China’s electric-vehicle industry is piling in, as are speculators
FORGET the “resource curse”. Australia is blessed with the stuff. For more than a quarter of a century it has not had a recession, thanks largely to Chinese demand for its raw materials.
It is only a few years since the end of one such China-led boom, in base metals such as iron ore. A new speculative flurry has started in minerals such as lithium, cobalt and nickel to feed another China-related craze—making batteries for electric vehicles (EVs).
Ken Brinsden, an Australian mining engineer, says he pinches himself over these remarkable turns of fortune. Until 2015 he was a boss at Atlas Iron, which shipped low-grade iron ore to China. In 2011, at the height of the China-led supercycle, it had a valuation of A$3.5bn ($3.8bn).
This has now shrunk to A$167m. But he now heads Pilbara Minerals, whose Pilgangoora lithium mine in the outback of Western Australia lies so close to two of Atlas’s former iron-ore mines that he can see them from the top of the dusty-red escarpment.
Since 2015 Pilbara Minerals’ market capitalisation has jumped from A$25m to A$1.5bn, as the soaring price of battery-grade lithium has made the economics of producing it from Australia’s spodumene, or “hard rock” reserves, more attractive. Great Wall Motor, a Chinese carmaker, recently bought a small stake in the firm and agreed to take a large share of its spodumene concentrate.