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Australian stock market investors will benefit from investing their money in mining companies that specialize in extracting an important material needed for electric car batteries.
Australian lithium exports rose 737 percent in the year to June to $2,632 billion. Exports of this mineral multiplied eight-fold from $314 million when the June 2022 quarter was compared to the June quarter of 2021, new data from the Australian Bureau of Statistics showed.
Australia is also the world’s largest exporter of lithium – accounting for 46 percent of the world’s supply in 2020.
Like Australia, the US, UK, European Union, Japan and South Korea are aiming for net zero CO2 emissions by 2050 in an effort to tackle climate change.
Australian stock market investors will benefit by putting their money into mining companies that specialize in extracting an important material needed for electric car batteries (Tesla charging stations shown)
Labor’s plan to cut CO2 emissions by 43 percent by 2030 was passed by the House of Representatives on Thursday, and Greens leader Adam Bandt has vowed his party will pass the legislation in the Senate.
This means demand will rise for lithium, a key component of electric vehicles and solar batteries that will be needed as Australia and much of the developed world reduce their reliance on petrol cars and coal-fired power stations.
Lithium is also an important part of cell phones, laptops and cameras.
Exports of lithium concentrate, the powered material used to power batteries, hit an all-time high of $1.163 billion in June, a huge 1,189% increase from June 2021.
The value of these exports has grown nearly 13 times from just $90 million a year earlier.
Saxo Capital market strategist Jessica Amir said electric vehicle manufacturers would increasingly need lithium, with Australian and US government subsidies to boost demand
Saxo Capital market strategist Jessica Amir said electric vehicle manufacturers are increasingly needing lithium, with Australian and US government subsidies to boost demand.
“It means they will continue to produce electric vehicles and key electric vehicle components, many of which come from Australia,” she told the Daily Mail Australia.
‘It just means that support has been established among the lithium sector.
‘The focus is now back on the lack of supply and the increasing demand.’
Western Australia has accounted for more than 99 percent of Australia’s lithium exports every month since January 2021, with the state already having a near monopoly on Australia’s iron ore exports.
Demand for lithium is set to rise sharply, a key component of electric vehicles and solar batteries that will be needed as Australia and much of the developed world reduce their reliance on petrol cars and coal-fired power stations. Lithium is also an important part of mobile phones (stock image, photo), laptops and cameras
Australia’s largest lithium miner, Pilbara Minerals, signed a 2019 deal with Chinese automaker Great Wall Motor to supply spodumene concentrate, an important mineral for electric vehicles.
Australian lithium miners
Pilbara Minerals: Australia’s largest lithium miner owns the entire Pilgangoora project and operation, 120km from Port Hedland
Orocobre: A $4 billion merger with Galaxy Resources in April created the world’s fifth largest producer of lithium chemicals. It is now known as allkem
Springs at the lake: One of the world’s cheapest lithium chemical producers
This Perth-based company owns the entire Pilgangoora project and operation, 75 miles from Port Hedland.
“This is by far our largest lithium exporter in Australia,” said Ms Amir.
The stock has risen from just 15.84 cents in March 2020 to a peak of $3.20 in January 2022, before falling back to $2.29 in June and rising to its current $2. 77.
But Ms. Amir said it would be at least another year before Pilbara Minerals saw a significant rise in its share price, with investors holding back as the Reserve Bank continued to raise interest rates.
“Unlike other unprofitable lithium companies, Pilbara Minerals has a robust balance sheet,” she said.
“The market thinks it may have a turnover this year.
“The market thinks that sales will probably double by 2023.”
Orocobre became the world’s fifth largest producer of lithium chemicals in April last year through a merger with Galaxy Resources.
This merger was officially renamed Allkem in November 2021, with the Brisbane-based company primarily mining lithium in Argentina.
Exports of lithium concentrate, the powered material used to power batteries, hit an all-time high of $1.163 billion in June, a massive 1,189 percent increase from June 2021. The value of these exports is nearly 13 times greater. from just $90 million a year earlier
Allkem’s share price rose from $2.03 in May 2020 to $14 in May, before slipping back to $11.55 on Friday, with historic Australian Securities Exchange data capping the price when the company was known as Orocobre.
“Not only have they seen their balance sheets strengthened after the Galaxy purchase, but Argentina’s lithium province still pumps out the highest quality lithium than anywhere else in the world,” said Ms Amir.
Lake Resources is another player, selling itself as one of the world’s cheapest producers of lithium chemical products.
The Sydney-based company also sources much of its lithium from Argentina.
The stock has risen from just seven cents in December 2020 to $2.31 in April this year, before falling to 61 cents in July and recovering to 92 cents as of August.
The resignation of former Lake Resources director Steve Promnitz in June had put the stock price under pressure.
Ms Amir said Allkem and Lake Resources, despite being listed on the Australian Securities Exchange, were more focused on Argentina, meaning they could take better advantage of Tesla now making electric vehicles in Texas, at its Gigafactory plant.
Tesla also announced this week that they would start producing their own fuel cells.
“It just means Telsa will continue to look at how to get cheap access to lithium,” Ms Amir said.
The word’s biggest carbon emitters are less ambitious. China promises a net zero target by 2060, while India has a deadline for 2070.
Allkem and Lake Resources, despite being listed on the Australian Securities Exchange, were more focused on Argentina, meaning they could take better advantage of Tesla now making electric vehicles in Texas, at the Gigafactory plant (photo is Tesla CEO Elon Musk)
After a year of battling China’s politically motivated trade sanctions, Australia has hopes for a new trade horizon, with exports to India more than doubling in the year to June, up 108 percent.
Australia now has an annual trade surplus of $16.7 billion with India, compared to $16.7 billion a year earlier.
CommSec chief economist Craig James noted that Australian exports to India are worth more than the combined exports of both the US and the UK.
But coal, a fossil fuel linked to climate change, is a major export to India.
Australia’s exports of iron ore to China to make steel fueled the 54th consecutive monthly trade surplus in June.
In that month, Australia had a trade surplus of $17.67 billion.
During the 2021-2022 fiscal year, Australia had a record annual trade surplus of $136.4 billion, up from $90 billion a year earlier.