Duncan Calder China Specialist Argues That Lithium Cobalt And Graphite Have A Bright Future

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Duncan Calder, China
Share
Specialist, Argues That
Lithium, Cobalt And Graphite Have A Bright Future
The recent disappointing IPO of Ganfeng Lithium
which fell 20 per cent on its ?rst day of trade
on the Hong Kong Exchange has had some
commentators arguing that the future is looking
dim for those seeking to develop lithium, cobalt
and graphite projects to meet the supply demands
of the burgeoning Electronic Vehicle (EV) market.
They argue that this disappointing ?oat may bode
ill for rival companies also seeking to ?oat
such as Tianqi Lithium. Duncan Calder, ex-KPMG
Senior Partner and Managing Director of Contour
Capital argues that this view misses the
point. Share markets are always volatile
currently particularly so. US China trade war
rumblings and US midterms uncertainty are right
now helping to fuel this volatility. Naturally,
that can affect timing and short term prospects
for listings of resource companies. But, we must
not forget, in the end fundamentals always
prevail. Always, says Calder. The fundamentals
for companies like Tianqi Lithium are strong. The
story for commodities exposed to the EV / Lithium
Ion battery market be that traditional large
commodity markets like Nickel or smaller
commodity markets like Lithium, Cobalt and
Graphite remains unquestionably bright in the
long term. Investors should not baulk just
because of some short term market activity that
appears to be of concern. EV sales are certainly
surging in China, but that hasnt yet translated
into the expected uplift in lithium prices as
new supply sources hit the market. We must not
forget though that the longer term outlook is
much brighter as Beijing policy makers actively
promote EVs to combat air pollution. Chinas
commitment to cleaner air has been sustained and
unwavering. Of course when the outlook for EV
production is so incredibly positive, there is a
rush to start up new mines for these commodities
and of course some projects will succeed but
many, sadly, will not.
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The key, Duncan Calder argues, as always, will be
the size of resource being developed, projected
production costs (with low quartile the most
sought after), logistic obstacles (such as rail
and port access), sovereign risk, willingness to
cede control of the project and the ability of
management to sell the story to
investors. Independent advisers such as Contour
Capital that specialise in assisting companies to
secure development ?nance, in particular from
the worlds biggest market the hungry dragon
that is China remain con?dent that well
managed, quality projects will ?nd funding and a
pathway to market. The facts are clear EVs are
coming and they need more nickel, lithium, cobalt
and graphite. The world especially needs more
Lithium Cobalt and Graphite it is just a
question of which resources companies will best
respond to the demand challenge. Calder, based
in the massive resource-rich province of Western
Australia, sees his role is to help Australia and
Australian resources companies developing
projects both within Australia as well as in
Eastern Africa to play a larger role seizing this
opportunity and not to be sidelined.
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