Bets on Aussie lithium miners rise as Chile plan stokes concerns (updated)

Lithium Power International

24/04/2023 07:44

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      ASX-listed miners with Australian projects rally
    

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      ASX-listed miners with South American projects fall
    

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      Japan announces subsidies for lithium projects
    

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      China lithium prices rally on improved demand expectations
    

  
 (Recasts, changes slug, adds China price details, Japan
subsidy)
    By Melanie Burton and Harish Sridharan
       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 6% 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 0.5%, while
shares in Lake Resources  LKE.AX , Argosy Minerals  AGY.AX  and
Galan lithium  GLN.AX  fell between 3% and 6%.  
    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.
    

 (Reporting by Melanie Burton in Melbourne, Harish Sridharan in
Bengaluru, Mai Nguyen in Hanoi and Siyi Liu in Beijing; Editing
by Lincoln Feast and Sonali Paul)
 ((Harish.Sridharan@thomsonreuters.com; Twitter: https://twitter.com/damnit_saladin))