It’s always the same with these blokes. Stay off our backs for a fair tax share on the way up, and stick the hand out for bailout on the down.
Miners will push Resources Minister Madeleine King to drive reform of the way Australian critical minerals are priced at crisis talks this week, after lenders withdrew a $760 million loan to fund Western Australia’s next big lithium mine.
Shares in Liontown Resources crashed almost 22 per cent on Monday after a prediction for a five-year depression in lithium prices spooked the nation’s biggest lenders to withdraw a loan offered just three months ago.
It came as BHP said about 20 jobs would be cut at its Kambalda nickel concentrator in response to the closing of Andrew Forrest’s privately held nickel mines, and as Chalice Mining warned that half of the world’s palladium mines were losing money at current prices.
Australia’s flagship rare earths producer Lynas also reported a halving of received prices on the back of weak demand from customers linked to the Chinese property sector, such as the manufacturers of air-conditioners.
Demand weakness is not ending any time soon, to say the least. We are only two years from when Goldman told us nickel was the new gold.
As we warned then, green metals are abundant, and crashing Chinese demand would put the market in surplus.
As for lithium, there is more bunkum:
“When the Chinese futures exchange came into being in June last year, the lithium price has just trended one way since then,” said Mr Ottaviano.
“We just need to get better at pricing this product.”
Prices for battery metals have slumped because of weaker than expected growth in electric vehicle sales, particularly in North America, where automakers such as Ford and General Motors have slowed production in the past four months.
Don’t give up your day job, mate. Lithium is a classic boom and bust super cycle story in which supply will overwhelm demand after a shortage.
This is the nature of demand shocks and inelastic markets with big mines:
Lithium mines are so big that new supply will invariably crash the price. Expect more boom and busts ahead.
The quickest and easiest way to adjust these markets is to let the green metals miners burn.
