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The Age of Electricity is creating enormous opportunities in the critical minerals investment thematic. Howard, Rodney and Matt provide in-depth discussions with major developers and analysts covering lithium battery metals, rare earths, and many other specialty commodities.
Episodes
Thursday Sep 12, 2019
Thursday Sep 12, 2019
SIGNIFICANT LITHIUM PRICE DOWNSIDE RISK.
THE LONG-TERM PAIN OF NEW SUPPLY.
SQM TO DEFINE GLOBAL LITHIUM PRICES. WHAT IS THE SWEET SPOT?
LEAVING ARGENTINA.
DECLINE OF LI PRICES IS JUST BEGINNING.
Lithium equities have fallen precipitously since late February 2018 as these and similar headlines entered the public domain from a global team of research analysts at Morgan Stanley which has amongst the most extensive breadth of coverage across the EV supply chain - from mining/chemical to cathode to battery to Autos.
Is the bear lithium price thesis underpinning their call correct? Or have they been “right for the wrong reasons” so far?
In Season 2 Episode 2, Rodney Hooper and Howard Klein interview Morgan Stanley’s Javier Martinez de Olcoz Cerdan who covers SQM, one of the largest, lowest cost lithium suppliers and has articulated aggressive supply expansion from their world class Salar da Atacama project.
Howard connected with Javier in March 2016 following SQM's 50% equity stake in Lithium America’s Cauchari-Olaroz in Argentina, an investment he looked at skeptically at the time as a ploy as SQM re-negotiated its Atacama concession with CORFO. Anyone invested in lithium shares interested in preserving their capital should have listened to Javier and the Morgan Stanley team, if not in February 2018 when they made their initial call, then perhaps in August that year, when their call on SQM exiting Argentina proved correct.
As Summer Time Blues have come and gone, will the Blood, Sweat & Tears continue into year-end? Please enjoy Part One of Lithium-ion Rocks! 20th episode, inspired by the 50th anniversary of the legendary Woodstock concert, With a Little Help From our Friend of the Devil, Santana Martinez, who saw early and told the world about a lithium Bad Moon Rising,
And please also visit the Lithium-ion Rocks “tip jar”: www.patreon.com/lithiumionrocks
Podcast Index:
0:00 - 4:20 - Introduction
4:21 - 10:40 - Javier background and the Morgan Stanley team
10:41-17:53 - Javier discusses lithium as a commodity and the importance of supply
17:54 - 30:30 - Discussion on SQM and technology
30:31-36:00 - Will new projects come into production with prices below $10k/t?
36:01 - 44:45 - SQM product mix Q2 and the future, gaining market share
44:46 - 51:20 - Global lithium markets, basis and arbitrage
51:21 – end Disclaimer
Not Investment Advice. Do Your Own Research
For important disclosures, please see the Morgan Stanley Research Disclosure Website at www.morganstanley.com/researchdisclosures
Sunday Sep 08, 2019
Sunday Sep 08, 2019
As @RodneyHooper13 and @LithiumIonBull return after a five-week break to begin @LithiumIonRockssecond season, a redux of late 2018 Velocitility has again returned to global and global emerging markets.
Despite a strongly upbeat hydroxide demand outlook articulated in Livent’s Q2 conference call and supply restraint at Albemarle, lithium equities have staged only fleeting bear market short squeeze rallies. Political instability in usual (Argentina) and unusual (Hong Kong) places, negative bond yields, Brexit/EU stagnation and Trade War “chicken” with China continue to weigh on short-term sentiment. Gold is hot and goldbugs globally are giddy.
Canaccord Genuity’s Reg Spencer and Fastmarkets’ Will Adams discuss with Rodney and Howard their views of the current state of play with lithium supply/demand, prices, the outlook for ASX shares Alita ($A40), Altura ($AJM), Pilbara ($PLS) Orocobre ($ORE) and two of Canaccord’s top junior picks that continue to outperform, Piedmont Lithium ($PLL) and Lithium Power International ($LPI).
We also comment on Ganfeng's ($1772) surprise “No” vote from its Hong Kong shareholders and what this could mean to its $450M capital raising plans and its multiple junior miner partners.
PLUS! SOMETHING NEW!
LithiumIonRocks has joined Patreon to enable all our listeners the opportunity to contribute to our continued production of #LithiumEquityIntelligence
www.patreon.com/lithiumionrocks
Monthly Tiers:
$1 Tier - Brine
$10 Tier - Hard Rock
$20 Tier - Jane & George Battery Pack
$50 Tier - Unicorn in Green Fields
$100 Tier - LithiumIonBull
EXCLUSIVE SNEAK PREVIEW for all Patreon members that join the $10 Tier or above! Rodney and I recorded commentary on Livent and Albemarle conference calls which will be published as part of upcoming next episode following SQM’s Q2 conference all later this week.
Meantime, inspired by an epic stadium show by the Rolling Stones No Filter tour…
Enjoy E19: S2 Premiere! Emotional Rescue. Let it Bleed
Podcast Index
0:00-4:43: Introduction
4:44-15:30: Fastmarkets’ Will Adams price round up:
15:31-39:20: Sydney-based Canaccord Genuity analyst Reg Spencer discusses the current market conditions and his coverage of AJM, PLS, ORE, LPI & PLL
39:21-49:00: Howard & Rodney commentary on Alita and Ganfeng
49:01-end Disclaimer
Not Investment Advice. Do Your Own Research.
Wednesday Jul 10, 2019
Wednesday Jul 10, 2019
1H Mr. Lithium Bull Market Scoreboard. Dead or a Livent?
E18 S1 Finale: #LiTHiuMadMen. #ChangetheConversation
0:00-5:04 Introduction
Howard discusses the change in conversation from price pressures to future chemical shortage. The battery arms race has begun and there’s a need to “overfund” to meet future demand. Geopolitics of Lithium. US Security of Supply. Mr Market scoreboard. Piedmont, Lithium Power International, Savannah, Infinity.
5:00-6:00. Tesla Lithium? Verbatim from Elon Musk at AGM & perspective on the potential for this vertical integration from recent podcast from Tesla gurus Galieo Russell (HyperChange) & Sam Korus (Ark Invest).
6-7 Chicago, Saturday in the Park. A man selling Ice Cream (Plain vaniLLa)
7 -9:30 Howard discusses Livent earnings, speciality chemicals multiples, and new discoveries/expansion - eg, Liontown, Piedmont, Carolina Tin Spodumene Belt.
9:30-13:15 Rodney discusses the 1st half and important trends to watch
13:15-15:30 Howard and Rodney discuss Europe as the new China and the OEM’s and the choices they’re making re EV’s
16:12-33 Tesla’s China factory and VW’s ability to make low prices cars. Eramet and the truth about how many projects are actually at an advanced stage. Project funding and who might get funded? Can new supply meet demand growth by the mid 2020’s? Chinese control of supply and Ganfeng’s growth strategy. What does Bacanora investment mean for Ganfeng - LAC/Thacker Pass? Will Ganfeng be welcomed to invest in #USA? Merge with LAC?
Dead or a Livent?
33-54 Chris Kapsch of Loop Capital discuss Livent in detail, including its place in the supply chain and whether like Albemarle it's a base load supplier? Price target and valuation time frame and which of LTHM and ALB he likes better.
Not Advice. Do your own research. Read Disclaimer.
Friday Jul 05, 2019
Friday Jul 05, 2019
KISSam Luke Parts 1, 2 & 3 PLUS Chile Manager Ellen Lenny-Pessagno
Index by Minute:
0-3 4 years since Rockwood acquisition, what has change in capital markets to so de-rate Albemarle’s multiple?
3-7 Momentum “block trade” increasing volatility & creating a “Freebird” Lithium valuation.
7-10:45 Albemarle overview of its mix of business and current key valuation metrics.
11 - 19 When hydroxide demand greater than carbonate? Hydroxide to maintain its price premium to carbonate? Sustainability in Atacama, other outstanding considerations with Chile regulators.
19 – 21 Antofalla, Argentina asset vs. possibly buy. LIvent, Orocobre. High quality brownfield Kings Mountain North Carolina
21-24 Clay or geotherma projects? Nemaska. Execution by juniors, by majors
24-26 Weather. Compare Western Australia (Wodgina) and Quebec
26-31 Tianqi SQM, possibility of takeover by Tianqi/China support?
31-34:30 ALB’s lithium assets trading at “replacement value”. Why?
34:30-37 ALB vulnerable for a takeover? Insider Buying?
37 What price expectation did ALB use to ensure IRR of two times their cost of capital for $2B Wodgina investment?
37-42 Spider Web – what two most important factors for M&A transaction?
Rockwood - Reflections four years on acquisition logic – World Class Greenbushes, Atacama. Pivot to hydroxide from Oz rock vs. Atacama carbonate. Perspectives on Ganfeng, partnering strategies with juniors or Chinese converters. Response to Ganfeng’s strategy to take over ALB as #1 producer. Big vs. profitability. Thoughts on Quebec, North Carolina, Europe as lithium geographies.
43:30-45 Kings Mountain – “No questionthat is a World Class, World Scale Asset” Can build “Hydroxide, Carbonate or another lithium derivative around it.” North Carolina, USA.
45:15-51 Timing of ALB bond? China approval for Wodgina?
Reliability of ALB’s long-term contracts and price floors
ALB’s customer mix
51 – 53:30 From 2021 will you seek to re-enter new carbonate contracts expire?
54-60:05 Strong potential of its past producing, plain vanilla hard rock lithium mine in King's Mountain North Carolina. Update on cost position and plans at Wodgina JV with Mineral Resources and potential to buy further China conversion assets. Luke also weighs into the increasingly topical discussion about USA Security of Supply - will US follow China and EU with some level local and federal support infrastructure, coordination and incentives support to bring entire supply chain? Can ALB be strategic American supplier to GM, Ford, VW USA?
60:05-89:30 Albemarle's Chile Country manager and ex-USA diplomat Ellen Lenny Pessagno also joins Howard Klein and Rodney Hooper in Santiago at the 11th annual FastMarkets Lithium Supply & Markets Conference with an update after her first nine months since joining ALB. Ellen outlines her and ALB's commitment to Sustainability while doubling the company's lithium production in Atacama and La Negra through the installation of new equipment to increase yield by 30%. And the company’s unique relationship and commitment to and employment of local indigenous populations as well as its strong relationship with CORFO and other government regulators. Ellen also shares her view on current political situation and risk/reward in Argentina.
89:30 Howard concluding comments including response to vocal ALB haters spewing “De-Worseification” and “Bad Company” epithets.
Not Investment Advice. Do Your Own Research. Read Disclaimer
Friday Jul 05, 2019
Friday Jul 05, 2019
Lithium Power International (ASX: LPI, OTC: LTHHF), has invested $50M advancing Maricunga, the most important Lithium Salar in Chile after Atacama, to Definitive Feasibility Study, positioning the company for potential full funding and Final Investment Decision upon final permitting expected later this year. Meantime, LPI will begin drilling highly prospective spodumene hard rock targets in elephant country Western Australia.
18 months into the Pinera Presidency, the LPI team reminds us of Chile's 30+ years of fast economic growth & political stability, its well established mining and environmental culture and the inherent competitive advantages of developing a high grade, low cost, conventional lithium project in one of the most skills- and infrastructure-rich locations in the world.
Ahead of FastMarkets 11th Annual Lithium Supply & Markets Conference in Santiago in early June, Howard Klein and Rodney Hooper had the opportunity to record four members of the LPI management and board, including CEO Cristobal Garcia Huidobro, Richard Crookes, David Hannon and Ricky Fertig.
Timeline Index
0:00-8:20: Introduction. "No dramas". Chile is "Open for Business"
8:20-10:15: Ricky Fertig discusses the history of the project and the importance of a strong local partner
10:15-11:15 David Hannon discusses the board composition and their backgrounds
11:15-15:15 Cristobal Garcia gives an overview of the project and outright ownership of land and the EIA process
15:15-17:30 Richard Crookes outlines the characteristics of the ideal strategic partner and a potential funding/capex strategy
17:30-20:30 Ricky & Cristobal discuss the benefits of the project's location and availability of key resources
20:30-25:15 Cristobal Garcia details how advanced the project is, the length access to fresh water and good relations with the local indigenous people
25:15:31:15 Richard Crookes discusses the hidden potential of the WA exploration assets and the proposed drilling program at Tabba Tabba. He provides further input on the Pilgangoora and Greenbushes assets. Richard and Howard discuss the Wesfarmers acquisition of Kidman and potential further lithium investment plans.
31:16: Wrap up
Not Investment Advice. DYOR. Read Disclaimer
Monday Jun 24, 2019
Monday Jun 24, 2019
Will Adams & Jon Mulcahy @FastmarketsMB banter with @RodneyHooper13 & @LithiumIonBull about Takeaways and Giveaways as #Lithium19 Santiago #Chileconcluded last Wednesday.
Featuring: Sounds of Silence. Us & Them
Timeline
0:00 - 5:07: Introduction. VW ID Buzz. Sounds of Silence.
5:08 - 6:15: Fastmarkets introduction
6:16-10:35: Fastmarkets conference takeaways
10:36 - 12:10: Shouldn't OEMs lock in equity & off-take deals at current low prices?
12:11 - 14:00: Cathode chemistry trends
14:01 - 17:10: Hydroxide and carbonate pricing
17:11-22:58: Tianqi, Ganfeng, Livent, Albemarle banter. Sustainability. Transparency. Us & Them
22:59 - 27:35: Europe & battery supply chain. Infinity. Keliber. Savannah.
27:36 - 31:12: EV range, infrastructure, & carbon neutrality.
31:13 - 35:26: General commentary & Fastmarkets overview
35:27 - 41:30: LME contract & price forecasts
41:31 - 44:50: Project funding
44:51 - End: Trade war, EV sales & LME
Monday Jun 24, 2019
Monday Jun 24, 2019
Albemarle's CEO Luke Kissam talks about the strong potential of its past producing, plain vanilla hard rock lithium mine in King's Mountain North Carolina in the final segment of our interview from $ALB's world headquarters in Charlotte on May 30. And update on plans at Wodgina JV with Mineral Resources and potential for further China conversion assets. Luke also weighs into the increasingly topical discussion about USA Security of Supply.
Albemarle's Chile Country manager and ex-USA diplomat Ellen Lenny Pessagno also joins Howard Klein and Rodney Hooper in Santiago at the 11th annual FastMarkets Lithium Supply & Markets Conference with an update after her first nine months since joining ALB. Ellen outlines her and ALB's commitment to Sustainability while doubling the company's lithium production in Atacama and La Negra through the installation of new equipment to increase yield by 30%. And the company’s unique relationship and commitment to and employment of local indigenous populations as well as its strong relationship with CORFO and other government regulators.
King's Mountain in Charlotte, the Queen City of the South. Virginia USA-born Ellen Lenny Pessagno. American Girls.
Not investment advice. Do your own research.
Wednesday Jun 12, 2019
Wednesday Jun 12, 2019
Albemarle looks vulnerable for opportunistic takeover. Valuation (down ~50%) reflects Mr. Market pricing in today’s China spot carbonate price as the long-term reference point, rather than ALB’s more profitable long-term hydroxide price with floors from reliable non-Chinese counter-parties.
In Part Two of Lithium-ion Rocks exclusive interview with KISSam Luke - the leader of the world’s largest lithium producer - Howard Klein and Rodney Hooper ask about such M&A possibility and whether management/board are considering insider buying at current prices? Additionally:
What LiOH pricing did ALB assume for its Wodgina JV to achieve 2X cost of capital? What is expected timing and pricing for $1B+ bond deal later this year for Wodgina JV? What are ALB's top two most important investment criteria for lithium investment? Might ALB deploy Ganfeng-like strategy in partnering with juniors via off-take agreements? After investing "tens of millions" evaluating King’s Mountain North Carolina what has ALB learned about the quality and size of that past-producing asset and the likelihood/timing that the Carolina Tin-Spodumene belt will again become an important part of USA and global lithium supply?
PLUS: Chris Kapsch of Loop Capital
Is lithium a specialty chemical or commodity chemical? What does that really mean for $ALB long-term profit margin and Mr. Market earnings/EBITDA multiple? With Tier One harbrock (Talison) and brine (Atacama), ALB is positioned as the "baseload supplier" to "Tier One" Battery and Cathode producers outside China. Does this justify premium valuation to peers? Where does ALB & other lithium producers sit relative to broader “Specialty Chemicals” investment universe?
ALB now attracting traditional Value funds, compared to prior interest from Growth and GARP investors - what are their top questions?
What are the dynamics in ALB's bromine and catalyst business? Might we see a positive or negative surprise from these Oligopolistic businesses supporting ALB's lithium growth investments?
Not Investment Advice. DYOR
Friday Jun 07, 2019
Friday Jun 07, 2019
May 30, 2019. Luther “Luke” Kissam IV, Albemarle’s Chairman, CEO & President speaks with Howard Klein from $ALB's Charlotte, North Carolina headquarters with Rodney Hooper dialed in. LithiumIonRocks will publish the co-hosts' candid questioning over a three-part series of exclusive podcasts, each with an additional complementary guest.
In today’s Part One, we discuss with the leader of the world’s largest and highly profitable lithium producer the current state of the still nascent and immature lithium industry, Albemarle’s place within it, and its aggressive investments - substantially focused on lithium hydroxide - to meet unprecedented 15-20% annual demand growth from increased Electric Vehicle adoption.
What does Luke think about what Mr. Market is saying about ALB - trading at ~7X 2020 EV/EBITDA down some 50% from last year’s high, essentially flat since Luke assumed the CEO role in 2011, and only marginally up since ALB's 2015 purchase of Rockwood at 14.4X LTM EV/EBITDA?
Will hydroxide demand overtake carbonate demand and when? Will hydroxide maintain its price premium to carbonate? How does Luke think about unconventional clay and geothermal projects? Thoughts on Livent, Orocobre? Buy vs. Build Kings Mountain North Carolina or Antofalla, Argentina? As an S&P 500 constituent and Goldman Sachs SUSTAIN 50 name, Luke comments on Sustainability considerations in general and via yield enhancement equipment being implemented in Chile.
As much of the lithium industry heads to Santiago Chile for the flagship Fast Markets 11th Annual Lithium Supply and Markets conference - and tours both ALB and SQM’s Atacama brine salars - LithiumIonRocks also profiles the state of play in Chile. Cristobal Garcia Huidobro, CEO of Lithium Power International (LPI) & Tim McKenna - ex Rockwood VP of IR and Government relations, now with Piedmont Lithium in North Carolina - discuss the brine vs. hard rock debate and investor perceptions (and misperceptions) about Chile’s lithium investment climate for producers like SQM and ALB as well as advanced development projects like LPI’s Maricunga.
Not Investment Advice. DYOR.
Friday Jun 07, 2019
Friday Jun 07, 2019
Ganfeng Lithium’s US$30M prospective investment and off-take agreement with Bacanora Lithium is a very consequential deal.
Providing operational and, by our estimates, up to $150M in equity support, "Off-take Partner of First Resort" Ganfeng is once again taking astute, calculated risk with a large, long-lived clay asset that by any definition should be considered World Class.
Bacanora - advised by Citi and Canaccord - and its Sonora Lithium project, with Ganfeng, Hanwa, Red Kite and other large institutional support could be fully funded by end 2019 with targeted fast track Stage One production of 17,500t lithium carbonate by 2021.
#LithiumIonRocks co-hosts Howard Klein and Rodney Hooper dive deep with successful project developer and Bacanora CEO Peter Secker who outlines the background, deal details and what to expect over the next few months in what is yet another important strategic relationship for Ganfeng in another new Western Hemisphere emerging market jurisdiction.
We also preview next week’s pilgrimage to Santiago, Chile for the Lithium Industry’s flagship @Fastmarkets 11th Annual Lithium Supply Conference.
PLUS
LithiumIonRocks First Ever Contest & Giveaway. “Who Can It Be Now?”
That is, our upcoming E15 guest - a serious player in the lithium industry.
Tune it to hear more about the contest and giveaway!
And, for further reading:
P.S. I Like Soft Rock - “Clay Will Have Its Day” @LithiumIonBull November 2017.
docs.wixstatic.com/ugd/affbaa_cb1a…79af63983d1.pdf
Not Advice. DYOR