It won’t be much late for us when we would start with the era of Battery Domination, the glimpse of which is pretty evident in our day-to-day lives. Be it the Li-Ion driven electrical household appliance or the rapid developments taking place in Tesla’s automotive labs or our nowadays quintessential cell phones. The only glitch or the speed breaker to this surge in the battery dynamics is the fact that the global production for the same is not all that great. The market is still heavily dependent on the limited number of producers. In year 2018, there was a gush of announcements from the global carmakers as regards the new electric vehicles models. The lithium ion batteries supply is suddenly now being garnered by the electric vehicles, which was earlier reaped only by the laptops and smartphones.
It has been expected by the analysts globally that they don’t see any slump in the demand for the Li-ion batteries going forward. On the flipside, there might still be enormous demand for the same as the electric car production is anticipated to rise by more than 30 times as large by the year 2030.
The lithium is found and mined in the six continents & hence there is enough amount of lithium available in the world. Hence, for meeting this kind of exorbitant demand, the mother earth surely has the lithium which is required, it is just that the battery makers will be required to have much more lithium mines in place from which they can extract the same and make the needed batteries. Also, they will now need to build them much more quickly than they ever thought; otherwise it may happen that there would always be a dearth of the supply vis-à-vis the demand.
Also, even if the prices of the lithium rises, that won’t prove to be a problem for the equipment as well as the electric automotive manufactures as the cost of lithium on a whole electric vehicle is minuscule and they would just like ensure that there is a constant supply of lithium, whatever may the cost that they need to incur, and hence the demand for the lithium continues to startle.
However, there have been certain negative reports also, mentioning that the transition towards the electric vehicle and the surge in the global lithium demand won’t be that rapid as many of the analysts saw the EV sector as growing slowly than earlier anticipated.
Two of the foremost companies in the lithium space which are listed on the Australian Stock exchange are Galaxy Resources Ltd & Pilbara Minerals Ltd.
Galaxy Resources Limited (ASX: GXY) is a global lithium company, with a diverse project portfolio, consisting of both hard rock and brine assets spanning Australia, Canada and Argentina. The Company produces spodumene at its Mt Cattlin Lithium & Tantalum Mine in Western Australia. Galaxy Resources owns and develops Lithium projects and undergoes definitive feasibility study on the projects.
The company has for FY ended 31 December 2018, reported a profit after tax of US$150.223 Mn. This rise in the PAT was predominantly on account of the profits that were derived from the disposal of the northern tenement package in the Salar del Hombre Muerto to POSCO. If we are to exclude this gain from sale, then the Group PAT for the year which ended on 31 December 2018 was US$3.4 million.
The company’s revenue from ordinary operations rose by 60% to come in at US$153.9 million in FY2018 on the pcp. This growth was driven on the back of improvement seen in the commodity prices and a sales volume expansion of 40% from the erstwhile 113,467 dmt in 2017 to 159,255 dmt. The average price realised from the sale of spodumene concentrate came in at US$927/dmt, an 18% improvement on FY2017 (US$783/dmt).
The Group yielded an EBITDA from ordinary operations which came in at US$58.1 million for the year. The cost of goods sold per DMT (excluding royalties and selling costs) increased by 19%, to come in at US$411/dmt for FY2018 as compared with US$346/dmt sold as reported for FY2017.
Regarding the MT Cattlin, the company is targeting a production of spodumene in the range of 40,000 dmt to 45,000 dmt in Q1 of 2019 while, for the full calendar year is expected to be in the range of 180,000 dmt to 210,000 dmt.
Pilbara Minerals Limited (ASX: PLS) operates as a mining and exploration company. The Company focuses on the development of lithium and tantalum projects. Pilbara Minerals serves customers worldwide.
For the HY ended 31 December 2018, 46,682dmt of +6% spodumene concentrate was shipped at an average selling price of US$742/dmt CIF, reflective of the offtake pricing model developed with key customers. A provisional 32,7951lb of tantalite concentrate was sold during the half year (pending final assay results). Besides, 205,766 tonnes of direct shipping ore was sold to Atlas Iron under a Mine Gate Sale Agreement.
The Group’s consolidated loss after tax for the half-year ended 31 December 2018 was $11.899 Mn (31 December 2017: loss after tax of $9.973 Mn). The loss includes exploration expenses of $4.415 Mn (31 December 2017: $3.219 Mn), an unrealised foreign exchange loss of $6.094 Mn (31 December 2017: $1.32 Mn) related to the Company’s US$100M Nordic bond debt facility and noncash share-based payment expenses of $1.788 Mn (31 December 2017: $2.631 Mn).
The company seeks to work for the objectives which revolve around completing the development and mine world class lithium-tantalum deposit at Pilgangoora Project which is 100% owned and is situated in Pilbara region of Western Australia and continuing to conduct the exploration activities at Pilgangoora Project so that existing JORC resource and reserve can be increased.
The market outlook happens to be robust, and there is a growing demand for the companies’ underlying product such as lithium.
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.