November 16th, 2021 | 13:28 CET
Orocobre, Manganese X Energy, First Cobalt - Indispensable companies for the energy turnaround
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"[...] Nickel, therefore, benefits twice: firstly from its growing importance within batteries and secondly from the generally growing demand for such storage. [...]" Terry Lynch, CEO, Power Nickel
Orocobre - Is the lithium giant about to take the next leap?
After the Australian lithium giant Orocobre announced the extremely positive Q1 figures, it looked as if the share price could finally break the all-time high of AUD 10.08. However, many investors used the renewed price increase for profit-taking. Nevertheless, the ever-rising lows speak that the psychologically important limit will soon fall, so there should be enough room for further growth. And the market data also speaks a clear language: Lithium will remain one of the most important raw materials for the production of batteries for the foreseeable future. Due to rising demand, the average price for battery-grade lithium carbonate has already more than quadrupled this year alone. And this is far from the end of the line.
Analysts at Fitch forecast a further increase in the price of Chinese lithium carbonate (purity: 99.5%) to USD 15,025 per ton, up from an average of USD 13,145 per ton in the current year. Rio Tinto's recent study shows that only 15% of the supply deficit of battery-grade lithium accumulating over the next ten years will be satisfied from existing projects. These results will likely ensure a continuing party mood at the world's fifth-largest lithium producer after its merger with Galaxy Resources, especially since the war chest is well filled with a high cash balance for further acquisitions and new projects.
Manganese X Energy - Knocking down open doors with domestic projects
Manganese X Energy is a Canadian explorer based in Montreal, Quebec, engaged in exploring domestic raw material deposits essential for rechargeable batteries and bringing them into production. These include the elements nickel and cobalt, and mainly the semimetal manganese, which is included in the Company name. Until recently, the material graphite was also included, but all activities related to the exploration and production of graphite were spun off into a separate company, Graphano Energy Ltd., and separately listed on the stock exchange. Since September 30, Graphano has been listed independently on the TSX in Toronto, while Manganese X can continue to devote itself to its core business.
Here the Company operates, among others, the Battery Hill project in Woodstock, New Brunswick province, not far from the US border. The 1,228-hectare property consists of 55 claims with manganese-iron deposits. It is the only commercially explored manganese deposit in North America. An initial official resource estimate suggests 34.86 million tonnes of proven manganese at a grade of 6.42%, with suspected resources of 25.91 million tonnes at a grade of 6.66%. The Company itself considers deposits of up to 194 tons of manganese possible. If these assumptions prove true, a very interesting player in the raw materials market will emerge. In particular, the fact that over 80% of manganese production currently comes from South Africa represents a competitive advantage due to its proximity to North American auto manufacturers.
With demand for manganese forecast to grow by 30% p.a. and the associated price increases, the Company expects to profitably operate the Battery Hill project. Development is also expected to begin soon on a second property. The 2,568 hectare Peter Lake property consists of 44 claims with historic copper-nickel-cobalt deposits grading up to 22.8% copper, 0.73% nickel and 0.266% cobalt. On September 9th, 2021, the Company announced interesting details: ‘Sensitivity analysis of the Battery Hill deposit to cut-off grade indicates 12.25 million tonnes of measured and indicated mineral resources at 8.77 per cent Mn and 10.61 million tonnes of inferred mineral resources grading 9.05 per cent Mn, utilizing a cut-off grade of 7 per cent Mn.’ Currently, the Company is moderately valued at around CAD 45 million.
First Cobalt Corp. - Renaming to Electra Battery Metals and expansion of product range planned
The cobalt specialist from Ontario in Canada, currently valued at around CAD 200 million on the stock exchange, recently announced that the Company will be renamed Electra Battery Metals. The change is intended to reflect the fact that in the future, not only cobalt but also nickel sulfate will be produced for battery production and that the Company plans to enter into the recycling of lithium-ion batteries. In addition, the Company intends to expand its cobalt refining capacity from the current 5,000 tons per year to 6,500 tons. The new capacities are to be available from the fourth quarter of 2022.
As part of the new strategy, a regional battery metals site is to be built, where the raw materials lithium, nickel, cobalt, copper and graphite will be harnessed from the recycling of spent lithium-ion batteries. A demonstration plant is planned for 2023. In addition, the development of a nickel sulfate production facility with an annual capacity of 60,000 metric tons is being investigated, which would be fed by nickel production from regional producers in the province of Ontario. These products could then be processed into battery precursor materials such as electrodes in a further step. Here, First Cobalt, or Electra, is likely to rely on a joint venture solution. The local supply structure and proximity to North American automotive production would allow significant savings to be realized in the battery value chain, for example, by eliminating the need to crystallize the nickel sulfate before shipping.
Batteries and rechargeable batteries are the future. Storage options are essential not only for electromobility but also for the security of grid supply. That means that the demand for battery materials will continue to rise in the future. If you want to play it safe, put the shares of a heavyweight like Orocobre in your portfolio. First Cobalt's focus is also heading in the right direction. The greatest potential - but also the greatest risk - is currently offered by Manganese X Energy. If the Company's plans come to fruition as planned, we can look forward to substantial returns.
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