May 17, 2020

SURVEY: Skepticism Clouds Future of Australia's Mining Sector

Gina Rinehart
Rio Tinto
Mining Business Outlook Report
Su
Admin
2 min
SURVEY: Skepticism Clouds Future of Australias Mining Sector
Australias mining industry has been hit hard in recent years, riding a five-year low as disappointment and pessimism scours the sector.According to indu...

Australia’s mining industry has been hit hard in recent years, riding a five-year low as disappointment and pessimism scours the sector.

According to industry executives and leaders surveyed in the latest Mining Business Outlook Report, 93 percent were not optimistic about their growth prospects for the next 12 months. The staggering proportion is up 50 percent compared to the previous year.  

Plagued by tough market conditions, declining commodity prices and difficult regulatory environment, leaders in Australia’s mining sector believe the future is out of their control.

"We've got timid politicians who want to head off activists, NIMBYs, environmentalists across the country who, when you start talking about opening up a mine, get a lot of media coverage saying 'this is bad, this is evil, this is terrible',” says David Hand, managing director of report authors Newport Consulting.”

"Politicians have worked out there's no votes in opening a mine in 2014 so what they then do is placate their voters and the people they're concerned about, by saying 'we will make sure that the performance of this mine in terms of environment and safety and community involvement is as high as possible.

With confidence in Australia’s mining industry dwindling, 89 percent of leaders now say the country has lost its investment appeal.

Mining magnate Gina Rinehart said the high cost of doing business in Australia was driving some multinational companies to pursue overseas projects.

“Sadly, too many multinational companies, even Australian companies, are focusing and preferring to invest in overseas countries with lower costs,” said Rinehart.

“For instance, Rio Tinto, which has been in Australia for decades, and made most of its revenue from Australia, is now arranging multi-billions of dollars of investment for a major resource project with substantial infrastructure in ­Guinea in Africa.

“When that’s operating, it will bring billions of tons of ore on to the market to compete against Australia, and push down commodity prices. Too few seem to recognize the impact this will have when we are competing with lower-cost countries and how it will hurt Australia for decades.”

Mining Business Outlook Report surveyed over 60 executives of private and publicly listed mining companies. 

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May 7, 2021

Lithium producers bullish as EV revolution ramps demand

Lithium
Electric Vehicles
Albemarle
SQM
3 min
Lithium producers are drawing optimism from rising prices for the electric vehicle battery metal

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.

Lithium

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.”

Albermarle

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.

Electric Vehicles

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.

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