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Lithium stocks that will make it?, page-465

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selfmaderiches

1,845 Posts.

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22/11/18

20:34

Post #: 36609143
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Originally posted by springinhetveld ↑

Today we learned about the (big) deal between Albemarle and MIN regarding the Wodgina resource. MIN selling a 50% stake for 1.2b$US. This could be the start of the "deal making season" in the lithium space!?

Firstly I would like to say that I am a bit surprised about this deal. For this amount of money Albemarle could have bought PLS as its MC was about this (but they would have had to pay a premium of course). And although Wodgina is a great resource I believe the one from PLS is much better. So why did they go for MIN and not PLS. No clue at present but I will keep pondering this question in the next weeks.

Anyway, back to the "deal making season". Why do I think this could be the start. Well two main reasons.
Firstly, it becomes clearer and clearer that we are moving towards a significant shortage in lithium production. EV mobility is really happening.
Secondly, the recent IPOs from both FMC with their Livent spin off and Ganfeng on the hong-kong market have brought some significant amount of money into the lithium space although due to the low SPs and low(er) IPO prices less money then expected/hoped for. But still a very significant sum of money. In addition the high lithium prices of the last two years have brought in a lot of money for the lithium producers. The main ones being ALB, FMC, SQM, and Ganfeng. So there is a lot of money available and I am sure there are a couple of non-lithium companies who are very interested, if not already active, in getting into this business. POSCO and Softbank are two examples.

So lets have a look at the lithium producers and what they have done.
The big three
ALB: Deal with MIN for 50% of Wodgina and building a LiOH facility.
SQM: Deal with KDR for 50% of Mt. Holland and also building a LiOH facility
Dropped ist deal with LAC. In discussions with Tianqi for JV of its Chili salar.
FMC (now Livent LTHM): No deal yet!?

Others:
Tianqi: Has 50% of Greenbushes (ALB has other 50%) making deal with SQM for Chilean salar
Ganfeng: Deal with LAC (Canada, taking over from SQM) and offtake with AJM
POSCO: Deal with GXY and offtake with PLS

New players that are worth a mention:
Huayou: Invested in AVZ
Yahua: Deal with CXO
RuiFu: Deal with CXO (had a deal with PLS which never happened)
Nextview bought Li-X (Canada) and interested in (much?) more
Softbank invested in NMX (and is top SH of Uber) and interested in much more lihtium
CATL: battery producer who had its IPO earlier this year and still needs to secure supplz

So it seems ALB and SQM have made their (first) move. So we may expect LTHM to follow soon, especially with the fresh cash in the pocket.

Tianqi is trying to make a big move taking a significant share (24% for 4b$US) of SQM but Chili currently blocking the deal. If the deal does not go through it would mean Tianqi has 4b$US available for other lithium deals! But I assume the deal will go through it seems to mainly be an issue of Tianqi being involved with both ALB and SQM. SQM wants to make sure ALB does not get access to its sensitive information (pricing!).And if the deal goes through it will mean that SQM has a lot of money to spend!

Ganfeng has done a relatively small deal with LAC and an offtake with AJM. I expect more to come from them in the next months!

POSCO the new kid on the block has done a pretty large deal with GXY for 50% of its SdV and more to come. And have an offtake with PLS and option for PLS to participate in building LiOH facility. They seam very keen to get into the lithium market. Expect more to come from them.

Dark horse for me at present is CATL. They have some pretty big contracts and need to secure supply.

So what does this mean for the deal making season!?
We may expect a significant deal from LTHM soon I believe.
Either Tianqi of SQM will have a "sheet load" of money and will do something with it in the lithium space
Ganfeng seems to have just started as well as POSCO. More to come from both I believe.
CATL in dire need of lithium and cobalt.

Which resources are still available for this?
PLS: phase 1 and phase 2 already done and dusted
AJM: phase 1 and phase 2 also done and dusted
MIN: done and dusted
ORE: done and dusted
GXY: SdV and JB deals to be made. SdV most likely with POSCO but is next to LTHM, that could be interesting. And JB also available!
KDR: done and dusted
TAW: done and dusted

So what else is there? Not much in Australia (SYA maybe?). So Africa? AVZ, BGS, PSC!? Chinese seem to like Africa!

I think the coming months will be interesting! All producers and near producers are spoken for. Mainly the African resources are still "open". Expect some interesting fights with/around GXY. But then it will move to Africa I think unless some new resources pop up in Australia or Canada.

Expand

Wodgina has no offtakes... Wodgina was for sale... PLS has offtakes and agreement, PLS was not for sale...

Wodgina has more growth fro ALB that's it... Also MIN own 10% of PLS so probably conflict of interest....
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