Australian private equity and a $860m boost in mining
EMR Capital, the Australia private equity firm, has announced that it has raised around $860m as it looks for more investments in copper, gold, potash and coking coal across Australia.
The fund, which is the second round of fundraising, follows on from the company’s first fund which raised around $450m last year.
The company has a keen eye on copper assets following an increased demand for the metal in China and India, and Chief Executive Jason Change admits the company is keeping its options open.
“We love Australia. Anything in copper in Australia we'd like to look at. So, we're looking at a range of different things," he told Reuters.
“I think investors agree with us that there's a universe of interesting opportunities that we're seeing across all four commodities."
EMR has identified a number of assets, such as Glencore PLc’s Cobar copper mine following the previous investments in Martabe gold mine in Indonesia, coking coal mine in Britain, copper mine in Australia and Chile and potash projects in both Spain and the United States.
What is EMR Capital?
EMR Capital is an Australian specialist resources private equity company with the goal of creating superior returns to stakeholders through Successful resources exploration, Deep linkages to Asian markets and Private equity investment management.
The company has offices in Melbourne, Sydney, Cayman Island as well as networks and links across the globe.
EMR Capital was founded by Owen Hegarty, who has a long industrious history in the mining industry with Rio Tinto Asia and Australian Copper (Managing Director from 1989 – 1994), founder of Oxiana Limited. He is also Vice Chairman of Fortescue Metals Group.
Hegarty is also a Fellow and Former Director of the Australasian Institute of Mining and Metallurgy (AusIMM), a Fellow of the Australian Institute of Company Directors and has been awarded the AusIMM Medal and the GJ Stokes Memorial Award for his distinguished service to the mining industry.
He’s not the only one. The EMR Capital Board is bursting with experienced men and women from across the mining industry. You can find out more about them here.
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Get in touch with our editor Dale Benton at [email protected]
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.