SMM, February 28th: on the evening of February 27th, Ya Hua Group announced that its wholly-owned subsidiary, Yahua International Investment and Development Co., Ltd., intends to subscribe for 3.7 million shares of Australia's ABY at a price of A $0.75 per share, accounting for 3.4% of the total pre-IPO share capital of ABY.
According to the announcement, ABY is an Australian-registered battery metal company with mineral resources in African countries such as Sudan and Ethiopia. Its core assets are mainly Ethiopia's Kenticha lithium mine, which is 51 per cent owned by ABY.
It is reported that the Kenticha lithium mine began mining in 1990, and it has been proved that the amount of lithium resources is as high as 67.4 million tons, and the average grade of Li2O is 1.03%. For further exploration and development of confirmed mineralization, the total resources range from 8000 to 110 million tons of lithium resources, equivalent to more than 1 million tons of Li2O.
It is reported that the overall technical and operational team of Kenticha Lithium Mine comes from the former Galaxy Lithium Industry in Australia, and the group has a long-term and good cooperative relationship with Yahua Group. The lithium concentrate of the first phase of the lithium mine 200000 tons / year (equivalent to Li2CO3 equivalent 30, 000 tons / year) will start delivery in the second quarter of 2023, and the life of the mine is expected to exceed 18 years.
In addition, the two sides also signed an "off-take and sales agreement", under which ABY is responsible for the development of the Kenticha lithium mine project and the sale and payment of lithium concentrate products to Yahhua International. The agreement is valid from the date ABY informed the company that the product was ready for shipment until December 31, 2025. According to the agreement, ABY's 12-month contract is required to supply no less than 120000 tons of lithium concentrate to Yahhua Group. If ABY has excess lithium concentrate in the future, both parties can provide additional quantity of lithium concentrate to Yahhua International in accordance with the terms agreed in writing.
As for the purchase price, the two sides will negotiate with reference to the 6.0% Li2O-based lithium concentrate price published on the relevant market website no later than 3 months before the expected delivery date of the lithium concentrate, and agree on the price of the relevant batches. If ABY does not give further notice before the end date of the agreement, the agreement between the two parties will be automatically extended for 2 years from the end date.
From the contents of the above agreement, it is not difficult to see that Ya Hua Group's move is intended to lock the supply of lithium concentrate in advance. And this move is not surprising at a time when the global competition for lithium resources is becoming increasingly fierce. In addition, as early as the evening of February 16, Ya Hua Group also issued an announcement announcing the new progress of its "off-take agreement" on lithium concentrate signed with Lithium Development, a wholly-owned subsidiary of Core, Australia at the end of March 2019.
According to the previous agreement, Yahhua International will buy at least 300000 dry tons of lithium oxide concentrate from the development of the lithium industry, and will buy at least 75000 dry tons of lithium oxide concentrate each year (fluctuating up and down by no more than 10 per cent) after the lithium deposit is put into production. Now, Australia's Core has started mine construction as planned and is expected to provide lithium concentrate to the company in the fourth quarter of this year as agreed.
Of course, Yahua Group is not the only one competing for the layout of lithium ore resources. In 2022, many enterprises, including Ningde era, Zangge Mining, Ganfeng Lithium Industry and so on, have increased the layout of lithium mines.
According to SMM spot prices, the spot price of spodumene concentrate (6 per cent CIF China) has risen 23.95 per cent from $2150 a tonne at the beginning of the year to $2665 a tonne on Feb. 25. The price of lithium metal has also continued to rise recently. as of February 25, the average spot price of lithium metal was 2.54 million yuan / ton, up 1.145 million yuan / ton or 82.08% from the beginning of the year.
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Guojin Securities previously commented that there is still a gap between supply and demand for lithium mines in 22 and 23 years, which has been greatly alleviated in 24 and 25 years, and the sustainability of this round of mismatch between supply and demand will exceed expectations, and continue to be optimistic about investment opportunities in the lithium sector.
At the same time, with the explosive growth of downstream demand, the prices of lithium salts such as lithium carbonate and lithium hydroxide, as the main raw materials of power batteries, are also soaring. As of February 25, domestic battery-grade lithium carbonate was reported at 46.4 yuan per ton, up 186000 yuan per ton from the beginning of the year, or 66.91 percent.
Recently, however, with varying degrees of maintenance and production reduction in the downstream lithium iron phosphate plate, enterprises' enthusiasm for purchasing lithium carbonate has declined; in addition, battery and material enterprises are under the pressure of a surge in costs caused by the high-speed upward rise in lithium prices. some enterprises adopt the strategy of "abandoning and buying" more than 470000 yuan / ton of lithium carbonate, and the short-term upstream and downstream games are heating up. Under the combined influence of a series of factors, the price increase of lithium carbonate has slowed significantly recently, but SMM believes that with the beginning of March, companies downstream of the head gradually begin to make monthly orders, and lithium carbonate prices are expected to rise slightly in the future. "View details
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