Welcome to the July 2020 edition of the lithium miner news. July saw lithium prices only slightly lower and further significant moves by companies (BMW) and countries [UK] to secure lithium supply and invest in lithium-ion battery megafactories. Depressed lithium prices continue to subdue the lithium miners sector despite the tsunami of lithium demand (6x increase) set to hit this decade, and the EV and battery manufacturers strong price rally.

Lithium spot and contract price news

During July, 99.5% lithium carbonate China spot prices were down

Lithium carbonate, battery grade, cif China, Japan & Korea

Source: Fastmarkets

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Lithium demand versus supply outlook

On June 24 Investing News reported:

Simon Moores: US domestic supply chain build out “far too slow”. “It is not too late for the US, but action is needed now,” Simon Moores of Benchmark Mineral Intelligence told the US Senate on Tuesday. “A new global lithium-ion economy is being created,” Moores said. “Yet any US ambitions to be a leader in this lithium-ion economy continue to only creep forward and be outstripped by China and Europe.” Looking at the raw materials needed to supply that lithium-ion economy, Benchmark Mineral Intelligence forecasts that by 2029, demand for nickel will double, while demand for cobalt will grow by three times, flake graphite by four times and lithium by more than six times.

On June 30 Benchmark Mineral Intelligence reported:

UK earmarks £1bn to attract EV battery gigafactory and kick start lithium ion economy. The UK Government stated: “We are making additional funding available this year to attract investment in ‘gigafactories’……

BNEF updated Li-ion battery demand outlook (June 2020)

Source: Bloomberg New Energy Finance [BNEF]

Benchmark Mineral Intelligence lithium demand v supply forecast 2020

Source: Benchmark Mineral Intelligence

2019 to 2030 ‘battery’ demand increase forecast for EV metals as the EV boom takes off

Source: Courtesy BloombergNEF

Benchmark Mineral Intelligence – Simon Moores’s – forecasts

Source: Benchmark Mineral Intelligence Twitter

Lithium market and battery news

On July 6 Investing News reported:

Australia’s lithium producers could benefit from vertical integration……Harry Fisher of CRU Group…..“On the lithium side, that’s really favouring lithium hydroxide, which is a good story for Australia and those spodumene producers. We’re seeing lithium hydroxide demand really start to pick up over the long term, and actually overtake the traditional carbonate demand from South America and the like.” “From the work that we’ve done looking in detail at lithium chemical costs globally, the Australian projects that are out there will be really competitive at a global level and they could really benefit from vertical integration,” Fisher said.

On July 9 New Atlas reported:

Lifetime of lithium-ion batteries boosted by new cathode coating……The new coating was able to boost the operating voltage of the battery to 4.6 V, up from 4.2 V on existing lithium-ion batteries….The team says that this would reduce the cost of battery packs, and extend the battery life of devices.

On July 15 Yahoo Finance reported:

Lex Letter from Seoul: LG Chem — the proxy Tesla bet. In Asia, those who missed out on the Tesla rally are shifting their attention towards the batteries that go into the vehicles, and the stocks of maker LG Chem. Shares have rallied….. LG Chem — which also counts Mercedes-Benz, Audi and Volvo Cars as clients — accounts for about a quarter of the global market. Orders have increased to the point of creating a backlog while the company boosts capacity. Sales rose more than two-thirds in the first five months of this year in spite of global lockdowns. Shares are up 140 per cent from a March low.

On July 16 Yahoo Finance reported:

BMW agrees €2bn battery cell contract with Northvolt. BMW has signed a €2bn contract with the Swedish battery cell manufacturer Northvolt, to secure supplies for its upcoming electric models as competition for core components heats up. The premium carmaker, which has already spent €10bn on battery cell contracts with China’s CATL and Korea’s Samsung SDI, said the order would be fulfilled from 2024 when Northvolt’s Skelleftea plant is scheduled to have expanded its capacity. BMW added that it would work with Northvolt to source the raw materials for cell production, including cobalt and lithium, “from mines that fulfil the high sustainability standards of both companies”.

Lithium miner news

Albemarle (NYSE:ALB)

On July 14, Albemarle announced:

Albemarle Corporation announces dividend. The Board of Directors of Albemarle Corporation announces that it has declared a quarterly dividend of $0.385 per share. The dividend, which has an annualized rate of $1.54, is payable Oct. 1, 2020, to shareholders of record at the close of business as of Sept. 18, 2020.

Sociedad Quimica y Minera S.A. (NYSE:SQM)

No news for the month.

Investors can read the company’s latest presentation here.

Jiangxi Ganfeng Lithium [SHE:002460] [HK: 1772], Mineral Resources [ASX:MIN], International Lithium Corp. [TSXV:ILC] (OTCPK:ILHMF)

On July 20, Mineral Resources announced:

Mineral Resources Limited 2020, financial year results – release date. Mineral Resources Limited will release its 2020 Financial Year [FY20] full year results on Wednesday, 19 August 2020.

(Chengdu) Tianqi Lithium Industries Inc. [SHE:002466]

On July 2, Tianqi Lithium Industries Inc. announced:

Tianqi Lithium donated 60 tons of disinfectant and goggles to contribute to prevention and control of Novel Coronavirus pneumonia.

Livent Corp. (LTHM)[GR:8LV] – Spun out from FMC Corp. (NYSE:FMC)

On June 23, Livent Corp. announced:

Livent announces pricing of private offering of $225 million of convertible senior note of the International Capital Market Association Green Bond Principles 2018. Livent Corporation today announced the pricing of $225 million aggregate principal amount of 4.125% Convertible Senior Notes due 2025 (the “Green Notes”) in a private offering (the “Offering”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Livent also granted the initial purchasers of the Green Notes a 13-day option to purchase up to an additional $33.75 million aggregate principal amount of the Green Notes. The sale of the Green Notes to the initial purchasers is expected to close on June 25, 2020, subject to customary closing conditions, and is expected to result in approximately $217.8 million (or approximately $250.6 million if the initial purchasers exercise their option to purchase additional Green Notes in full) in net proceeds to Livent after deducting the initial purchasers’ discount and estimated offering expenses payable by Livent.

On July 13, Livent Corp. announced:

Livent second quarter 2020 earnings release and Webcast Conference Call.…..on Thursday, August 6, 2020, after stock market close via PR Newswire and the company’s website.

Orocobre [ASX:ORE] [TSX:ORL] (OTCPK:OROCF)

On June 25, Orocobre announced:

Olaroz June quarter sales. Orocobre Limited advises that following a review of completed and planned sales for the June quarter the total sales volume is expected to be approximately 1,600 tonnes of lithium carbonate. Product pricing is expected to be approximately US$4,015/tonne FOB. COVID-19 restrictions have limited the ability of both Olaroz and its customers to complete sales during the quarter. While most logistical issues have now been addressed, delivery of product is yet to return to normal as customers delay shipments due to lower production and excess inventory.

Upcoming catalysts include:

  • H2 2020 or H1 2021 – Olaroz Stage 2 (42.5ktpa) commissioning.
  • H1 2021 – Naraha lithium hydroxide plant (10ktpa) commissioning (ORE share is 75%).

You can read the latest investor presentation here.

Galaxy Resources [ASX:GXY] (OTCPK:GALXF)

On July 7, Galaxy Resources announced:

Sal de Vida advances to design phase………Galaxy remains in a strong position to execute its growth strategy countercyclically and meet the forecast lithium demand surge.

On July 13, Galaxy Resources announced: “Multi year offtake extension with long term major customer Sichuan Yahua Industrial Group.” Highlights include:

  • “Three-year extension agreement from January 2023 signed with current long term major customer Yahua International Investment and Development Co Ltd for minimum 120,000dmt per annum of high quality spodumene concentrate from Galaxy’s Mt Cattlin Operation.
  • Yahua to purchase another 30,000dmt during the remainder of 2020.
  • Yahua officially launched its new plant capable of 20,000 tonnes per year of lithium hydroxide, located in the city of Ya’an in southwest China’s Sichuan province on Monday, 18 May 2020.
  • Agreement extension underpins Galaxy’s Mt Cattlin Operation as a reliable, high quality product that is qualified in major lithium supply chains throughout China and Japan.”

On July 23, Galaxy Resources announced: “June 2020 quarterly activities report.” Highlights include:

Covid-19

  • “COVID-19 health and safety practices implemented organisation wide without incident.
  • Sal de Vida’s development schedule has been impacted but Stage One production in 2022 remains the target.
  • Mt Cattlin operations continued without major disruption and James Bay’s site based geotechnical program rescheduled for Q3.”

Production & Operations

Mt Cattlin, Australia

  • “Operational performance under the new campaign mode of operations improved throughout the quarter.
  • Production volume of 30,942 dry metric tonnes (“dmt”) achieved at a grade of 5.93% Li2O, in line with annual guidance.
  • Ore sorter circuit approaching nameplate performance at 1,000 t/ day of stockpiled, low grade ore processed through the plant.
  • 26,030dmt of spodumene concentrate was shipped in June, bringing total H1 shipments to 58,542 dmt.
  • Post-quarter,a multi-year offtake extension was executed with along-term major customer.”

Feasibility

James Bay, Canada

  • “Value engineering work completed with results showing reduced capital intensity and operating costs.”

Financial & Corporate

  • “As at 30 June 2020, Galaxy was debt free with cash and financial assets of US$108.6 million.
  • Proceeds from the June shipment were received post quarter and final product inventory of 49,463 dmt was held at quarter end.
  • Cost reduction initiatives yielded annual group savings of ~US$7 million.”

Upcoming catalysts include:

2020 – Construction progress at SDV. James Bay FS.

2022 – SDV Stage 1 production commencement target.

Investors can read my recent article “Galaxy Resources Plan To Be A 100,000tpa Lithium Producer By 2025”, and my CEO interview here, and the latest company presentation here.

Pilbara Minerals [ASX:PLS] (OTC:PILBF)

No news for the month.

Upcoming catalysts:

2021 – Stage 2 commissioning timing to depend on market demand.

Investors can read my article “An Update On Pilbara Minerals”, and an interview here.

Altura Mining [ASX:AJM] (OTC:ALTAF)

On June 29, Altura Mining announced: “Sales and shipping update” Highlights include:

  • “Record quarter for sales with shipments of 60,950 wet metric tonnes [WMT].
  • Quarterly production on track to achieve approximately 45,000 wmt.
  • Further shipment scheduled to commence loading in early July 2020.
  • Continued supply to existing off-take partners”

On July 20, Altura Mining announced:

Altura Mining Limited notes the announcement by Civmec Limited on 17 July 2020 regarding a legal claim against Altura subsidiary Altura Lithium Operations Pty Ltd in relation to process plant construction and installation work at Altura’s Pilgangoora Lithium Project. Civmec was awarded the civil, construction, fabrication and commissioning work in 2017. The fabrication and construction works had a combined contract value of approximately $64 million. To date, Altura has paid Civmec $61.55 million for these works. As a result of the delay in reaching practical completion, Altura’s position is that liquidated damages of at least $2.35 million are payable by Civmec in accordance with the contract. Altura exercised its rights to offset the liquidated damages payable by Civmec against the certified outstanding amount payable and retention monies ($2.4 million in total) and has paid Civmec the balance including interest.

Altura Mining delivers a record quarter of sales

Source

Investors can read a company presentation here.

AMG Advanced Metallurgical Group NV [NA:AMG] [GR:ADG] (OTCPK:AMVMF)

On June 21, AMG Advance Metallurgical Group NV announced:

AMG Advanced Metallurgical Group N.V. schedule for second quarter 2020 earnings release…..on Tuesday, July 28, 2020….

Upcoming catalysts:

2020 – Lithium projects in Zeitz, Germany and in Zanesville, Ohio in planning stage.

2021–> – Stage 2 production at Mibra Lithium-Tantalum mine (additional 90ktpa) planned.

Neometals (OTC:RRSSF) (Nasdaq:RDRUY) [ASX:NMT]

On June 30 Neometals announced:

Lithium-ion battery recycling joint venture update. Project developer Neometals Ltd confirms an extension to the exclusivity period to allow finalisation of definitive legal agreements for the incorporation of the proposed lithium-ion battery (“LIB”) recycling joint venture (“JV”) with German company, SMS Group GmbH (“SMS”). Pursuant to a binding memorandum of understanding (“MoU”), Neometals granted SMS an exclusive due diligence period to evaluate and negotiate incorporation of a 50:50 JV to commercialise the Neometals technology…….The JV formation decision date of 30 June 2020 has now been extended by one month, with JV shareholder agreement execution scheduled on or before Friday 31st July 2020. Neometals has accepted the Comminution section equipment section of the Demonstration Plant from manufacturers in the US. The equipment has been certified it as EU compliant and is in the process of being shipped to Germany.

Lithium Americas [TSX:LAC] (LAC)

On July 6, Lithium Americas announced:

Lithium Americas confirms positive COVID-19 cases at Caucharí-Olaroz and temporarily suspends construction. On the afternoon of July 3rd, two workers tested positive for COVID-19. These workers are asymptomatic, in good health and have been provided with safe and preventative quarantine. In response, disinfection activities, quarantine and testing of first and second contact workers on site was implemented using polymerase chain reaction (“PCR”) tests as well as all other required actions in accordance with the COVID-19 Health and Safety Protocol.

Upcoming catalysts:

  • 2020 – Cauchari-Olaroz plant construction.
  • Mid 2020 – Thacker Pass DFS.
  • Early-Mid 2021 – Cauchari-Olaroz lithium production to commence and ramp to 40ktpa.
  • 2023 – Possible lithium clay producer from Thacker Pass Nevada (full ramp by 2026). Also any possible JV announcements prior.

NB: LAC owns 49% of the Cauchari-Olaroz project and partners with Ganfeng Lithium (51%).

Investors can read my article “An Update On Lithium Americas.”

Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) – Price = US$36.50.

The LIT fund was up strongly in July, boosted by Tesla (TSLA), some battery manufacturers, and some lithium miners smaller price recovery. The current PE is 38. My model forecast is for lithium demand to increase 2.9 fold between 2020 and end 2025 to ~1m tpa, and 6.5x this decade to reach ~2m tpa.

Source: Seeking Alpha

Conclusion

July saw lithium prices only slightly lower.

Highlights for the month were:

  • Benchmark Mineral Intelligence forecasts that by 2029, demand for nickel will double, while demand for cobalt will grow by three times, flake graphite by four times and lithium by more than six times.
  • Simon Moores: US domestic supply chain build out “far too slow”. “It is not too late for the US, but action is needed now,
  • CRU Group – “On the lithium side, that’s really favouring lithium hydroxide, which is a good story for Australia and those spodumene producers.”
  • Lifetime of lithium-ion batteries boosted by new cathode polymer coating.
  • UK earmarks £1bn to attract EV battery gigafactory and kick start lithium ion economy.
  • BMW agrees €2bn battery cell contract with Northvolt. BMW added that it would work with Northvolt to source the raw materials for cell production, including cobalt and lithium, “from mines that fulfill the high sustainability standards of both companies”.
  • Orocobre June quarter sales forecast to be down (only 1,600 tonnes lithium carbonate) due to COVID-19 and product pricing is expected to be ~US$4,015/tonne.
  • Galaxy Resources announces a 3-year extension agreement from January 2023 signed with current long term major customer Yahua International Investment and Development Co Ltd for minimum 120,000dmt pa.
  • Altura Mining achieves a record quarter for sales with shipments of 60,950 tonnes.
  • Lithium Americas confirms positive COVID-19 cases at Caucharí-Olaroz and temporarily suspends construction.

As usual all comments are welcome.

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Disclosure: I am/we are long Global X Lithium ETF (LIT), NYSE:ALB, JIANGXI GANFENG LITHIUM [SHE: 2460], JIANGXI GANFENG LITHIUM [HK: 1772], SQM (NYSE:SQM), ASX:ORE, ASX:GXY, ASX:PLS, ASX:AJM, AMS:AMG, TSX:LAC, TSXV:NLC, ASX:AVZ, ASX:CXO, ASX:NMT, TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The information in this article is general in nature and should not be relied upon as personal financial advice.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.