July 4th, 2022 | 12:11 CEST
Extreme growth in demand for Ganfeng and Edison Lithium, XPeng and NIO with solid sales figures
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"[...] We know exactly what we are doing and are implementing what we consider to be a proven technology in an industrially applicable and scalable way. [...]" Uwe Ahrens, Director, Altech Advanced Materials AG
Attractive correction levels
According to a study by Roland Berger, demand for lithium will grow disproportionately by 30% per year worldwide until 2030. The growth driver is the fast-growing electric car industry. The surge in demand is already causing supply bottlenecks. According to experts, the market will more than double again to around 1 million tons by 2040. However, the enormous demand is offset by a supply that is far too small. Lithium mining is non-existent in Europe. According to the USGS Mineral Commodity Summary 2021, the world's largest lithium deposits are in South America, with over 60% of the world's lithium resources found in Argentina, Bolivia and Chile. Argentina, in particular, is on the fast track due to the creation of a favorable regulatory environment.
Edison Lithium in the middle of the big players
The "Lithium Triangle," a geographic triangle encompassing parts of northwestern Argentina, southern Bolivia, and central Chile, where lithium-rich brine deposits lie beneath the salt plains, has emerged as particularly productive in terms of lithium.
Here, Edison Lithium in 2021 was able to secure 148,000 hectares of lithium brine claims from Resource Ventures, divided into the Salar de Antofalla project with 107,000 hectares and the Salar de Pipanaco project with 41,000 hectares. Salar de Antofalla is located less than 20 km west of a lithium production operation of Livent Corporation, Argentina's largest lithium producer. It is also bordered on both sides by concessions of Albermarle Corporation, a global player with a market capitalization of about USD 25 billion and annual revenues of approximately USD 3 billion. Among others, major players such as Allkem, Lake Resources and Posco Chemical, a group with a stock market value of USD 7.90 billion, are located in the vicinity.
In addition, the Canadians, who were still listed under the name Edison Battery Metals at the end of last year, own a promising cobalt project near Ontario in Canada, known as the Kittson Cobalt Property. Previous resource estimates indicated grades of 1.5% cobalt over 1.37m and selected grab samples of up to 4% cobalt and 93.3 g/t gold. In addition, deposits of nickel and copper were identified. In order to create greater value for shareholders to participate in the development of two separate specialized businesses, the spin-out of the Cobalt segment into a newly formed subsidiary has now been unanimously approved by the Board of Directors. The common shares of the new company are to be issued to Edison shareholders based on one SpinCo share for each Edison common share. In addition, management plans to list the stand-alone Cobalt unit on the stock exchange. That means shareholders will have two hot irons in the fire in the growing battery metals market in the future. The stock market value of the Vancouver-based company is currently EUR 6.82 million and could increase significantly with the positive development of the projects. The spin-off of the cobalt company should significantly boost the share price fantasy.
School-like correction at NIO
With a double bottom in mid-May at USD 13.01, the shares of Chinese electric car maker NIO said goodbye to the correction for the time being, and since then, they have risen by around 90%. With the resistance at USD 24.34, a harder nut now awaits, which could not yet be cracked on the first attempt. Should this prominent obstacle be cleared out of the way, there is follow-up potential to initially USD 28.
The automaker reported further increasing sales figures in the June delivery figures. The Chinese company delivered a total of 12,961 electric SUVs in the month of June of the current fiscal year 2022, an increase of 60.3% year-on-year. In May, the Chinese electric car producer's deliveries were still at 7,024 units. In June 2022, NIO delivered 5,100 units of the ES6, the 5-seat electric SUV, and 1,684 units of the ES8, the Company's 6- to 7-seat electric SUV.
Competitor XPeng fared even better. The latter sold a total of 15,295 electric SUVs in June, up 133% year-on-year. Another supplier, Li Auto, was also ahead of NIO with 13,024 vehicles.
Despite the enormous excess demand in the lithium market, listed lithium companies consolidated strongly, offering opportunities at discounted levels, such as Edison Lithium. NIO, XPeng and Li Auto all saw significant increases in sales in June.
Conflict of interest
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