... but also in todays AFR: Rich Listers pile into lithium IPO that closed in 20 minutes

Mineral Resources managing director Chris Ellison has emerged as a big shareholder in lithium hopeful Kali Metals, after an extraordinary initial public offering that opened and closed in less than 20 minutes and was massively oversubscribed.

Kali is due to start trading on the ASX on Monday. Its backers include another West Australian billionaire, former MinRes director Tim Roberts, and Navitas education company co-founder Rod Jones.

They will be hoping Kali can mirror the success of lithium hopefuls Azure Minerals and Wildcat Resources, which saw their valuations skyrocket last year as the likes of Gina Rinehart, MinRes, New York-listed Albemarle and Chile’s Sociedad Quimica y Minera engaged in a multi-billion dollar tug-of-war over assets in WA.

The interest in Kali shows some investors remain confident about the long-term future of lithium despite spodumene concentrate prices plunging to near $US950 a tonne, down from about $US8000 a tonne last January. That price fall has cast doubt over the immediate future of producers like Core Lithium, which on Friday said it would pause mining at Grants Open Pit at its Finniss operation first opened in 2022.

Kali holds vast tracts of ground in a lithium hotspot around Kalgoorlie and Norseman, where MinRes owns and operates the Mt Marion and Bald Hill mines.

It also has exploration ground near lithium mines and projects in the Pilbara, including a joint venture with SQM. The Chilean giant is aiming to establish a big presence in the Pilbara after joining forces with Mrs Rinehart in a $1.7 billion bid for Azure.

Other big names on the Kali list of top 20 shareholders include Mutual Trust, the family office for the Myer and Baillieu families

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The Lithium miners in Australia are pushing the line that EV uptake is lower than expected and this is effecting demand. This seems to be contrary to the EV sale figures both in Aus and Worldwide. It must be hard when you aren’t the cartel controlling the price. Of course they need to spin some line to investors and the government. The frustrating narrative is these capitalist are now chasing socialist support. The usual capitalism on the way up and socialism on the way down. The government will as per usual most likely prop up the industry through royalty freezes and probably tax breaks. If only us individual could get tax freezes in the tough times. Sorry ATO things are tough this week so I asked my employer not to take out any tax. Note I am a holder of a lithium stock (down 50%) but that’s mining so I thought.

@NewbieHK … what a thought! Everyone’s been saying for years, it’s supply and demand,…and there’s a lot of supply with more in the way. So we need the cycle to sort things out. But it’s a cycle and it comes back. Given the abundance of Li and the ease of the supply response, we might expect shorter cycle intervals than some commodities?

The one area where I think there is a case for policy support is the midstream,..we have to get better than just digging it up and shipping it off. Besides, everyone else is well into the protection game again, so now’s our chance.

Yes I admit I was caught up a bit. Made money on PLS when I sold out but currently lost all that with my paper loss on LRS. The rhetoric among the more exuberant lithium investors was more of it being like a tech company, only up, but without realising it was still a commodity and had yet to complete a cycle.

Personally, I think the Chinese this time are on the front foot and will not allow what has happened to them in the Iron Ore sphere. There they are dictated to by the big 4 cartel.

One only needs to look at the way they are investing in opportunities in South America and ensuring they are across the full chain or extraction, processing and battery production.

I think sometimes in the West we can be blinded by our perceived dominance, however BYD is an example of just what can be done when the full supply chain can be controlled.

In terms of improving our midstream abilities. I am sure Aus miners will try (some), but the reality I feel is that it’s not in their nature so they will try to just continue to reduce operational costs.

An interesting article about BHP staying out of Lithium.

BHP’s view of lithium has barely changed. Chief executive Mike Henry told shareholders in April that strong forecast demand was not enough to convince BHP to invest in lithium.

“There has to be sufficient scale in the industry for it to be a needle-mover for BHP,” he said.

“It has to afford the opportunity through the shape of the cost curve, the difference between the high-cost players and the low-cost players to generate attractive margins over time.”

Tony Ottaviano is familiar with BHP’s view; he spent 18 years at the company before leaving to run Liontown in 2021.

“We beg to disagree,” Ottaviano said in May.

But the challenge for lithium stocks such as Liontown, Pilbara Minerals and the owner of the Wodgina mine – Mineral Resources – is that fund managers tend to believe BHP.

https://www.afr.com/companies/mining/billionaires-v-bhp-in-wa-s-lithium-power-grab-20230914-p5e4u5

Appears to be behind a paywall.

A few points from the story:

BHP doesn't believe demand is enough for investment

BHP thinks economies of scale and low costs still not present.

Many fund managers also agree with BHP that investment in Lithium is not compelling

I'm sure there's quite a few here who hold the same view.

I'm on the fence but maybe slowly leaning in favour of Lithium after Core's troubles ramping up their operations.

Still doing some more research but something I notice is Lithium has many things that make it totally different from base metal mining.

.

Yup. Stays in the too hard basket for me.

if I were younger and had a longer time fram then perhaps.

I should add that the only speculative play I am looking at is Ioneer. ASX:INR. Please see previous posts. There are a number of tailwinds and potential competitive advantages if they get to production but this is still some time away.

@Chagsy

Thanks for the heads up on Ioneer. Looks like a good one. Including the Nasdaq shares, maybe looking at 800m market cap?

Pity though that America makes a lot of noise about needing a secure supply of future facing commodities only to turn around and say we don't want that mine in our backyard. Hence they drag the chain for permitting on all mines. Not offence to the Americans who see this but they are kings of NIMBYism.

I reckon that's why all the potential mining projects in the USA tend to attract steep discounts and thus impacts the valuation. As I mentioned before, I think Botswana of all places is a better place for miners than USA. Perhaps even Bosnia-Herzogovina is better than USA too now that Adriatic Metals has started mining in under 3 years even despite the political risks over there.

Haven't bought an EV yet but did switch to one of those Giant Lithium-powered 40V lawn mower that I bought off ebay after I got sick of trying to fix the leak in the fuel line between the tank and the carburetor on my 20+ year old Victa petrol powered mower (it's been handed down through the family). Sorry I did not go for the Ryobi ones offered at Bunnings for you Wesfarmers shareholders on here.

Really impressed by the usability of the mower. Most importantly it is so lightweight and easy to start and push. Much lighter and easier to start than the Victa. Good for those with back pain. Only problem is the width (less than 40cm) and can't wash with water so can't mow when grass is wet.

Still early days though, see how long this little engine lasts. But I think Lithium electric mowers will become dominant once they find a way around the water issue.

Loved this @Rudyboy

"EVs/electrification, therefore lithium" is a really weak investment case.

On the other hand, a bit of industry knowledge can go a long, long way.

Also like to point out that Lithium also used by Strawman favourite XRF Scientific.

From 23 Aug 2022 FY22 Announcement.

So just adding the price of lithium is a bit of a headache for some such as XRF until prices moderate.

I'm sure lots here are looking at how the Lithium hopefuls will react on Monday after the first Lithium Carbonate Futures Contract traded in Guangzhou on the open market last Friday (21 july). The exchange had to temporarily stop trading after the %change hit the limit threshold.

Below are the hard rock producers on Friday close (21 Jul). I probably made a few omissions so feel free to correct.

This is the state of Lithium hopefuls on 21st July which have shown upward trend. Some have not moved as much as the above.

Feel free to add any below where the price is moving against trend.

Also Beament's Precision Opportunities Fund have taken some profits on DLI (Delta lithium).

Just amazing I've nearly bagged on AZS and is still running. Too bad I did not add it in time on Strawman.

Something tells me this could be a good time to take profit on AZS despite Bell Potter setting a $3 price target. This would be the shortest hold I've ever had on a stock if I decide to sell...

Lithium Carbonate is a whole lot easier to get right and produce than Hydroxide, so most battery people will want hydroxide. Depending on purity, price per tonne can be over $90k for 99.99%, but this is very hard to produce in volume. The spodumene that is supplied can also have a series affect on the end product, word is Greenbushes lenses are differing and this is a bit of an issue for Tianqi and Kemerton.

Of course, very few people know any of this so share price will not be affected until the poo hits the proverbial fan.

Could be a factor in Chris Ellison's recent decision for MinRes to exit Kemerton entirely, and leave that as 100% Albemarle.

Source: Simplified-MARBL-JV-Agreement-Reached.PDF [MIN.asx, 20 July 2023]

Just on Kemerton - Monadelphous Group (MND.asx - which I hold in my SMSF, and here) announced today that they have been awarded another circa-A$200m construction contract by Albemarle for the front-end pyromet structural, mechanical, piping, electrical and instrumentation works associated with two new lithium processing trains (trains 3 and 4) at Albemarle's Kemerton lithium hydroxide plant.  Work will commence onsite later this year and is expected to be completed in the second half of 2025.

The new contract award announced today follows the successful delivery by MND of construction packages on trains 1 and 2, and the recently awarded long-term maintenance and sustaining capital projects contracts at Albemarle’s Kemerton operations. 

Albemarle don't seem to be deterred by any issues they are having there at Kemerton, and are awarding decent-sized contracts for the plant expansion - it sounds like they are doubling its capacity.

Source: MND-secures-major-construction-contract-with-Albemarle.PDF [25-July-2023]

That $200m contract comes 5 days after they announced $150m worth of new work for FMG, BHP and RIO: Monadelphous-Contracts-Update-circa-A$150m-of-new-work-for-FMG-BHP-RIO.PDF [20-July-2023]

In today's announcement, MND's MD, Zoran Bebic, said this new Albemarle work, in addition to the new work announced last week with Fortescue Metals Group (at the Christmas Creek mine site), represents "the first in a new wave of major construction projects to come to market."

That sounds good, coming from a company that tends to underplay their hand, mostly under-promising, and trying to over-deliver. Gone are the days of several multi-billion-dollar LNG plants being built at the same time or all three of our largest iron ore miners all building new mines at the same time... however a smaller new wave of "major" resources construction projects would be very welcome, as I hold several companies that are well placed to benefit from that.

Albemarle's Kemerton lithium hydroxide plant in the SW of WA, just north of Bunbury and around 2 hours south of Perth.

Macquarie Equity Research recently (21st July 2023) released a research report on "Australian Lithium and Rare Earths Miners"

It highlights:

• Policy tailwinds in China
• BEV moving into an early majority market phase
• MIN exiting Kemerton and China downstream
• AKE delivering first production at Olaroz Stage 2
• Maintain preference for Australia-based producers

The report runs to 36 pages (and noting that pretty much every company is tagged as an Outperform) but these two tables probably summarises their thesis

Heard a rumour that IGO is waiting for the Chinese Tianqi boys to get so pissed off about progress at Kwinana then they are going to swoop in and buy the half they don't own. Not certain of it, but source is very robust and certainly reflects the situation.

Holding firm. The overvalued AZS got knocked back down but recovering.

TMB doing well considering they do nothing

BTW: I still haven't taken profit on AZS! While it is overvalued, I do like the scale of their project which is very rare to see these days.

More Lithium news -this time from the Beebs touting Australia as the biggest Lithium supplier

https://www.bbc.com/future/article/20221110-how-australia-became-the-worlds-greatest-lithium-supplier

Even though I hold Azure Metals (which is in a trading halt pending a capital raising/placement), I'm still divided on the Lithium story.

I think much of the story now is driven by securing the "best" supply in the safest jurisdictions rather than the price of Lithium which has fallen quite a bit.

Already it appears Chile and Africa are no longer safe. Look at AVZ and LLL as case studies.

So the majors like SQM and Albermarle are taking every opportunity to look at Lithium projects in Australia.

Again not going to read too much into this.

Maybe prices stabilising

Also the whole "Fe" thing in Lithium assays has got me thinking about the Lithium producers

I think Kathleen Valley has the lowest Fe content. Early Grey/Mt Holland may have the highest.

I might do some digging soon depending on time but more than happy if someone else can do it...