Bets on electric vehicles light up lithium miners and battery makers

Investors bet that the rise of electric motors will promote a period of rapid growth for lithium miners and battery manufacturers.

The Solactive Global Lithium Index, which includes the shares of battery makers, rose 32 percent this year to a record high, driven by profits for Chinese companies Ganfeng Lithium and Catlus.

Sales of electric cars have risen in Europe and China this year, raising the outlook for the battery industry. The world’s largest car manufacturers have promised to spend billions on developing new models. Meanwhile, the EU said last week that it might ban petrol and diesel cars by 2035.

Volkswagen, the world’s largest carmaker, said sales of electric cars were increased by 165 percent in the first half of the year; The Chinese BYD reported a 154 percent increase.

Prices for lithium carbonate, a key material for electric car batteries, have nearly doubled in recent years, according to Benchmark Mineral Intelligence.

“We believe that a transforming bull market for specialty metals is underway as the green revolution fits in and the ‘green recovery’ of the Covid-19 crisis provides the stimulus and regulation of the sector,” said Baker Steel fund managers . Capital managers.

Shares in Ganfeng Lithium, China’s largest producer of battery material, rose 98 percent this year, giving the company a value of $ 42 billion, making it the largest listed world. lithium mines. The Xinyu-based company was highly available and this year is investing in lithium assets in Mali, Mexico, China and Argentina.

Shares in CATL, the world’s largest battery maker, rose nearly 38 percent this year, increasing their market value to $ 200 billion – $ 50 billion more than VW.

‘If you look at all the expansion plans for the battery manufacturer and OEMs [carmakers] you have to be prepared, ”he said Wang Xiaoshen, Ganfeng’s CEO, in an interview with the Financial Times. “The world needs all kinds of lithium sources.”

Wang said the lithium market over the next few years runs the risk of demand lagging behind, as the new mining projects could experience delays. This could limit car manufacturers’ ability to achieve their ambitious targets for EVs.

‘It looks like it [the market] can be balanced, but if it is balanced, it will have a very close balance, ”he said.

The enthusiasm of investors for batteries has led to a number of start-ups of battery technology being listed on the stock exchange through reverse mergers with special acquisition vehicles, known as SPACs.

SES, based in Singapore, which is developing a more powerful lithium metal battery, said would list on the New York shares exchange via a combination with Ivanhoe Capital Acquisition Corp.

However, rising raw material prices will lead to higher production costs for lithium-ion batteries, making electric motors and energy storage more expensive.

Steven Meersman, co-founder of UK battery startup Zenobe Energy, said higher battery prices are causing some people to delay energy storage projects, which use large lithium-ion batteries to store energy for electricity networks.

“Battery prices are going up a lot,” he said. ‘There is currently a perfect storm happening in shipping, which is becoming more expensive and commodities. . . the supply chain wakes up from its slumber to Covid. ”

The higher prices have provided an incentive to reuse old lithium-ion batteries that have lost some capacity but can still be used in energy storage applications, he said.

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