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The Wesfarmer-Kidman Buyout causes Shockwaves in the Lithium and Battery Metals space – Superstructure Advisors

The Wesfarmer-Kidman Buyout causes Shockwaves in the Lithium and Battery Metals space


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Current global market analysists predict that the supply of lithium is inadequate to deal with increasing demand with a global shortage predicted. In particular, Tesla has warned this may be on the horizon due to underinvestment in the mining sector according to sources at a closed-door mining conference in Washington, United States. A Tesla manager for battery metals Sarah Maryssael recently stated that “high prices for key metals could increase exponentially as a consequence of supply constraints”. (source: https://smallcaps.com.au/tesla-warns-upcoming-global-shortages-battery-minerals/)

More relevantly to Australia are the moves by Wesfarmers to offer to buyout Kidman Resources for $776 million dollars. This move by Wesfarmers was predicted as lithium consumption habits are changing rapidly as electric vehicle manufacturers are seeking batteries that can drive longer distances between charging sessions also resulting in a preferred form being lithium hydroxide rather than lithium carbonate. It is these market conditions that have put Kidman in a prime position to be a primary vendor within the Western Australian great lithium rush.  In addition to this Kidman has found success in Chile with its joint development plan with a Chilean conglomerate, this play at lithium has made them a far more attractive during Wesfarmers’ tire kicking exercise to find additional lithium resources.

So, on a final note Wesfarmers and Kidman Resources have both been in discussions with Tesla who outsourced its battery making to Tesla who subsequently went on to state that its lithium hydroxide specs are going to change again later this year.

 

Source: (https://www.afr.com/business/energy/wesfarmers-seduced-by-kidman-chemistry-not-electric-dream-20190502-p51jab)

Adam Longfellow
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