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News.com.au
27-06-2025
- Business
- News.com.au
Barry FitzGerald: Why Wildcat may the BESS buy as lithium demand goes through the roof
'Garimpeiro' columnist Barry FitzGerald has covered the resources industry for 35 years. Now he's sharing the benefits of his experience with Stockhead readers. Will battery energy storage systems bring forward the day when the lithium market flips from over to undersupply, putting a rocket under lithium prices and ASX lithium stocks in the process? It could well be the case, with the previously under-appreciated demand growth from BESS known to be a key reason behind Rio Tinto's (ASX:RIO) dive in to the lithium space, as the renewable energy sector gets both bigger and smarter. Its $10bn acquisition of Arcadium was classic straw hats in winter stuff by Rio, given the beaten-up lithium prices at the time, which are still to find a bottom. But if it's right about BESS, Rio's move into lithium may well prove to have been sweetly timed. BESS is the new high growth driver for lithium battery demand. It wasn't that long ago that a new solar or wind farm would be built without battery storage. Now utility-scale systems sit alongside renewable energy sources to improve efficiency, providing grid stability benefits as well. BESS demand is not as big as the electric vehicle sector, but its growth rate in 2024 was a phenomenal 51%. Demand growth from the EV sector was a none too shabby 26% off a higher base. High demand growth rates from EVs and BESS have continued in 2025. Combine the two and the question of when lithium demand again outstrips supply comes into sharp focus. Some forecasters suggest a supply deficit could emerge by the end of next year. It was a supply deficit that drove lithium prices to a crazy $US80,000/t ($US6,000/t for concentrates of the intermediate raw material spodumene) in late 2022. Prices are now back at $US8400/t and $US620/t respectively. Struggle town It is struggle town for all but the (very) low cost producers and means that the incentive to bring on new mines and expand existing operations to meet the growth in demand has been extinguished for the time being. That too feeds into the suggestion that the supply deficit and happier days of higher prices could be closer than equity markets think. No one is forecasting a return of prices to the boom time conditions of 2022. But there doesn't need to be for ASX-listed lithium stocks to get off the floor. That comes through in a lithium sector update (June 20) by Argonaut's Hayden Bairstow. His price targets for lithium producers and developers he follows are all well above prevailng market prices even though the price targets have been cut due to lower spodumene prices. 'We believe a (spodumene) price recovery is likely to be rapid once the market swings to a modest deficit, but the cycle is likely to be shorter given the volume of brownfield capacity that can be brought online, largely in Australia,'' Bairstow said. He now expect spot spodumene prices to peak at $US1500/t in late 2026, which is likely to trigger a re-start of existing capacity. A return to a balanced market is then forecast for 2027 before the widening deficit pushes prices higher in the long-term ($US1600/t). Wildcat pick Of the stocks mentioned by Bairstow it was Wildcat Resources (ASX:WC8) that caught Garimpeiro's eye. It was trading mid-week at 14c for a market cap of $187 million. Bairstow has it as a ''spec buy'' and has set a 40c price target. Wildcat is advancing its Tabba Tabba project in the Pilbara towards production. A pre-feasibility study is due for completion in the coming quarter. It's a world-class hard rock discovery weighing in at 74.1Mt grading 1% lithia with exploration upside. Garimpeiro mentioned Wildcat back in December when it was a 20c stock on the basis that projects like Tabba Tabba will be needed to meet the wave of demand coming for lithium from EVs and BESS. His timing for an acknowledgement from the share market that stocks like Wildcat had been oversold was obviously a bit off. But here we are with the lithium demand scenario now being juiced up by BESS. The company itself sees value in its stock as it has just announced a $5 million on-market share buyback. It is an unusual thing for a developer to do, but in Wildcat's case having $60 million in the till makes it a no-brainer given the current share price level. There is also a takeover overlay to the stock. Mineral Resources (ASX:MIN) has an 18% stake which it acquired in November 2023 for 85c a share. MinRes is a 50% partner in the big Wodgina lithium mine about 87km by road from Tabba Tabba. MinRes is busy sorting out its balance sheet and would likely entertain a bid for its stake at prices much higher than the current market price. But it could also decide, like Rio, that lithium represents a high growth opportunity and that Tabba Tabba needs to be part of its lithium story given its proximity to Wodgina.
Bloomberg
11-03-2025
- Business
- Bloomberg
Trump Rules out Tariff Exemption
Good morning, Rich Henderson here in Bloomberg's Melbourne bureau with the latest news headlines. Today's must-reads: • US tariffs on Australian steel and aluminum to hit • Rio Tinto offers $9 billion in bonds after Arcadium deal • Ukraine agrees to US proposal for 30-day truce with Russia US tariffs on Australian steel and aluminum will take effect later Wednesday in the US after the White House ruled out an exemption. The move follows efforts by Anthony Albanese's government to secure the exemption, which included meetings this week between Kevin Rudd, Australia's Ambassador to the US, and the Trump administration.
Reuters
27-02-2025
- Business
- Reuters
Rio Tinto-buyout target Arcadium Lithium posts loss on falling lithium prices
Feb 27 (Reuters) - Arcadium Lithium (ALTM.N), opens new tab posted a loss in the fourth quarter on Thursday, as low prices of lithium, used to power electric vehicle batteries, weighed on the company. Lithium prices have plunged more than 80% from its peak in November 2022 after a supply glut and softening of aggressive EV adoption rates. Arcadium has agreed to sell itself to Rio Tinto ( opens new tab, which shareholders approved in January and is expected to close by March 6. Rio Tinto plans to create a standalone lithium division after it completes the $6.7 billion acquisition, and the new business would assume control of Rio's $2.5 billion Rincon project in Argentina but not its controversial Jadar lithium project in Serbia. Arcadium Lithium reported a net loss of $14.2 million, or a loss of 1 cent per share, in the reporting quarter, compared with a net income of $37.7 million, or 9 cents per share, in the year-ago quarter. Its revenue for the quarter was $289 million, higher than estimates of $269.06 million. For the whole year, it reported revenue of $1 billion, compared with around $885 million in 2023. Analysts expected full-year revenue of $986.6 million. On overall volume of lithium sold, those of lithium carbonate and hydroxide in 2024 were slightly lower from a year earlier as weaker spodumene sales weighed, due to reduced production at Mt. Cattlin in Western Australia. Arcadium said last year it would put its Mt. Cattlin mine in care and maintenance by the end of the first half of 2025 due to the pricing downturn. The Philadelphia-based company reported adjusted earnings per share of 1 cent, in line with analysts' expectations according to data compiled by LSEG.
Euronews
20-02-2025
- Business
- Euronews
Rio Tinto sees steady earnings despite lower iron ore prices
Mining giant Rio Tinto revealed a consolidated sales revenue of $53.7 billion (€51.5bn) for the full year 2024, a 1% fall from 2023. However, net earnings came up to $11.6bn (€11.1bn) in 2024, representing a rise of 15% from the previous year. This was despite an 11% drop in iron ore prices, mainly because of weaker demand from China, as its domestic property sector still faces major issues. Rio Tinto's share price dropped 1.5% on Thursday morning. Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) came up to $23.3bn (€22.3bn) for 2024, a drop of 2% from 2023. Underlying EBITDA for iron ore came up to $16.2bn (€15.5bn), with the Pilbara iron ore production being 328 million tonnes. Underlying EBITDA for aluminium was $3.7bn (€3.5bn), whereas for copper, it was $3.4bn (€3.3bn) and for minerals, $1.1bn (€1.1bn). In 2024, Rio Tinto made significant strides at Oyu Tolgoi in Mongolia, with construction also starting for the expansion of the AP Technology AP60 aluminium smelter in Quebec. Argentina's Rincon starter plant also produced its first lithium. In a statement, Jakob Stausholm, the chief executive officer (CEO) of Rio Tinto said: "We continue to build on our momentum with another set of strong operational and financial results. Our strong balance sheet enables us to pay a $6.5 billion (€6.2bn) ordinary dividend, maintaining our practice of a 60% payout, the ninth consecutive year at the top end of our payout range, as we continue to invest with discipline. Optimism for the future at world's second largest miner "We are excited as we head into 2025, with all the building blocks for an incredibly successful, diversified and growing business in place including the expected closing of the Arcadium acquisition in March. We will remain disciplined in the short, medium and long term, while paying attractive returns to shareholders." Rio Tinto's chair Dominic Barton said in the company's 2024 annual report: "Rio Tinto is optimistic about the coming year. In 2024, we laid out the pathway to a decade of growth, gained clarity on the portfolio, and ensured we are in excellent financial health even as we execute more projects worldwide than ever before. "Even with more global volatility, the underlying drivers of population growth, an expanding global middle class, the push for more localised manufacturing, artificial intelligence, and the energy transition continue to underpin demand for what we do." Analysts say results illustrate the company's resilience Commenting on the results, Maurizio Carulli, energy and materials analyst at Quilter Cheviot, said: "Rio Tinto's FY2024 results are broadly in line with expectations, and the company has provided a steady outlook for the future. It is reassuring to see that group earnings (EBITDA) decreased by only 2% despite an 8% fall in iron ore prices. This resilience is a positive consequence of the evolution in the earnings mix and Rio Tinto's defensive characteristics. "Net debt has increased to $5.5bn (€5.3bn) due to acquisitions carried out in 2024, but it remains at comfortable levels. Looking ahead, Rio Tinto is guiding for a 4% volume growth in 2025. Management has indicated that its two largest mining projects, Simandu (iron ore) and Oyu Tolgoi (underground copper), are progressing well. Additionally, the acquisition of lithium producer Arcadium is expected to be completed next month. "Rio Tinto boasts a solid portfolio of assets, primarily positioned at the lower end of the cost curve in iron ore, copper, aluminium, and, since October, lithium. The significant barriers to entry in iron ore and copper, due to the complexity and difficulty of developing new mines, further strengthen Rio Tinto's market position." Shareholders asked to oppose abandoning London listing Rio Tinto has been increasingly under pressure from activist investor Palliser Capital and several other shareholders to review its dual-listing model. The company is being pushed to keep only its Australia listing, instead of one in London as well, in an effort to boost its share price. However, the company's board has urged shareholders to oppose this proposal, saying in the 2025 notice of annual general meeting: "The Board considers that the resolution is not in the best interests of Rio Tinto as a whole and has recommended that shareholders of Rio Tinto plc vote against the resolution." This is mainly because of concerns of such a move being too expensive. Recently, other mining companies such as Glencore have also been reviewing their London listings, with BHP also moving its primary listing to Australia.
