Is lithium ore still a high-quality asset?
Listed companies last year “sky-high” grab the lithium mine scene is still vividly visible, this year, the attitude of enterprises to enter the lithium mine is rational.
From the results of the auction of the exploration rights of two lithium mines in Yunnan recently, although the auction of two lithium mines was successfully completed, it did not appear that many listed companies competed for the situation in the past, but it was won by local enterprises in Yunnan. As one of the key raw materials for power batteries, is lithium ore still “sweet cake”?
From the perspective of supply pattern, global lithium resources are limited. In the past, the case of competing for lithium ore is not only often staged in China, but also frequently occurred abroad. With the rapid development of new energy vehicles and battery industries, the demand for lithium resources is increasing. Therefore, whether it is domestic or foreign, the competition for lithium mines will not weaken.
Therefore, from the perspective of resource scarcity, lithium mining is still “sweet cake”, but whether it can eat this “sweet cake”, for the enterprises entering the game, it is facing a lot of uncertainty.
First of all, the downstream products of lithium ore are affected by many factors such as market, policy and supply and demand relations, and the price fluctuates greatly. At the same time, because the downstream market demand changes are also large, enterprises should pay attention to market dynamics and forecast future demand. Since last year, as the development of lithium mines continues to increase, supply increased, lithium carbonate began to appear in a state of oversupply this year, the price once fell below the cost line of lithium mining companies, many companies had to reduce production in order to support the price. If the lithium ore purchased at a high price encounters a sharp drop in the price of lithium carbonate, the cash flow pressure faced by enterprises can be imagined.
Second, lithium mining itself is a capital – and technology-intensive endeavor. What is not optimistic is that some cross-border enterprises do not have the technical level of exploration and development. Due to geographical location and climatic factors, some areas have low temperature and slow brine evaporation due to high altitude, and the construction of lithium mine infrastructure is difficult and has high technical requirements.
Third, with the country’s increasingly high requirements for environmental protection, lithium mine development will also face increasingly stringent standards and norms. This means that enterprises may add more investment in environmental protection, pushing up production and operating costs, and affecting the income level of enterprises to a certain extent. In addition, companies that fail to meet environmental requirements may be subject to penalties such as production suspension or capacity restrictions. At the end of last year, a number of lithium mining enterprises in Yichun, Jiangxi province, were investigated by relevant departments for discharging pollutants and other problems.
Therefore, we must be aware that lithium mining has high risks and challenges. For enterprises, when the downstream product price of lithium ore is in a low state, the risk of blindly pursuing “sky-high” lithium ore is getting higher and higher, and it is getting harder and harder to eat this “sweet cake” of lithium ore.