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Sock-et to me: Battery metals light up

  • Lithium, cobalt and nickel are the key metals used in electric vehicle batteries.
  • McKinsey predicts the market for lithium batteries globally will grow to at least $360bn by 2030.
  • Investors pile into lithium producer shares following a number of companies announcing supply agreements with leading EV manufacturers.

As a growing number of countries pledge to phase out petrol cars, demand for electric vehicles is surging, leading investors to back battery metal producers in anticipation of stronger demand.

Lithium, nickel and cobalt are among a number of key metals used to make EV batteries.

In 2021, global mined lithium production hit a record high 100,000 metric tonnes (excluding USA) according to preliminary data released by the US Geological Survey. McKinsey predicts the market for lithium batteries globally will grow to at least $360bn by 2030.

The price of cobalt has increased 87% over the past year, from around US$44214.85/metric tonne in 2021 to US$60412.50/metric tonne in 2022.

Nickel is up 53.75% over the past year to US$27,586/metric tonne in 2022.

A number of battery metal exploration companies have made headlines in recent times after signing supply agreements with EV producers including global leader, Tesla (NASDAQ:TSLA).

ASX-listed lithium exploration company Core Lithium (ASX:CXO) announced it entered into a binding Term Sheet with Tesla for up to 110,000 tonnes of lithium spodumene concentrate supply over a 4-year period.

Following the announcement on March 2, shares in Core Lithium jumped 5% in one session while the company’s shares have rocketed 412.3% over the last year.

Fellow Australian-listed battery metals exploration and development company Liontown Resources (ASX:LTR) is also catching the eye of investors and big EV manufacturers, with the company’s share price surging 171% over the last year.

Liontown Resources has signed two notable supply agreements so far in 2022. In January, they signed a deal to sell lithium spodumene from its flagship project to the battery unit of LG Chem (KRX: 051910) in South Korea, causing Liontown Resources’ share price to jump 13% in one session.

In February, Liontown Resources also announced it had signed a 5-year agreement with Tesla to supply lithium spodumene concentrate to the EV giant, which boosted Liontown Resources’ shares 20% in one session.

A number of other battery metals exploration and development companies look set to join the party including Celsius Resources (ASX:CLA), who has two key deposits of battery metals in the Philippines and Namibia, and Sayona Mining (ASX:SYA).

Investors are keeping a close eye on lithium, cobalt and nickel exploration and production mining companies in 2022 as the list of countries pledging to go green continues to grow.

The one-line takeaway: Investors shrug off geopolitical tensions and market volatility to back battery metals producers.

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