Surge in Chinese electric vehicle sales bodes well for battered local lithium miners
Electric vehicle sales in China rose 58 per cent year-on-year in April, a positive sign for struggling WA lithium miners with the battery commodity's price running low on juice.
The April sales figures are 2 per cent higher than March's numbers and take the total year-to-date EV purchase growth in the Middle Kingdom up to 51 per cent.
Retail discounts have driven the speedy growth, according to Morgan Stanley, but there could be headwinds on the horizon.
'Our China Autos team remain watchful for signs of sub-seasonal demand turning into a broader price war as order intake moderates,' Morgan Stanley stated.
'They note the Shanghai Auto Show last month failed to impress as some key EV launches had already occurred, and some highly anticipated models were absent with launch dates now in June or July.'
Prices of the spodumene concentrate produced by WA miners to power electric vehicle batteries are yet to show signs of improvement.
The prevailing price is currently $US665 a tonne, according to Shanghai Metals Market, down about $US150/t in the space of a month and continuing a broad decline over the past two years.
A rapid rise in lithium mine output from African countries like Zimbabwe, Rwanda and Nigeria has partly fuelled the supply glut.
Morgan Stanley believes there is still pain ahead but prices should improve to $US1330/t by 2030.
'Our commodities team have a balanced view and see upside capped as the cost curve moves lower, driven by cost cutting and supply growth coming through,' it stated.
'We think prolonged prices below levels required to support new projects could impact supply modelled to come online over the next few years.'
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That means access to high-paying Western buyers who simply can't — or won't — touch concentrates with high radioactivity or impurity purity, combined with scale, grade and simplicity, is putting Lindian firmly on the radar of end users, financiers and fund managers project boasts a whopping JORC-compliant resource of 261 million tonnes going 2.19 per cent TREO and an ore reserve of 23 million tonnes. That reserve grade comes in at an impressive 2.9 per cent TREO and importantly, almost 20 per cent of that is the more lucrative magnet rare earths used in electric motors, neodymium and praseodymium. All that is expected to bring about more than 15,000 tonnes a year of contained rare earths concentrate, of which 1,600 tonnes per annum will be sought-after neodymium and praseodymium. 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