12 hours ago
Monsters of Rock: The shape of the lithium recovery, plus copper investments ramp up Down Under
Lithium prices remain subdued, but demand continues to rise
Could deficit send spodumene prices back to US$1500/t next year?
Copper investments ramp up as ASX options dry up
Lithium prices remain very sick indeed, with lithium carbonate barely trading above US$8000/t and spodumene concentrate, the kind of product shipped to China by WA's hard rock miners, down around US$612.50/t, according to Fastmarkets.
Few miners make enough cash at those prices to generate a profit, certainly not once capital costs are accounted for. June quarterlies will make for curious reading.
There's more negativity on the supply side with the entry of Chevron into the Smackover Formation, a potential oil field brine source of lithium all the energy supermajors are keen on as they look to hedge their oil and gas businesses with exposure to 'new energy'.
At the same time demand is still surging. China's Ministry of Industry and Information Technology reported a 68% lift in lithium ion battery output in the first four months of 2025 to 473GWh, with export values up 25% to US$21.6bn.
With demand for lithium continuing to grow, a modest deficit could emerge soon, some analysts say.
"Spot spodumene prices have continued to decline and we have lowered our near-term price outlook to reflect this. We believe a price recovery is likely to be rapid once the market swings to a modest deficit, but the cycle is likely to be shorter given the volume of brownfield capacity that can be brought on-line, largely in Australia," Argonaut head of research Hayden Bairstow said in a note to clients.
"We now expect spot spodumene prices to peak at US$1500/t in late 2026, which is likely to trigger a re-start of existing capacity. A return to a balanced market is then forecast for 2027 before the widening deficit pushes prices higher in the long-term. The changes have driven material cuts to earnings for the spodumene miners. We retain our positive view on the sector, with most stocks factoring in weaker spot prices for longer."
Argonaut has buy labels on Pilbara Minerals (ASX:PLS), IGO (ASX:IGO) and Liontown Resources (ASX:LTR), with spec buys on Core Lithium (ASX:CXO), Wildcat Resources (ASX:WC8) and Patriot Battery Metals (ASX:PMT), the latter upgraded from a hold in the most recent update.
Watch this space.
Aussie copper investments accelerate
ASX copper investors are facing a conundrum with more and more options taken off the table and heading overseas.
Those that do remain in Aussie hands are trying to ramp up as many investments as they can to hit some sort of critical mass.
On the outta here list are New World Resources (ASX:NWC) and MAC Copper (ASX:MAC), though there is at least some intrigue emerging at the former.
While MAC Copper is yet to pull in competition to Harmony Gold's $1.6bn bid for it and the CSA copper mine in Cobar. But PE firm Kinterra Capital has emerged as a potential challenger to NWC's takever by Central Asia Metals.
The bid from CAML was ratcheted up from 5c to 5.3c, lifting its consideration from $185m to $197m, with CAML also making a $10m placement at 5.3c (~5% of NWC) to meet bonding requirements on a quicker than expected Arizona state permitting timeframe for its Antler mine in the US state, as long as no competing proposal is lodged before COB on July 4.
Kinterra, which recently emerged with a ~12% stake in NWC, has taken its grievance over the placement to the Takeovers Panel, which has yet to make any interim orders.
Meanwhile, capital is being splurged from the top to the bottom of the mining sector on the critical mineral, expected to play a major role in the expansion of green energy and modern technologies.
BHP (ASX:BHP) this week announced plans to spend $1.5bn in an arrangement with logistics provider Aurizon Holdings (ASX:AZJ), which will see much of its haulage of copper concentrate, cathode and inbound freight shift from road to rail haulage between Pimba and Port Hedland.
Rail's a lot more efficient, creating cost savings as BHP looks to nearly double the scale of its SA copper business, including Olympic Dam, Carrapateena and Prominent Hill by the mid 2030s to 500,000tpa.
The mining giant says 13m kilometres of truck movements will be taken off SA's regional roads annually, or 11,000 total truck movements.
At a far smaller scale, AIC Mines (ASX:A1M) in Queensland has announced a $55m placement and US$40m prepayment facility ($61m) with Trafigura, which will be used to complete a $77.6m plant expansion led by GR Engineering Services (ASX:GNG) for its Eloise copper mine.
The development will grow the Eloise plant from 725,000tpa to 1.1Mtpa to increase its production capacity from ~12,500tpa of copper to 20,000tpa after commissioning in the December 2026 quarter.
It will also include the installation of oversized equipment, enabling the company to ramp up to a processing rate of 1.5Mtpa in the future.
This all comes as the Queensland government mulls the future of the nearby Mt Isa copper complex, with the underground mine owned by Glencore set to close in the coming month and work now going on both behind and in front of the scene to keep the smelter that is the lifeblood of the town – known as Stack City for its iconic candy striped smoke stack – open up to and beyond its planned closure date in 2030.
The ASX 300 Metals and Mining index fell -4.36% over the past week.
Which ASX 300 Resources stocks have impressed and depressed?
Making gains
Capricorn Metals (ASX:CMM) (gold) +11.2%
IperionX (ASX:IPX) (titanium) +9.2%
Adriatic Metals (ASX:ADT) (silver) +8.6%
Newmont Corporation (ASX:NEM) (gold) +7.9%
Eating losses
Patriot Battery Metals (ASX:PMT) (lithium) -17.9%
ioneer (ASX:INR) (lithium) -16.5%
Coronado Global Resources (ASX:CRN) (coal) -16.7%
Vulcan Steel (ASX:VSL) (steel) -14.8%
