- ASX-listed miners with Australian projects rally
- ASX-listed miners with South American projects fall
- Japan announces subsidies for lithium projects
- China lithium prices rally on improved demand expectations
MELBOURNE, April 24 (Reuters) – Expectations that demand for Australian lithium will grow boosted Sydney-listed miners’ stocks on Monday after Chile unveiled plans to take control of its output of the metal essential for electric vehicle (EV) batteries.
Listed miners with lithium projects in South America suffered, however, on concerns other governments may follow Chile’s lead.
Elsewhere in Asia, lithium prices stabilised on an improved demand outlook, and Japan acted to shore up its EV minerals supply by announcing a swathe of industry subsidies.
Shares in Australia’s biggest independent lithium producer, Pilbara Minerals (PLS.AX) jumped 5.2% to a six-and-a-half week high, while Mineral Resources (MIN.AX), Liontown Resources (LTR.AX), Core Lithium (CXO.AX) and IGO Ltd (IGO.AX) also rose.
Australia, the world’s top lithium producer, makes up around half of global supply.
Last Thursday, Chile’s President Gabriel Boric announced a move that would see the world’s second-largest lithium producer shift to a model in which the state holds a controlling interest in all projects, partnering with mining firms.
“Chile’s decision could slow down investment into the country, which is probably slightly positive for the lithium world, and it may force the majors to pour in more investment dollars outside of Chile,” said Glyn Lawcock, head of resources at Sydney investment bank Barrenjoey.
“It probably makes Australian hardrock more valuable, because you are in a much more stable regulatory environment compared to Chile. Sure, there might be small increases in royalties payments from time to time, but we don’t generally nationalise assets.”
Bucking the regional trend were Australian-listed miners with projects in South America’s lithium triangle which spans Chile, Argentina and Bolivia, on concerns other governments may follow Chile’s footsteps.
Shares in miners with Argentine projects fell. Allkem Ltd (AKE.AX) which operates the Olaroz mine, dipped 0.2%, while shares in Lake Resources (LKE.AX), Argosy Minerals (AGY.AX) and Galan lithium (GLN.AX) fell between 4.1% and 4.9%.
Lithium Power International, (LPI.AX) whose Maricunga brine project is Chile’s largest permitted, proposed project welcomed the new policy which it said would “positively transform” Chile’s lithium industry. Its shares fell 6.2%.
The nationalisation trend poses a challenge to EV manufacturers scrambling to secure battery materials, as more countries look to protect their natural resources and access to battery minerals supply.
In the latest move, Japan will subsidise half the cost of smelting and mine development projects of important minerals including lithium by Japanese companies, Nikkei Asia reported on Sunday.
MARKET OUTLOOK
Prices of lithium in Wuxi, China, which fell after news of the policy broke last week, rallied 14.8% on Monday given expectations of an upcoming demand recovery.
“The jump in futures is mainly driven by improved sentiment as the market sees limited scope for prices to fall further,” said Zhang Weixin, an analyst at China Futures.
“News from Chile has limited impact as the decision won’t have any imminent impact on supply in the near term.”
Demand for lithium appears to be improving after stronger-than-expected first quarter sales of EVs in China, said Reg Spencer of broker Canaccord.
Prices for lithium carbonate have slumped by more than two-thirds since November while those for Australian ore have dropped nearly 30% after a rush by EV makers over two years drove prices up sharply.
