast a tentatively balanced market in 2024," Fastmarkets explains.
With a market bottom potentially approaching, what other factors were at play in the lithium sector during Q1? Read on for a look at key events during the quarter and what experts see coming heading further into the year.
January: Lithium market calm amid inventory saturation
Lithium oversupply from 2023 continued to saturate the market at the beginning of 2024, dampening prices. Production in 2023 came in at 180,000 metric tons (MT) of contained lithium, 34,000 MT higher than 2022’s output.
“Indications were that inventory was quite strong both at the finished cell level and upstream with miners/brine producers,” Adam Megginson, analyst at Benchmark Mineral Intelligence, told the Investing News Network. “As such, procurement activity on the spot market was fairly subdued. Buyers in Japan and South Korea opted to draw from inventory or volumes already being procured under contract rather than procure additional on the spot market.”
Trading activity was also muted in January as market participants anticipated China's Spring Festival.
“Expectations were that demand and in turn prices would pick up afterwards,” explained Megginson. “This restocking activity didn't immediately materialize after the Spring Festival, which led to some gloomier sentiment in China.”
Notable lithium deals from the first month of the year include two transactions by Chinese chemical and battery manufacturer Ganfeng Lithium (OTC Pink: GNENF,SZSE:002460,HKEX:1772).
The first, between Ganfeng and Australia’s Pilbara Minerals ( ASX:PLS,OTC Pink:PILBF), amended an existing offtake agreement, increasing short- and medium-term supply of spodumene concentrate. The revised agreement will see Pilbara supply Ganfeng with up to 310,000 MT annually in 2024, 2025 and 2026, compared to the previous 160,000 MT.
“The long-term outlook for the industry remains incredibly exciting. Both Ganfeng and Pilbara Minerals remain focused on extending our respective positions as major, low-cost producers in the burgeoning lithium market,” said Dale Henderson, Pilbara's managing director and CEO, in the announcement.
Subsequently, Ganfeng penned a supply agreement with South Korea’s Hyundai Motor Group (KRX:005380). The deal — which is effective from January 1, 2024, through December 31, 2027 — will see Ganfeng supply an undisclosed amount of battery-grade lithium hydroxide to Hyundai.
February: Lithium producers react to market pressure
As downstream players sought deals amid low prices, producers began revising production tallies.
“We also began to see some supply response to the persistent lower price environment, with the announcement of delays to expansion plans and layoffs at some lithium producers or aspirants,” Megginson said. “I only expect this to palpably impact the supply picture in 12 to 18 months, as that is when these expansions were planned to ramp.”
In mid-January, Albemarle (NYSE:ALB) announced it was trimming capital expenditures by US$500 million year-over-year.
"The actions we are taking allow us to advance near-term growth and preserve future opportunities as we navigate the dynamics of our key end-markets," CEO Kent Masters said. "The long-term fundamentals for our business are strong and we remain committed to operating in a safe and sustainable manner. As a market leader, Albemarle has access to world-class resources and industry-leading technology, along with a suite of organic projects to capture growth."
A few weeks later, the US-based company entered into a long-term partnership with BMW Group (ETR:BMW) to provide the automaker with battery-grade lithium for its high-performance EVs.
ASX-listed Liontown Resources (ASX: LTR,OTC Pink:LINRF), which plans to open its Kathleen Valley lithium project mid-year, noted the precarious lithium market in a January update.
“The recent material decline in spodumene prices has triggered significant reductions in short and medium-term lithium price forecasts,” it reads. “As a result, we have commenced a review of the planned expansion and associated ramp-up of Kathleen Valley to preserve capital and reduce the near-term funding requirements of the project.”
While the company is reviewing potential ways to cut overall costs, it did note that there will not be any changes to its plant design, which has a planned capacity of 3 million MT per year and is currently under construction.
Given this environment, some market watchers are calling for consolidation in the lithium sector.
“As lithium projects struggle to stay above water, analysts also expect M&A activity to increase as major producers with positive cash flow try to find deals in the market while junior companies try to sell projects in a market where private capitals are scarcer than previous years," a February 12 report from S&P Global states.
March: Evolving supply and demand factors support lithium prices
The beginning of March brought some recovery in lithium prices as both carbonate and hydroxide made gains.
After starting the month at US$14,977.15 per MT, lithium carbonate prices registered a five month high of US$16,109.48 on March 14. Prices for lithium hydroxide also moved northward on the London Metal Exchange, hitting a high for the first quarter of US$13,425 per MT on March 11.
For Megginson, these moves were in line with a market that's coming back into equilibrium.
“We forecast a fairly balanced market in 2024,” the Benchmark price and data analyst said. “While the low price environment has caused some project expansions to be pushed back slightly and some of the marginal, higher-cost supply has come offline — this has been mostly counterbalanced with larger producers producing more.”
He went on to outline the factors that likely brought on the March price rallies.
“On the demand side, cathode producers in China announced that they would substantially increase production in March, some by as much as 30 percent month-over-month — albeit compared to a very low level in February as Spring Festival was taking place,” Megginson said. The drivers on the supply side are a little more nuanced.
“Environmental inspections at lepidolite producers in Jiangxi province led to some concerns about supply from the region,” he explained. “Transgressions were found in terms of the handling of lithium slag, and some participants thought that supply could become constricted. In the end, the impact of these inspections was relatively limited with two companies being told to take action, with the remainder recommencing normal production (as of April 5).”
Megginson went on to note that there are now “rumblings” that brine producers in the same region could undergo similar environmental inspections. “Although downstream demand is ticking up notably at the moment, ample supply overall is likely to limit the extent of price rises in the short term,” he concluded.
In addition to price spikes, March also brought major developments for US-focused Lithium Americas ( TSX:LAC,NYSE:LAC). The company, which is developing its Thacker Pass project in Nevada, received conditional commitment for a US$2.26 billion loan from the US Department of Energy.
The loan is earmarked for the construction of the processing facilities at Thacker Pass, which Lithium Americas states has the largest-known measured and indicated lithium resource in North America.
The cash injection is designed to further strengthen the North American battery metals supply chain.
“The United States has an incredible opportunity to lead the next chapter of global electrification in a way that both strengthens our battery supply chains and ensures that the economic benefits are directed toward American workers, companies and communities,” Jonathan Evans, president and CEO of Lithium Americas, stated.
What factors will move the lithium market in 2024?
Toward the end of Q1, there was more significant news for the lithium market.
Chile, a key player in the global lithium market, unveiled the full details of its comprehensive plan to enhance lithium production and attract investment. The country explained that operations and projects in its Atacama and Maricunga salt flats will need to be majority controlled by its state operators, which will hold a 50 percent plus one share stake.
Chile also announced that it has opened up over two dozen salt flats in the country for private investment.
The new lithium policy aims to promote sustainable development while ensuring fair participation among industry stakeholders. Chile intends to streamline the permitting process for lithium projects, encouraging greater investment and boosting production. Additionally, the government plans to establish a lithium consortium to oversee research and development initiatives, facilitating technological advancements in lithium extraction and processing.
“The goal of the national strategy is to boost Chile’s lithium production, which is currently expected to rise by 20 percent to 270,000 tonnes in 2024 from 225,000 tonnes in 2023,” Fastmarkets analyst Jordan Roberts wrote. “Low production costs in the country mean producers have been facing less pressure from the recent weakness in lithium prices.”
For his part, Megginson advised watching lithium output from Africa.
“Although the quality of material is more variable than comparable material from, for example Australia, and the continent still makes up a small proportion of overall global supply, supply of hard-rock lithium concentrates from Africa is growing rapidly, especially from Zimbabwe and Namibia,” he said. “Currently, Chinese converters are responsible for the majority of the projects that are at more advanced stages. It is worth noting that many of these projects are not economical when lithium chemicals prices are significantly below RMB 150 per kilogram.”
Lastly, Megginson is monitoring sales activity. “We have seen an increasing number of public auctions and pre-auctions for spodumene concentrate,” he said. “This is definitely something to look out for, and I expect to see more auctions for the remainder of the year, and some similar auctions taking place for lithium chemicals as well.”
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Lithium Market Update: Q2 2024 in Review
Prices for lithium continued to sink during Q2, falling to lows unseen since 2021.
Oversupply, weaker-than-expected electric vehicle (EV) sales and a stalling energy storage sector have impeded lithium's ability to regain momentum, with lithium carbonate equivalent prices hitting US$12,610.44 per tonne at the end of June.
During a discussion at this year’s Fastmarkets Lithium and Battery Raw Materials conference, Zihao Lee, Fastmarkets price reporter, gave an overview of the current state of the overall lithium market.
“The global market is at a surplus of 180,000 tonnes of lithium carbonate equivalent,” he said. “The global lithium surplus is largely a result of a production ramp over the past few years, when prices were at their historical highs.”
Much of that increased production has come out of China, where domestic lithium carbonate equivalent output grew by a whopping 44 percent in 2023. On Mainland China, production climbed to 275,000 tonnes, while Chinese operations in Africa and South America delivered 30,000 tonnes of the material.
Although China ranks third in the world for annual lithium mine production, the nation dominates the refinement segment, which allows it to leverage control over global price dynamics, according to Lee.
“Different regional markets share similar pricing restraints, with Chinese lithium prices determining the direction of lithium prices,” he said. “Because China manages 70 percent of global lithium-refining capacity, it is the biggest consumer in the world and the country also has the most active spot lithium market.”
As new lithium projects get sidelined due to low prices, what other factors are shaping the lithium market in 2024? Read on for a look at key events during Q2 and what experts see coming heading into the second half of the year.
April: Oversupply keeps lithium prices low
Lithium carbonate equivalent prices slipped to US$14,780.57 at the start of April, but had clawed back to a Q2 high of US$15,503.96 by April 9. They then began a consolidation period that would last for the rest of the quarter.
Prices for lithium hydroxide on the London Metal Exchange remained flat from the start of the year.
“Regional markets have begun to converge to similar levels (against) the backdrop of a bearish market globally and oversupply concerns,” said Lee at the Fastmarkets event, which was held in Las Vegas, Nevada.
With prices locked in a downward trajectory, Will Adams, head of base metals research at Fastmarkets, warned of the sector's precarious state in his presentation at the conference. “The lithium market is in a difficult space — low prices are putting the brakes on development, when in reality there is no time to waste,” he said.
In the long term, demand for lithium carbonate equivalent is set to increase to 2.5 million tonnes by 2030, a substantial difference from the 292,000 tonnes of demand recorded in 2020.
As Adams explained, this increased demand will be satiated from a “more diversified supply base.”
Some of that new supply could come from Piedmont Lithium (NASDAQ:PLL,ASX:PLL), one of North America’s leading lithium suppliers. On April 17, the lithium miner announced that the North Carolina Department of Environmental Quality had approved a mining permit for its Carolina lithium project in Gaston County.
The open-pit lithium mine could play a key role in the North American lithium supply chain.
Further down the supply chain, Honda Motor (NYSE:HMC) revealed plans to invest C$15 billion to build a comprehensive EV value chain in Canada. In a late April announcement, the company said the funds will be used to construct an EV plant and a separate EV battery facility in Alliston, Ontario, slated to begin production in 2028.
Another portion of the investment will establish a cathode active material processing plant and a separator plant.
According to Honda Motor, once open, the EV plant will be able to produce 240,000 vehicles annually, while the battery plant will have a capacity of 36 gigawatt hours per year.
May: Tough financing environment for lithium juniors
Despite the difficult price environment, S&P Global data shows that juniors saw some positivity in Q2.
According to the firm, funds raised by junior and intermediate mining companies soared 179 percent month-on-month in April to reach US$1.38 billion, following a slow start to 2024.
The supersized amount represented the highest monthly total in 10 months, and was driven by a 14 percent increase in financings and several high-value deals. The surge was led by the lithium and copper sectors.
However, this energy-driven momentum didn't last long.
“After nearly tripling in April, funds raised by junior and intermediate mining companies fell 16 percent to US$1.16 billion in May,” a subsequent S&P Global report states. “The decline was fueled by lower copper and lithium financings and partially offset by an increase in gold financing, which rose for a fourth consecutive month.”
As Fastmarkets’ Lee explained during his presentation, the market glut and weak prices have been especially challenging for junior miners and lithium companies in the intermediate stage.
Commenting on incentive prices, he noted, “They usually sit around US$20 to US25 per kilogram per for battery-grade lithium chemicals. Currently, according to Fastmarkets' assessments, battery-grade lithium chemicals sit below US$15. Therefore, access to capital for new project development or existing production expansion could be challenging."
This hindrance to the project pipeline could make the market swing back into deficit as early as 2028, said Lee.
June: EV makers sign strategic deals despite sales concerns
As the last month of Q2 unfolded, concerns about weakened EV sales in the EU and Europe continued to apply pressure to lithium demand and prices. Adams noted that Chinese demand growth is set to dip from 113 percent in 2022 to 32 percent this year, while in Europe it's projected to fall from 44 percent in 2022 to 7 percent in 2024.
However, the most pronounced decline is anticipated to be the US market, where demand growth will fall from 81 percent in 2022 to a meager 4 percent in 2024.
These drops are the result of first-adopter saturation, as well as consumer concerns about affordability, range and charging infrastructure, said Adams. There are also mixed signals from OEMs and governments.
Those challenges didn’t inhibit EV makers from penning large-scale deals at the end of Q2.
In mid-June, sector major SQM (NYSE:SQM) announced that its subsidiary, SQM Salar, had secured a long-term agreement to supply lithium hydroxide to Hyundai Motor (KRX: 005380) and Kia (KRX: 000270).
"We are incredibly proud to announce this supply agreement with Hyundai and Kia," said Carlos Diaz, CEO of SQM Salar, at the time. "By providing these world-leading EV manufacturers with high-quality battery-grade lithium hydroxide, we are actively contributing to a more sustainable future."
Earlier in the month, SQM partnered with Codelco, Chile's state-owned copper miner, to jointly exploit lithium and other resources in the Salar de Atacama. The venture aligns with Chile's strategy to nationalize its lithium industry, leveraging its status as the holder of the world's largest lithium reserves and a leading producer of the battery metal. Under the nationalization plan, Codelco will hold the majority stake in the joint venture. The partnership entails merging Codelco's subsidiary, Minera Tarar, with SQM's subsidiary, SQM Salar, to boost lithium production through 2060.
Other notable news events from June include Volvo's (STO:VOLV-B) introduction of a "battery passport" for its EX90 electric SUVs, enhancing transparency in the supply chain. This digital tracker, developed with British firm Circulor, verifies the origins and recycled content of raw materials like lithium, cobalt, and nickel used in EV batteries.
The battery passport aims to ensure responsible sourcing and improve sustainability.
Available in the EU and US starting this year, customers can access the information via an app or QR code in the vehicle, leveraging Circulor’s blockchain technology for secure tracking.
To end the quarter, SQM announced plans to pilot test direct lithium extraction technologies with a goal of selecting one or more for long-term use by 2025. "We would like to have multiple direct lithium extraction solutions," Diaz said on stage during the Fastmarkets conference. "It's difficult to choose one that is going to fit and be suitable for all kinds of different chemicals that can be in different types of brine."
Looking ahead, Adams noted that the lithium market is consolidating in an environment of oversupply, weak demand and high inventory. He added that there is a risk of further price weakness due to the continued oversupply.
However, lower prices could prompt more supply restraint, helping to rebalance the market.
“We expect prices to remain flat in the short to medium term,” he said.
Don't forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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ASX Lithium Stocks: 5 Biggest Companies in 2024
After hitting all-time highs in 2022, lithium prices have come under pressure due to rising supply.
The lithium market is currently in a surplus that is likely to weigh on prices for the battery metal this year. However, looking longer term, experts are predicting positive growth in the years to come — the expectation is that demand for electric vehicles and energy storage systems will continue lifting the lithium market and lithium-mining stocks.
Australia, the world’s largest producer of lithium, is home to a number of global lithium miners, and investors interested in getting exposure to the market may want to start by getting familiar with these big-name players.
With this in mind, the Investing News Network has listed the top five ASX lithium stocks by market cap. All information in this list was generated using TradingView’s stock screener on March 4, 2024.
1. Pilbara Minerals (ASX:PLS)
Market cap: AU$13.18 billion; current share price: AU$4.41
Pilbara Minerals' fully owned Pilgangoora operation has a range of global partners and produces spodumene and tantalite concentrate. The operation includes two processing plants called Pilgan and Ngungaju; the former produces both a spodumene concentrate and a tantalite concentrate, while the latter solely produces a spodumene concentrate.
In the third quarter of 2023, Pilbara concluded optimisation and ramp-up activities at the Ngungaju plant, achieving its target production capacity of 180,000 to 200,000 tonnes per year of spodumene concentrate.
Shortly after, the company announced commissioning activities at its South Korea-based lithium hydroxide processing plant, a joint venture with partner POSCO Holdings (NYSE:PKX,KRX:005490).
Pilbara is currently working on multiple expansion projects at Pilgangoora. The P680 expansion will boost the Pilgan plant's production capacity by up to 100,000 tonnes per year, while the P1000 expansion is targeting a spodumene production increase at Pilgangoora to 1 million tonnes per year. Future expansions are under consideration.
Pilbara has long-term agreements with several high-ranking companies, including China’s Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460), Great Wall Motor Company (OTC Pink:GWLLF,HKEX:2333), Yibin Tianyi and General Lithium.
2. Mineral Resources (ASX:MIN)
Market cap: AU$13.14 billion; current share price: AU$66.40
Mineral Resources is a Perth-based mining company with a focus on the iron ore and hard-rock lithium sectors in Western Australia. The company's current lithium assets include Mount Marion and Wodgina.
In 2022, Mineral Resources and its joint venture partner Albemarle (NYSE:ALB) recommenced operations at Wodgina in response to surging lithium demand; they produced the first spodumene concentrate from train 1 in June of that year, and from train 2 that July. The company hopes to produce lithium hydroxide at Wodgina within the next five years.
The Mount Marion lithium project — located in Kalgoorlie, Western Australia — was upgraded in mid-2022 to a production rate of 600,000 tonnes per year of mixed-grade product. The company boosted its output again midway through 2023 to 900,000 tonnes per year, a 450 percent increase from its original annual capacity of 200,000 tonnes.
In August 2023, Mineral Resources partnered with battery materials company Lithium Australia (ASX:LIT,OTC Pink:LMMFF) on a pilot plant to test the potential of the latter's LieNA technology for enhancing lithium extraction yields. Subject to the results of the pilot plant study, the companies may enter a 50/50 joint venture to commercialise the technology.
3. Arcadium Lithium (ASX:LTM)
Market cap: AU$9.19 billion; current share price: AU$8.47
Arcadium Lithium formed out of the recent US$10.6 billion merger between Allkem and Livent, creating one of the world’s largest lithium companies with a production capacity of 248,000 tonnes of lithium carbonate equivalent per year.
The company’s operations and development projects are located in Argentina, Australia, Canada, China, Japan, the United Kingdom and the US. They include hard-rock mining, conventional pond-based brine extraction, direct lithium brine extraction and lithium chemicals manufacturing to produce a wide range of lithium products.
This year, Arcadium plans to increase its lithium carbonate and lithium hydroxide production by 40 percent to between 50,000 and 54,000 tonnes of lithium carbonate equivalent. To do this, the company is ramping up lithium carbonate expansion activities at several assets, including its Olaroz and Fénix brine operations in Argentina.
4. IGO (ASX:IGO)
Market cap: AU$6.18 billion; current share price: AU$8.16
Exploration and mining company IGO has a portfolio of battery metals projects, including the Nova nickel-copper-cobalt operation, the Forrestania nickel operation and the Cosmos nickel operation in Western Australia. The company’s battery metals interests also include a lithium joint venture with Tianqi Lithium (OTC Pink:TQLCF,SZSE:002466). The resultant company, called Tianqi Lithium Energy Australia, holds a 51 percent stake in the Greenbushes lithium mine in Western Australia. Ultimately, IGO owns an indirect 24.99 percent interest in the mine.
IGO reported after-tax net profit of AU$495.2 million in its December 2023 half-year report, compared with AU$631.4 million in the prior period. The decrease was attributed to lower spodumene prices and decreased sales volumes.
5. Liontown Resources (ASX:LTR)
Market cap: AU$3.11 billion; current share price: AU$1.33
Liontown Resources has two projects located in Western Australia, which is rich in resources. The Kathleen Valley project is expected to become a top battery metals provider and is projected to begin development in Q2 2024. The company's Buldania project has an initial mineral resource of 15 million tonnes at 1 percent lithium oxide.
Liontown has a binding power purchase agreement with Zenith Energy (LSE:ZEN,OTCQB:ZENAF), a globally reaching but independent Canadian oil and gas company. This agreement is for Zenith to design a power station that will supply Liontown’s Kathleen project with wind- and solar-generated electricity for at least the next 15 years.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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Cobalt Market Update: Q1 2024 in Review
The cobalt market put on a mixed performance in the first quarter of 2024 as metal prices stalled and contracted, while sulfate and hydroxide values increased.
The sector is divided into three segments. Cobalt metal is used as an alloy to strengthen and harden, while cobalt hydroxide is used in lithium-ion batteries, electronics and paint pigments.
Lastly, cobalt sulfate is used to make storage batteries, electroplating baths and some animal feed.
After reaching a second all-time price high in 2022 — US$82,200 per metric ton (MT) — cobalt metal prices have been retracting. They spent the first month of the year locked at the US$29,134.30 level, but sank to a three year low of US$27,215 on April 15. By the end of the quarter, cobalt metal had seen a 2.01 percent erosion in value.
Although cobalt metal prices declined during Q1, Benchmark Mineral Intelligence Pricing Analyst Roman Aubry noted that the rest of the market exhibited strength during the first 90 days of 2024.
“Benchmark has only seen a price decline for cobalt metal in Q1 of 2024; most of our cobalt grades have seen a slight positive trend on the back of rising cobalt hydroxide prices,” he told the Investing News Network (INN) via email.
What factors impacted cobalt supply and demand in Q1?
According to the US Geological Survey's latest report on cobalt, mine supply of the battery metal ballooned in 2023, growing 16.75 percent year-over-year, from 197,000 MT in 2022 to 230,000 MT in 2023.
The vast majority (170,000 MT) was mined in the Democratic Republic of Congo (DRC). In fact, the five largest cobalt mines in the world are located in the African nation.
As Adam Webb, product director at Benchmark Mineral Intelligence, explained during a late March webinar, the cobalt deposits in the DRC are much richer compared to anywhere else globally.
These high-grade areas have attracted the attention of Chinese mining companies, particularly China Molybdenum (SHA:603993,OTC Pink:CMCLF), which is now the largest cobalt producer in the DRC and the world.
With cobalt demand projected to increase by 60 to 70 percent by 2040, the DRC is projected to play a vital role in the energy transition. The country will be responsible for filling most of the additional 214,000 MT of cobalt demand expected by 2030, as it is the only country that can deliver this level of cobalt supply growth, explained Webb.
As Aubry, a colleague of Webb, noted in an email to INN, most of this increased cobalt supply originating in the DRC will end up in electric vehicles (EVs), which is a positive trend for the market.
“It’s hard to understate just how much demand will be added to the cobalt market by the EV industry,” he said. “Already it has become the largest demand sector, and its dominance is only set to grow.”
This sentiment was reiterated in the latest edition of the International Energy Agency's (IEA) Global EV Outlook, which forecasts a significant surge in EV sales, with one in five cars sold worldwide expected to be electric this year.
The report notes that global EV sales are projected to top 17 million by the end of 2024, with China leading the charge with roughly 10 million units. Europe and the US are also seeing increased growth in EV adoption, despite a generally weak outlook for passenger car sales. The report attributes this growth to substantial investment in the EV supply chain, ongoing policy support and declines in prices for EVs and batteries. Under current policies, nearly one in three cars in China and one in five in the US and EU are expected to be electric by 2030.
“The continued momentum behind electric cars is clear in our data, although it is stronger in some markets than others,” wrote IEA Executive Director Fatih Birol. “Rather than tapering off, the global EV revolution appears to be gearing up for a new phase of growth. The wave of investment in battery manufacturing suggests the EV supply chain is advancing to meet automakers’ ambitious plans for expansion.”
Sustained growth in the EV space helped to catalyze cobalt chemical prices during the second month of the year.
“From mid-February onwards, we saw an uptick in demand for cobalt chemicals, particularly from cobalt sulphate, as nickel-cobalt-manganese (NCM) battery cathode manufacturers began to restock their cobalt chemical reserves, in anticipation for increased demand from Tier 1 cell suppliers for high-end EV models,” said Aubry.
Cobalt surplus seen lasting into 2025
Although the long-term outlook for cobalt remains positive, Aubry pointed to various near-term challenges.
“The cobalt market is presently very bearish; the source of this is a significant oversupply of cobalt hydroxide,” he said. “Our forecasting team estimates the cobalt oversupply to be around 12,400 tonnes in 2024.”
The Benchmark team expects this surplus position to last into 2025.
Another factor that could weigh on the cobalt market and prices is battery chemistry, according to Aubry.
“Currently the biggest threat to cobalt is the adoption of lithium-iron-phosphate (LFP) chemistries for EVs; China in particular has been rapidly increasing LFP production,” he explained. “Despite this, cobalt demand overall is expected to go up considerably even if LFP displaces NCM chemistries significantly due to the sheer potential of EV growth.”
Benchmark projects that NCM batteries will “maintain over 40 percent market share, particularly in the west where consumers value distance covered in a single charge.”
“The EV market is set to take off further in the coming years, and critical components, like cobalt, will quickly see their demand rise much faster than the supply can match,” said Aubry. “By 2030, a significant supply gap will form, and if the market does not sufficiently adapt, we may see cobalt prices exceed the heights of 2022.”
While cobalt-containing batteries are likely to retain a broad chunk of the market despite LFP growth, one headwind that has the potential to disrupt output is mined supply. “The biggest pain point in cobalt is in mining capacity more than refining. In that aspect, additional refining capacity will certainly help alleviate some of this pressure; however, there is still a fundamental difference in what the demand is for the market compared to what is supplied. While refining capacity may increase prices for some cobalt grades, it may in turn hurt others,” noted Aubry.
Don’t forget to follow us @INN_Resource for real-time news updates.
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Cobalt Market Update: Q2 2024 in Review
Prices for cobalt metal continued to contract in Q2 on the back of oversupply. Meanwhile, values for alloy-grade cobalt saw some growth due to increased demand in the aerospace and defense sectors.
Starting the 90 day session at US$28,551.80 per tonne, prices for cobalt metal shed 4.93 percent through Q2, ending the period at US$27,143.90. “We've seen prices for standard grade kind of draw down to eight year lows, despite the energy transition demand in the space that's been moving forward,” said Alex Cook, senior price reporter at Fastmarkets.
At Fastmarkets' Lithium Supply and Battery Raw Materials event, Cook noted that increased production in the Democratic Republic of Congo (DRC), Indonesia and China outpaced demand growth and impeded price momentum.
Reiterating that point in a July report, Cook and Angeline Shi, also of Fastmarkets, note that China’s CMOC Group (OTC Pink:CMCLF,SHA:603993) produced 54,024 tonnes of cobalt metal in the first half of the year, achieving 83 percent of its annual guidance of 60,000 to 70,000 tonnes. This surge, which added to an already oversupplied market, was reportedly driven by the expansion of CMOC’s TFM mine, along with increased monthly output at the KFM mines in the DRC.
As Cook explained, Fastmarkets expects cobalt metal prices to trend lower through the third quarter of 2024.
Cobalt metal price graph, June 2022 to April 2024.
Chart via Fastmarkets.
While cobalt metal prices remained muted in Q2, Cook noted that there is a growing price discrepancy between the value of cobalt metal, or standard-grade material, and alloy-grade material.
The spread between alloy-grade and standard-grade cobalt has widened to its largest point since 2009. Strong demand from the US aerospace sector has created a premium for approved aerospace brands amid supply tightness, he noted.
“We are seeing alloy grade at a premium,” Cook told the audience at the Fast markets event. “The main demand source at the moment is aerospace demand, and military defense applications as well.”
Additionally, a 25 percent US tariff on Chinese cobalt metal is somewhat restricting long-term imports. While some have opted to pay the tariff, Cook sees that trend as unsustainable.
He also highlighted a discrepancy between low standard-grade and high standard-grade prices. Supply disruptions for some western brands have created a small premium, with deals clustering around the higher end of the range. The rapid expansion of production capacity for Chinese brands has increased their availability, further widening the range.
Oversupply creating cobalt price pressure
Last year, global cobalt mine supply jumped 16.75 percent year-over-year, rising from 197,000 tonnes in 2022 to 230,000 in 2023. Both the DRC and Indonesia saw significant production increases, with the DRC's output climbing from 144,000 tonnes in 2022 to 170,000 in 2023 — that amounts to 74 percent of global supply. Indonesian production grew from 9,600 tonnes to 17,000 tonnes during the same timeframe, making up 8 percent of supply.
With higher mine output from the DRC and Indonesia, and increased refinery production in China, Fastmarkets is forecasting a 10,000 tonne surplus for 2024, which will add to price headwinds. This despite China’s State Reserve Bureau (SRB) making a strategic cobalt acquisition of 15,000 tonnes for delivery by the end of the year.
“Initially the (stockpiling) provided a boost to standard-grade prices; (however), the low end has since fallen to levels seen before the SRB purchase,” explained Cook. Moving forward, the SRB's 15,000 tonne acquisition could be offset by heightened production in China through the second half of the year.
Elsewhere, high copper prices are likely to keep cobalt by-product production in the DRC at elevated levels.
Indonesian cobalt supply is the result of high-pressure acid leaching (HPAL), a process used to extract nickel and cobalt from laterite ore bodies. Fastmarkets expects this space to grow significantly in the next decade.
“An increase in Indonesian HPAL capacity will more than double its share of cobalt mine supply by 2028," said Cook. “Indonesia will account for 19 percent of mine supply by 2028.”
With this increased production in the DRC and Indonesia, Fastmarkets anticipates that the market will take in an additional 52,000 tonnes of cobalt supply by 2028.
On the demand side, the battery segment will continue to drive growth. In 2023, batteries accounted for 73 percent of global cobalt demand, and according to Fastmarkets, demand from the sector is projected to rise at a CAGR of 12.5 percent between 2023 and 2028. This increase will boost the battery sector's share of demand to 81 percent.
In contrast, demand growth from superalloys and other sectors is expected to be much lower. These segments have estimated CAGRs of 4.4 percent and 2 percent, respectively.
Low prices weighing on western cobalt supply
Outside the DRC and Indonesia, cobalt mines have been impacted by weak prices.
“Those low prices that we've seen have really started to threaten the development of western cobalt capacity,” said Cook.
“Already over the last 12 to 18 months, we've seen a US cobalt mine having to be shuttered because of the low price environment — the breakeven cost is far higher than the market price," he added.
In April, cobalt- and nickel-focused Jervois Global (TSXV:JRV,ASX:JRV,OTCQB:JRVMF) suspended final construction and full concentrator commissioning at its Idaho Cobalt Operations (ICO).
“ICO’s mineral resource and reserve is the largest and highest grade confirmed cobalt orebody in the US and when commissioned will represent the country’s only primary cobalt mine supply,” the company said.
“Jervois has determined that not mining ICO cobalt at cyclically low prices, will preserve the optionality and inherent strategic value of ICO for shareholders and key stakeholders including local communities and the State of Idaho. The company also views not mining ICO at current prices is consistent with US Government critical mineral policy objectives.”
ICO isn't the only cobalt endeavor that has sidelined by a changing environment.
In late June, BASF (OTCQX:BFFAF,FWB:BASF) decided against a US$2.6 billion investment in a nickel and cobalt refinery. Although the move was largely attributed to increasing global availability of nickel, cobalt will be affected too.
BASF initially announced the plan with Eramet (EPA:ERA) in 2020, and the refinery project was expected to output 42,000 tonnes of nickel and 5,000 tonnes of cobalt annually for BASF.
What factors will move the cobalt market in 2024?
The cobalt market saw more stability in late June as some excess supply was absorbed.
“Prices continued their steady decline in June due to persistent oversupply from mines in the Democratic Republic of Congo and Indonesia,” FocusEconomics' July Consensus Forecast reads. “Against this backdrop of low prices, several hedge funds have recently entered the cobalt market as buyers, providing some support to pricing.”
Overall, Fastmarkets expects to see demand for cobalt increase in 2024, but believes this increased demand will not be enough to offset rising supply, leading to another year of surplus.
“(For) alloy grade it’s a little bit different,” said Cook. “We're seeing the opposite in that demand is actually increasing far above the availability of supply.” However, he did note that alloy demand is a small segment of the cobalt market.
“Our research team expects cobalt supply to continue to increase year-on-year, dominated by China. We are expecting China’s refined cobalt supply capacity to increase as well,” said Cook.
While Fastmarkets sees continued price pressure and bearishness in the cobalt industry for the remainder of the year, FocusEconomics has painted a more optimistic picture.
“Prices will surge from current levels by year-end on the back of resilient demand for electric vehicles (EVs), as well as speculative buying from hedge funds and planned stockpiling in China,” its report states. “In the longer term, prices will increase further as the metal is used in electronic applications and lithium-ion batteries, which are widely used in EVs.”
FocusEconomics panelists are projecting that cobalt prices will reach US$34,526 in Q4.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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ASX Cobalt Stocks: 4 Biggest Companies in 2024
Strong electric vehicle (EV) sales have been driving up demand for key battery raw materials in recent years. EVs require lithium-ion batteries to run, and each battery could contain up to 15 kilograms of cobalt.
This means that as demand for EVs increases, so too will demand for cobalt — and, as one of the top four cobalt-producing countries in the world, Australia finds itself in a position to capitalise on this demand.
About 74 percent of global cobalt output comes from the Democratic Republic of Congo (DRC). However, Australia is proving to be a solid contender; though it is only responsible for 2 percent of the world’s cobalt production, it holds about 15.5 percent of global reserves. Moreover, while the DRC’s labour and mining practices have often been labeled unethical and unsustainable, Australian miners are focused on safer, more environmentally friendly practices.
While cobalt prices haven't recovered from their fall in early 2023, EV demand is expected to be strong in the long term.
When it comes to getting exposure to the Australian market, large players may be a good place to start. Read on for a look at the biggest cobalt stocks on the ASX sorted by market cap. All market cap and share price data was obtained on April 15, 2024, using TradingView's stock screener.
1. Ardea Resources (ASX:ARL)
Market cap: AU$144.81 million; current share price: AU$0.73
Ardea Resources' primary focus is developing its wholly owned Kalgoorlie nickel project, which the company says “hosts the largest nickel-cobalt resource in the developed world.” The project includes the Goongarrie Hub deposit.
A 2023 prefeasibility study shows that Goongarrie Hub has an ore reserve of 194.1 million tonnes at 0.05 percent cobalt and 0.7 percent nickel, resulting in 99,000 tonnes of contained cobalt and 1.36 million tonnes of contained nickel. The study indicates that this resource would support an open-pit mining operation with a 40 year mine life and annual output of 2,000 tonnes of cobalt and 30,000 tonnes of nickel. Ardea is now working towards a definitive feasibility study.
In its September 2023 quarterly report, Ardea provided an update on its plans. It also confirmed an increase in throughput over the prefeasibility study's 3.5 million tonnes per year due to a reduction in autoclave residence time. In late March, the company shared that a detailed hydrogeology drilling program had commenced to quantify long-term water supply.
2. Jervois Global (ASX:JRV)
Market cap: AU$64.86 million; current share price: AU$0.24
Jervois Global is focused on producing battery minerals, with a specific emphasis on cobalt. Jervois boasts operations worldwide and hopes to become the only cobalt miner in the US at its Idaho Cobalt Operation (ICO).
In mid-2023, the company won US$15 million from the US Department of Defense (DoD) to fund drilling at ICO as well as a bankable feasibility study for construction of a US cobalt refinery. Resource drilling began at the Sunshine deposit at the ICO project shortly after, while work on a bankable feasibility study for the cobalt refinery was launched in October. DoD-funded resource-extension drilling at the RAM deposit kicked off in March of this year.
Most recently, Jervois completed its maiden JORC-compliant resource estimate for the Sunshine deposit as part of its deliverables under the DoD funding agreement. The deposit hosts inferred resources of 0.52 million tonnes at 0.5 percent cobalt, 0.68 percent copper and 0.49 grams per tonne gold at a cut-off-grade of 0.25 percent cobalt.
3. Cobalt Blue Holdings (ASX:COB)
Market cap: AU$56.74 million; current share price: AU$0.14
Cobalt Blue Holdings focuses solely on cobalt and is enthusiastic about the metal’s ethical and environmental potential within the renewable energy market. The company owns the New South Wales-based Broken Hill project, a cobalt asset that it says adheres to Australian labour and sustainability standards, and is planning the Kwinana cobalt-nickel refinery.
In November 2023, Cobalt Blue released the results of its cobalt-nickel refinery study. During Stage 1, the proposed refinery would process third-party feedstock and have a capacity of 3,000 tonnes of cobalt sulphate per year, along with 1,000 tonnes of nickel sulphate annually. Stage 2 would have the option to include potential feedstock from Broken Hill. The study projects stable margins throughout potential cobalt price fluctuations.
A few days later, the company announced that its potential partner for the refinery is Iwatani (TSE:8088), a battery minerals trader. According to Cobalt Blue, if everything goes through as planned, the refinery will be constructed on Iwatani's property in Western Australia's Kwinana industrial area. Cobalt Blue provided another update on the refinery in April, reporting that construction is expected to begin before 2024 is over.
4. Kuniko (ASX:KNI)
Market cap: AU$22.96 million; current share price: AU$0.26
Norway-focused Kuniko is targeting three metals key for the EV industry: cobalt, nickel and copper. The majority of its assets are in Norway, including its Skuterud cobalt project, Undal-Nyberget copper project and Ringerike battery metals project. Ringerike hosts the past-producing Ertelien nickel-copper-cobalt target.
In its quarterly report for September 2023, Kuniko highlighted significant developments, including an investment of AU$7.8 million by Stellantis (NYSE:STLA), which acquired a 19.99 percent interest in Kuniko and secured a 35 percent offtake for future production of nickel and cobalt sulphate from Kuniko's Norwegian projects for nine years.
In April, the company released a maiden resource estimate for Ertelien showing 23.3 million tonnes of inferred resources containing 49,700 tonnes of nickel, 37,300 tonnes of copper and 3,300 tonnes of cobalt, including high-grade sulphide resources of 4.59 million tonnes at 0.64 percent nickel equivalent and disseminated sulphide resources of 18.68 million tonnes of 0.22 percent nickel equivalent.
A second phase expansion drill program is now underway at Ertelien with an updated resource estimate to be published later in 2024. “Our aim is to demonstrate progress towards developing a Voisey Bay style resource as a potential new source of critical battery metals for European industries,” Kuniko CEO Antony Beckmand stated.
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Securities Disclosure: I, Melissa Pistilli, currently hold no direct investment interest in any company mentioned in this article.
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Graphite Market Update: H1 2024 in Review
Battery metals like graphite are becoming increasingly important for their role in battery technologies.
Both synthetic and natural graphite, in the form of spherical graphite, are currently used in the anodes of lithium-ion batteries, an end-use segment that continues to consistently grow its market share.
Market watchers and analysts are optimistic about graphite's role in electric vehicle (EV) batteries for the foreseeable future; however, significant increases in supply out of China continue to keep prices for both types of graphite muted.
This trend continued during the first half of 2024 as graphite supply from China ballooned, adding headwinds to global prices for the battery metal and threatening capacity outside of the Asian nation.
During a graphite market overview, Georgi Georgiev, battery raw materials analyst at Fastmarkets, commented on China’s dominance in the space, saying that the country had a particularly strong role last year.
“China has been the main producer of natural graphite, especially in 2023. China accounts for almost 78 percent of the global supply for graphite, which in 2022 was different,” he explained.
“When the prices were going up, we were seeing more supply from Africa. But with the price collapsing at the end of 2022 and throughout 2023, we saw less supply coming from African projects and more supply coming from China.”
Indeed, China's graphite output has exploded from 762,000 metric tons (MT) in 2020 to 1.2 million MT in 2023. Most of its increased capacity is coming from state-owned companies and one region in particular, Heilongjiang province.
Altogether, as much as 94 percent of global graphite mine supply is coming out of the Asian country at the moment, with that number growing to 99 percent when looking at spherical graphite supply.
Chinese graphite production saturating market
Graphite prices have retreated and remained depressed with the rise of Chinese production of the battery metal, making it challenging for miners outside of China to keep their projects economically viable.
"It's been especially difficult for projects in North America, where we actually have only one operating mine,” said Georgiev. “And also for the graphite mines in Europe and in South America.”
Although margins are tight due to growing Chinese supply, Northern Graphite (TSXV:NGC,OTCQB:NGPHF), the operator of the Québec-based Lac des Iles (LDI) mine — currently North America's only graphite mine — reported record-setting sales volumes and revenues in its most recent quarterly results, which came out at the end of May.
“While we are pleased to be able to report record sales volumes and revenue in the first quarter amid strong demand from our customers that started in the second half of last year and has continued this year, clearly there is more work to be done to support our growth catalysts,” said CEO Hugues Jacquemin.
He went on to outline the company’s growth strategy, noting that production at LDI has been insufficient to sustain cashflow, requiring external financing and inventory sales. To address this, Northern Graphite is increasing LDI’s output to 25,000 MT per year to meet demand from EV sales, Chinese export controls and US tariffs.
As part of its ambitions, Northern Graphite launched the NGC Battery Materials Group in late January to advance its mine-to-battery strategy, becoming one of the few integrated developers of natural graphite outside China.
The group was formed by acquiring the assets and R&D team from Germany's Heraeus Group, including a state-of-the-art lab in Frankfurt. Northern Graphite also licensed Heraeus' Porocarb technology to enhance energy storage efficiency.
The NGC Battery Materials Group will focus on material analytics, electrochemical characterization and high-temperature processing, providing customized solutions to EV battery makers and OEMs. The group will also develop the 200,000 MT per year Baie-Comeau battery anode material facility, slated to start construction in 2026, pending financing.
According to Northern Graphite, the facility will be modular and tailored to OEMs and EV battery makers, focusing on graphite milling, shaping, classification, purification and coating.
This project and several in Africa will help diversify supply away from China over the longer term, said Georgiev.
Synthetic graphite supply growing thanks to China
The synthetic graphite market is also seeing significant impacts due to increased supply.
Enhanced graphitization capacity in China has led to a surplus of synthetic graphite, diminishing the sector's dependency on natural graphite. As a consequence, the utilization rate of synthetic graphite in battery anodes has risen to 85 to 90 percent, up from the usual 70 percent; meanwhile, natural graphite usage has lessened.
“Natural graphite anodes used to have the advantage of lower costs to offset the disadvantages, such as poor compatibility with electrolytes, poor cycling stability, faster decay, and battery swelling. But the cost-effectiveness of the natural graphite anodes for some low-end lithium-ion batteries is gradually decreasing with plunging, alongside tumbling synthetic anode prices,” Fastmarkets states in a report published in April.
In Europe and North America, the synthetic graphite market is largely controlled by petroleum producer Phillips 66 (NYSE:PSX), a global manufacturer of specialty coke, a precursor to synthetic graphite used in battery anodes.
As Georgiev explained, Phillips supplies the majority of European synthetic graphite demand and has 200,000 MT of capacity in the US. “Meaning that even if you tried to diversify supply away from Chinese suppliers, you end up with getting your supply from only one supplier outside, which is very complicated for the industry,” he said.
The process of creating synthetic graphite from specialty petroleum coke is energy intensive and complicated, Georgiev noted, adding that in the last five decades no new synthetic graphite producers have emerged.
“It is a very difficult process, it is very difficult to produce,” he said. “So it's very difficult to add new capacity.”
He went on to explain that some of the market’s production capacity relies on operations that are very old and tend to require long periods of maintenance, making their supply status precarious.
“For example, last year the (Humber) refinery Phillips 66 operates in England went (offline) for four months for maintenance, which took supply out of the market,” he said.
Graphite sector facing mounting geopolitical tensions
In addition to the usual supply and demand dynamics that move resource sector markets, graphite's status as a critical mineral has made it somewhat of a political pawn between China and the US.
In October 2023, China announced plans to impose new export restrictions on certain graphite products.
Chinese exporters were told that starting in December 2023, they would have to obtain permits to ship "high-purity, high-hardness and high-intensity synthetic graphite material and natural flake graphite and its products,” Reuters states.
To counter, in early May of this year, the Biden administration gave OEMs notice that they would be given two years to find suitable and sustainable sources of battery anode material, including graphite, outside of China.
Days later the US doubled down, announcing it would raise tariffs on foreign EVs and batteries.
“The tariff rate on natural graphite and permanent magnets will increase from zero to 25 percent in 2026,” the statement reads. “The tariff rate for certain other critical minerals will increase from zero to 25 percent in 2024.”
As Georgiev pointed, out the two year grace period was the result of North American OEMs that “stated and made it clear to the administration that there is no way to find alternative material now.”
“Actually, it’s very questionable whether sufficient alternative material will be available in 2027 as well,” he said.
While OEMs and Georgiev remain skeptical, Northern Graphite is optimistic.
“This is really good news for us as we extend the life and production capacity of our LDI mine in Québec this year and increase the availability of natural graphite for the North American market,” said Jacquemin. “We are executing on our main growth catalysts and preparing the company to be a key graphite supplier to industrial customers and Lithium-Ion battery makers as they turn to local production, and away from China, to fulfill their needs.”
It is estimated that the US imports 42 percent of its graphite supply from China.
Natural graphite substitution could widen imbalance
Prices for natural graphite could face more headwinds as demand shifts to the synthetic market.
Currently, the synthetic graphite market is pressuring the natural graphite sector due to increased use by anode producers, which are looking for lower costs and better performance.
As synthetic graphite has become more prevalent, it has come to account for 90 percent of the graphite used in lithium-ion battery anodes. Natural graphite products have also been negatively impacted by China's export controls.
These trends, coupled with oversupply and declining prices, have led to reduced demand for natural graphite, causing the market to struggle more compared to synthetic alternatives.
According to the International Energy Agency (IEA), battery demand for synthetic graphite has grown to represent 40 percent of supply, and is expected to balloon to 55 percent by 2040.
Like Georgiev and the OEMS, the IEA sees building graphite capacity outside of China as challenging.
In its Global Critical Metals Outlook, the agency highlights that projected supply of critical materials outside China is expected to fall significantly short of demand. While early stage projects in the US, Korea, Saudi Arabia, India, Norway and Finland could help bridge this gap, the anticipated supply is still likely to be insufficient to meet requirements.
“This indicates that achieving the diversification ambitions outlined in recent policy measures would be highly challenging without significant efforts to expedite the development of projects in geographically diverse regions,” the report reads.
“These projects would, however, need to move ahead amid strong competition from incumbent players and significant announced overcapacities in China, which may require strategic and co-ordinated support from governments.”
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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ASX Graphite Stocks: 5 Biggest Companies in 2024
Graphite isn’t just used for pencils — it's also a key electric vehicle (EV) battery component due to its high conductivity and quick-charging capacity. As EV sales rise, experts believe this battery metal will also take flight.
With the graphite forecast looking hopeful, investors are searching for ways to get exposure to the sector. Australian investors can look to the ASX, which is home to a slew of companies focused on the graphite market.
When learning about an industry, it's often a good idea to start with key players, and here the Investing News Network has compiled a list of the largest graphite-focused companies on the ASX by market cap. Data was collected using TradingView's stock screener on July 10, 2024. Read on to learn more about Australia's largest graphite companies.
1. Sovereign Metals (ASX:SVM)
Market cap: AU$403.35 million; share price: AU$0.705
Sovereign Metals is focused on advancing on its Kasiya rutile-graphite project in Malawi. Rutile is a mineral consisting of titanium dioxide that's often used to produce titanium metal. Kasiya's graphite co-product mineral resource estimate is 1.8 billion tonnes at 1.4 percent graphite, containing over 24.4 million tonnes of graphite. The company believes this material has the potential to be used to supply spherical purified graphite for the lithium-ion battery anode market.
Major miner Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) has made a series of strategic investments in Sovereign Metals over the past year totalling AU$58.9 million, giving it a 19.76 percent stake in the company as of July.
With this funding and Rio Tinto's technical expertise, Sovereign is advancing Kasiya toward a definitive feasibility study (DFS). In June, the company announced that pilot plant construction is underway as part of an ongoing optimisation study, which will provide critical information for the planned DFS.
2. Syrah Resources (ASX:SYR)
Market cap: AU$331.17 million; share price: AU$0.31
Syrah Resources is an industrial minerals and technology company with a vision of becoming a leading global supplier of graphite and battery anode products. The company's two main focuses right now are its flagship Balama graphite project in Mozambique and its Vidalia anode materials facility in Louisiana, US.
Syrah’s Balama operation has a projected lifespan of over 50 years, and its combined mining and processing operations allow for the production of 94 to 98 percent pure carbon graphite concentrate.
Syrah reached a milestone in April with the sale of 10,000 tonnes of natural graphite fines from Balama to PT Indonesia BTR New Energy Materials. This was the company's "first large volume natural graphite sale to a battery supply chain participant destination outside China." It came after the announcement of a binding offtake agreement with South Korea's Posco Future M (KRX:003670) as part of Syrah's efforts to expand its reach into ex-China markets.
In February, Syrah started production at the Vidalia facility, making it the first integrated graphite processor outside of China. The plant has an annual production capacity of 11,250 tonnes of active anode material.
In 2022, the company was selected to receive an up to US$220 million grant from the US Department of Energy as part of the country's Inflation Reduction Act. The funds are being used to support the financing of an expansion at Syrah's Vidalia facility that will bring its capacity to 45,000 tonnes per year.
The company has binding offtake agreements with Tesla (NASDAQ:TSLA), Westwater Resources (NYSEAMERICAN:WWR) and Graphex Technologies, a wholly owned subsidiary of Graphex Group (NYSEAMERICAN:GRFX,HKEX:6128).
3. Renascor Resources (ASX:RNU)
Market cap: AU$228.73 million; share price: AU$0.09
Renascor Resources has honed its efforts on helping to power the future with clean energy resources. While the company has five projects, most of its activities are focused on its two fully owned projects in South Australia: the Siviour battery anode materials project and the Carnding gold project.
Renascor announced in April that the Australian government had approved a AU$185 million loan facility to help advance its planned vertically integrated battery anode material graphite mine and manufacturing operation. In July, the company was awarded a AU$5 million grant under the Australian government’s International Partnerships in Critical Minerals Program to help fund a AU$10 million demonstration plant. Both of these initiatives will help fast track Siviour.
Renascor says it’s on track for planned commissioning of the demonstration processing plant in Q2 2025. The plant will produce battery-grade purified spherical graphite.
4. Talga Group (ASX:TLG)
Market cap: AU$214.56 million; share price: AU$0.55
Talga Group is a vertically integrated battery anode and materials company, meaning it mines its own graphite and also produces anodes. It has operations in Sweden, Japan, Australia, Germany and the UK.
Last year, Talga received environmental approval for its Nunasvaara South graphite mine, which forms part of its vertically integrated Vittangi anode project in Sweden; it also got an environmental permit for its Luleå anode refinery, which Talga says will be Europe's first commercial natural graphite anode plant.
Construction of the plant began in the third quarter of 2023.
A FEED study for the Vittangi anode project was completed in the first quarter of 2024, and a scoping study is now underway to expand the existing initial 19,500 tonne per year production of graphite anode products. Talga is targeting Q4 of this year for the completion of the scoping study, which also includes downstream anode refinery expansions and incorporation of the company's proprietary graphite recycling technology.
5. Quantum Graphite (ASX:QGL)
Market cap: AU$163.87 million; share price: AU$0.52
Quantum Graphite is advancing the Uley 2 flake graphite project in South Australia, which includes the past-producing Uley mine and the Mikkira deposit. The company bills it as “one of the largest high-grade natural flake deposits in the world.”
The project is fully permitted and development ready with a binding offtake agreement with a major European trading group for 50 percent of its production for a minimum of five years.
Through its Sunlands Power joint venture with Sunlands Energy, Quantum Graphite plans to manufacture coarse-natural-flake-based thermal storage media sourced from the Uley mine to be fitted within Sunland Energy’s patented TES Graphite Cells technology for grid-connected, long-duration energy storage.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Securities Disclosure: I, Lauren Kelly, hold no direct investment interest in any company mentioned in this article.
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Vanadium Market Update: H1 2024 in Review
Vanadium saw a price bump in January on hopes that China's property sector would prop up demand, but that positivity began to erode during the first half of the year as consumption remained weak.
Willis Thomas, head of CRU+, said that in January prices were 5 percent higher than December’s average, reaching 91,167 renminbi per metric ton (MT) delivered at place (DAP), or US$12,766.16.
“However, since this pre-New Year’s bump, policies introduced this year have so far failed to revive demand in the property sector, and the downward trend on pricing has continued along with structurally weak demand for finished long steel products,” he told the Investing News Network (INN) via email.
By June, a sharper-than-expected drop in China's rebar production, which fell by 12 percent year-on-year in Q1 and 13 percent year-on-year in Q2, had exacerbated vanadium's price declines. Growing battery-related demand wasn't enough to offset the losses experienced in steel applications, which make up nearly 90 percent of vanadium usage.
“Generally, the price of vanadium is very low compared to recent historical periods,” said Thomas.
By June, Chinese vanadium pentoxide was averaging just 82,312 renminbi DAP (US$11,526.19).
Lower Chinese vanadium demand stalls price growth
Global vanadium production contracted slightly in 2023, slipping from 102,000 MT in 2022 to come in at 100,000 MT, according to the US Geological Survey's latest information on the critical metal.
The report states that vanadium redox flow batteries (VRFBs) are becoming increasingly significant for large-scale energy storage, particularly in supporting renewable energy projects aimed at reducing carbon emissions.
Global installations of VRFB projects are on the rise, with analysts predicting that the VRFB market will account for about 17 percent of vanadium consumption by 2033, up from just 3 percent in 2021.
However, while the VRFB market's growing need for vanadium will be helpful in the future, Thomas said weak demand in the steelmaking sector, where vanadium is used as a strengthener, is weighing on the metal now.
“It was not surprising to see rebar production numbers fall in China, but it was surprising by how much," he said, noting that back in December declines for Q1 and Q2 were projected at 6 percent and 5 percent, respectively.
Vanadium prices could improve in H2 as China's new rebar standards go into effect in September.
“The new regulations will shift standards from recommendatory to mandatory. They will also adjust standards of tolerance, smelting, properties, package and implement stricter requirements on rebar quality,” states a July report from Fastmarkets. The firm said the regulations are expected to lead to increased demand for vanadium nitrogen and silicomanganese amid a push for developing high-quality steel.
“For example, the tolerance for rebar with diameters of 6-12 millimeters (mm) is 5.5 percent in 2024 standards, compared with 6 percent in the 2018 version. The tolerance for rebar with diameter of 14-20 mm is 4.5 percent, compared with 5 percent in the 2018 version,” the firm continues in the article.
During the first half of 2024, Chinese rebar consumption slipped to 102.35 million MT, an 11.7 percent decline from the same period in 2023, when 115.92 million tonnes were used.
Battery demand growing, but still far outpaced by steel
While battery demand growth is seen supporting vanadium prices in the coming years, some of that potential may be eroded as different battery chemistries vie for dominance in the market.
According to the International Energy Agency's 2024 Global Critical Metals Outlook, the battery storage market experienced significant growth in 2023, with global installed capacity surpassing 85 gigawatts. This growth was driven mainly by China, the EU and the US, which together accounted for nearly 90 percent of capacity additions.
China led the market, making up 55 percent of the new global additions, primarily through utility-scale projects paired with solar and wind. The majority of the US’ new capacity was made up of utility-scale systems, while the EU saw rapid growth in behind-the-meter storage, especially in Germany and Italy.
Of this new capacity, lithium-ion batteries — particularly lithium-iron-phosphate batteries, known as LFP — make up the largest share, representing 80 percent of storage systems. This dominance reflects their increasing use due to lower costs and better performance for frequent charging and discharging.
The report goes on to note that lithium-ion batteries remain key for short-duration storage, while alternative technologies like vanadium flow batteries are being developed to diversify energy storage solutions.
“Lithium-ion batteries’ role in fuelling the growth of the EV industry remains unchallenged in the near term,” the International Energy Agency explains. “Alternative technologies such as sodium-ion batteries and vanadium flow batteries begin to take some shares from lithium-ion batteries in low-range vehicles and storage markets, but they do not materially alter the prospects for lithium demand in climate-driven scenarios.”
Thomas also expects to see continued growth in the energy storage sector, which will benefit vanadium.
“Battery-related demand has seen increases, with 2024 looking to be another record-breaking year for this sector — but growth in this sector has not offset the loss of steel-related demand," he emphasized.
What factors will move the vanadium market in 2024?
If forecasts for increased rebar demand and energy storage applications are correct, the vanadium market will need to increase production, a point the US Geological Survey makes in its vanadium overview.
However, escalating tensions between the west and China, as well as Russia, could impact access to supply. China and Russia are the first and second largest producers of vanadium globally.
“New supplies of high-purity vanadium pentoxide needed for VRFBs are expected to come from existing producers or early-stage development projects,” the organization's report on the battery metal states.
As the US looks to build its domestic supply chains for critical minerals, the country could look to the Gibellini vanadium project in Nevada. The site is owned by Nevada Vanadium, a subsidiary of Silver Elephant Mining (TSX:ELEF,OTCQB:SILEF), and has garnered attention from the Biden administration.
“The Gibellini project, located in Eureka County, Nevada, will help provide the critical mineral vanadium, which is an important component in lightweight steel and has the potential to increase the life and reduce the cost of batteries when used in utility-scale wind and solar projects,” an April press release from the White House states.
“This was the first primary vanadium mine to be permitted in the United States.”
Elsewhere, fresh supply could come from an unexpected source.
In June, Kazakhstan began producing mixed vanadium oxides, aiming to supply the growing battery market and support green energy efforts. A facility in the Kyzylorda region is reportedly able to produce over 30 MT of the material on a monthly basis using local raw materials and advanced technologies.
Kazakhstan's Ministry of Science and Higher Education is said to be exploring partnerships with battery producers VRB Energy and Invinity Energy Systems (LSE:IES,OTCQX:IESVF). These moves are part of a broader strategy to leverage the nation’s critical raw materials, including vanadium and lithium, for the green energy transition.
Despite the potential growth the vanadium sector is expecting over the next decade, Thomas warned that there is still plenty of volatility in the market. In his view, it's not yet clear if the bottom is in.
“Vanadium capacity is being curtailed currently, but there may still be some room left for prices to fall. If steel-related demand continues to fall, as expected in Q3, then vanadium prices are likely to be flat to negative," he said.
Chinese rebar production is projected to see a 5 percent year-on-year increase in Q4, “which along with continued battery related demand may support prices near the end of the year,” Thomas said.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Manganese Market Forecast: Top Trends That Will Impact Manganese in 2024
Caught up in the same volatility that impacted many metals in 2023, manganese prices trended downward on China’s slowing economic recovery and worsening global inflationary pressures.
Despite not being widely known, manganese is an important raw material for the steel industry. In fact, it is the fourth most common metal by tonnage, just after iron, aluminum and copper. It also has growing uses as a battery metal.
With those factors in mind, what will happen to manganese in 2024? To find out, the Investing News Network (INN) reached out to analysts who cover the market to get their take on what’s next for the manganese.
How did manganese perform in 2023?
The manganese market remained oversupplied for much of 2023 amid tepid demand and high ore supply.
The metal is inextricably linked to the steel market as more than 97 percent of annual manganese production is used in steelmaking. And as Andrew Zemek of CPM Group pointed out, the steel industry is not in great shape.
“Global crude steel production has been falling for the most part of the last two years,” he told INN in an email. “After the first 10 months of 2023 (seven of which recorded a year-over-year decline in production), steel industry output is almost exactly where it was after the first 10 months of 2022 — there was no growth at all.”
This happened even though China, the largest global steel producer, recorded a 1 percent year-over-year rise in steel production in the first 10 months of 2023, alongside a 2 percent increase in the rest of Asia. This dynamic caused manganese ore prices to decline by 10 to 20 percent from the start of 2022. Meanwhile, international prices for manganese ferroalloy, which is smelted directly from ore, were 20 to 40 percent lower as of early December.
China is the largest consumer of manganese, mainly as feedstock for its steel sector. And although the Asian nation is the fourth largest producer of manganese in the world, it is also the largest importer of the metal. Perhaps unsurprisingly, China is responsible for 90 percent of global manganese refining as well.
Decreased steel production activity means less demand for manganese, which has resulted in all-time high surpluses of manganese ore at China’s ports. “Ore prices have responded to the surplus in the market, and ferroalloy prices currently sit below the cost of production, even with reduced ore input costs,” Project Blue analysts told INN via email.
A mid-2023 report from Fastmarkets states that increased manganese imports weighed heavily on manganese prices in 2023, despite the overhang in ore material supply in China.
“According to China customs data, the country imported a combined 15.38 million tonnes of manganese ore in the first six months of 2023, up by 9.03% from imports in the first half of 2022,” said the firm’s analysts.
At the same time, China’s debt-ridden property market, which is a major source of demand for steel, has been in the doldrums for most of the year. “The key single factor affecting manganese demand is the situation of the Chinese construction sector,” explained CPM Group’s Zemek. “Silicomanganese (SiMn) is the most important manganese ferroalloy, which is mostly used in the production of concrete reinforcing bars (rebars).”
He noted that rebar production in China was 6 percent lower in the first 11 months of 2023 compared to the year-ago period, resulting in 8.1 million metric tons of “lost” rebar production, or 163,000 metric tons of “lost” SiMn demand.
What is the manganese supply and demand forecast for 2024?
Heading into 2024, the forecast for manganese supply and demand is slightly better; however, much of what happens will depend on which way the wind blows for China’s economy and the global steel industry.
The World Steel Association is projecting 1.8 percent growth in global steel demand in 2023, and another 1.9 percent increase in 2024, with a slower recovery expected in the developed economies compared to their emerging counterparts, particularly in Asia. “We expect the situation in China’s property market will stabilise in the latter part of the year and China’s steel demand will record slight positive growth thanks to government measures,” the association states.
China’s National Development and Reform Commission announced consumption stimulus measures midway through 2023, with a focus on auto, property and consumer goods such as appliances and electronic products. All of these moves should be beneficial for ferromanganese demand, but with Chinese consumers facing economic restraints it remains to be seen if demand from these sectors will improve enough to bolster the manganese market.
Given those factors, the Project Blue team has a more positive demand outlook for manganese this coming year: “Our 2024 demand estimate is in line with an expected recovery in the Chinese economy, with China dominating 54 percent of the steel market. The property stimulus, depending on additional government incentives, will affect overall ore demand.”
CPM Group also sees better prospects for manganese in 2024, however slight. Zemek stressed that some of the demand placed on the market by 1.9 percent growth in the steel industry “will be met from existing inventories" — not to mention that “the previously forecast 1.8 percent growth in demand in 2023 is not likely to materialize this year.”
Longer term, the expert told INN some analysts are predicting that steel production may only see a compound annual growth rate of 0.7 percent between now and 2032.
Outside of China, critical manganese supply and demand factors are also taking shape. One important region is India, the world’s sixth largest producer of the metal and one of the world’s largest consumers.
The vast majority of India’s manganese goes to the production of steel. This will be a necessary component of reaching the country's 2040 Vision, which includes the buildout of massive airport hub infrastructure. The World Steel Association is predicting that steel demand in India will “show healthy growth” of 8.6 percent in 2023, and 7.7 percent in 2024 — that would be down from 9.3 percent in 2022. “India is expected to see an increase in both manganese ore production and imports as the country moves towards implementing its 2040 Vision,” said Project Blue.
On the supply side, the Project Blue team is watching supply chain challenges, including reduced rail capacity and port delays in South Africa — the world’s number one producer of the metal. The firm said state-owned Transnet has reportedly received US$2.5 billion to assist with the operational challenges for both its port and rail facilities.
As for new manganese production, CPM Group said there are about 60 development-stage manganese ferroalloy projects scheduled to start production by 2027 — nearly all of which are outside of China. If all of these new projects in the pipeline are brought online, the impact on the global market would be about a 6 percent increase in manganese ferroalloy production capacity. This figure outpaces that of the expected growth in steel production.
“But it is not certain if all of them will go ahead, bearing in mind the current overcapacity and general economic climate, and very modest expectations regarding steel production,” Zemek explained in his comments to INN. “With Chinese dominance in manganese ferroalloy production, these new projects outside China will not change much in the overall picture of geographical distribution of production.”
Project Blue “expect(s) ore prices to remain under pressure moving into 2024 due to the uncertainty facing the Chinese steel and construction market.” The firm sees Chinese domestic demand supporting higher ore and alloy prices in the short term, and a potential global economic recovery in 2024 returning prices to a cost-driven level in the medium term.
“Thereafter, our price forecast is more driven by fundamentals and the need for new capacity to be developed,” the analysts added. “We expect prices in China to rise in the second half of the decade.”
What factors will move the manganese market in 2024?
Outside supply and demand, what trends should manganese market watchers look for in 2024?
“A general conclusion from analyzing the 2023 manganese market is that we won’t see any fireworks in 2024,” said Zemek. However, market events could lead to moderate price growth for some manganese products, particularly electrolytic manganese metal, high-purity manganese sulfate monohydrate and certain manganese ferroalloys.
Of course, the main driver of the ferroalloy market will continue to be China’s economic health and the consequences for its construction and steelmaking sectors. “Whatever is happening in the steel sector globally (and in China in particular) translates into demand for manganese (with some delay),” said Zemek. This means investors should watch for any impacts of China’s economic stimulus measures, as well as any additional steps that may come in 2024.
Aside from that, growth in the battery sector is another area for investor attention, particularly the chemical high-purity manganese products used by electric vehicle (EV) battery manufacturers.
“Several high-manganese rechargeable battery chemistries have been developed in recent years, but many will only enter mass production in Q4 2023 and 2024,” said Zemek. “This should reduce the current surplus of high-purity manganese sulfate and lift the prices from their doldrums.”
The team at Project Blue is also keeping an eye on this segment of the market. The firm expects that while prices for manganese sulfate will remain under pressure in 2024, over the long term they will gain support from rising demand from the EV battery sector, which will require a large-scale buildout of new manganese sulfate production capacity.
“Project Blue foresees sustained growth in demand for manganese in EVs over the medium term, as sales of EVs are projected to increase significantly due to governmental pressure to transition to low-emission fleets,” the team told INN.
While China is expected to remain the major producer of battery-grade manganese sulfate moving into 2024, one of the key catalysts for this submarket that should be on investors' radar is recent funding for several ex-China projects, which could move them closer to development in the new year.
“We estimate existing producers will be able to supply the market via increases in capacity utilization until about 2027, but that, thereafter, new supply will be required if supply is to meet demand,” said Project Blue. “We expect high-purity manganese sulfate prices to follow a similar trend to ore and metal for the next two years, with costs driving prices.”
CPM Group is also watching government policy and funding initiatives that may prove beneficial for ex-China manganese sulfate projects; for example, the US Inflation Reduction Act and the EU’s Critical Minerals Act.
“However, most of the non-Chinese projects in the pipeline are scheduled to start production by 2026/2027, so we’ll not see much change in 2024/2025,” said Zemek.
He added that the high-purity manganese sulfate subsector represents less than 2 percent of the overall market, and is currently oversupplied to the detriment of prices. This low-price environment will likely pose funding challenges for new battery-grade manganese projects, leading to possible production timeline delays and future supply deficits.
Don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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