00:00This is Australia's biggest pure play lithium producer.
00:04So Dale, we can touch on CLTL's results and what it means for lithium demand in a moment.
00:08But generally, how are you gauging price dynamics and demand in the lithium market right now?
00:15Sure. So, look, thanks very much.
00:18As it relates to demand globally, it's very, very positive.
00:22As it relates to, of course, EVs being a key growth set.
00:25We've seen for the September quarter about a 20% increase year on year.
00:30So that's pretty remarkable.
00:32Outside of that, BESS, or battery energy storage, is growing in leaps and bounds.
00:38So year to date, it's almost 40% growth on the prior year.
00:42So some very, very strong structural growth drivers.
00:45And outside of that, we're seeing some strong green shoots.
00:48So in particular, the data centre investment is pretty phenomenal.
00:51And connected to that, we're expecting more battery support.
00:56So demand's looking very, very good long term.
01:00Are there any sort of risks maybe to that outlook?
01:03I'm thinking, for instance, recently we saw China approving CATL mine reserves in China, for instance.
01:10That played into prices.
01:11But what does it mean for overall demand and supply?
01:13Sure.
01:16So as it relates to the demand side, as I mentioned, those structural growth drivers look incredibly positive.
01:22And that's sort of driven through three sort of key drivers being, obviously, energy transition, in particular around solar adoption.
01:31Then you've got the swap out of products.
01:34So combustion cars for EVs.
01:36And then you've got these green shoots around new products, whether it's EV tolls or other applications.
01:42So those are the broad demand drivers.
01:45As it relates to the supply chain build-out to support that demand, well, there's a lot going on.
01:50So we've seen sort of defensive measures that you mentioned there from China.
01:55Outside of that, you also sort of see subsidies and other support regimes from other countries.
02:00And then, of course, we've got the recent news we had yesterday of the collaboration between the U.S. and Australian government.
02:07So all of that is happening at the same time to build out these supply chains for these future-facing industries.
02:15So there's a lot going on.
02:18There is a lot going on, but also aware of the fact that decarbonization might not so much be a priority for the U.S.,
02:26given the shifts in policies there.
02:29Do you see there being an impact on demand via EVs and, in turn, lithium?
02:37Yes, so as it relates to global demand for lithium, that's looking very positive, as per the stats I mentioned a moment ago.
02:45Zooming in on the U.S., as it relates to the demand specifically from the U.S.,
02:51well, as it relates to EVs, we have seen a pullback, but I'd highlight that EV demand through the U.S.
02:57was roughly 10% of the demand stack for EVs.
03:02So it's a really important future market, being it's the second largest auto market globally,
03:08but it's a small component of actual demand to date.
03:12But outside of EVs, the BESS demand set for the U.S. is actually growing very strongly.
03:19And that's no surprise when we look at the investment in data centers.
03:24And I note that globally, McKinsey's estimating something like $7 trillion to be invested globally
03:30for data centers within this decade.
03:33So that's a remarkable level of investment.
03:36And coupled with that, of course, well, batteries are being deployed to support the stability of those data centers.
03:42So although for the U.S. we might be seeing a pullback in EVs, it looks to be supported by, as I say, this BESS subset.
03:52But as I say, this is a global shift, and the shift is not just about green energy.
03:57It's actually because it makes commercial sense.
04:01So hence, we're seeing these strong growth data across the board.
04:08Dale, I wonder also if you could weigh in on, OK, longer term, the trajectory looks quite solid in your mind on lithium demand.
04:16But we are expecting a fair bit of volatility as well.
04:20Do you think that in that sense, miners should be getting more into futures to hedge against some of that?
04:27Yeah, so as it relates to the volatility, well, the lithium market has been very much volatile from inception.
04:37And that's largely owed to the immaturity of the market and the fact that it's growing rapidly from a very small base.
04:43So out of that, yes, we've seen some very high highs and some very low lows.
04:48However, over time, I anticipate that that will start to even out as more scale enters the industry.
04:55Plus, the other thing which will ultimately help in time will be the emergence of a more efficient spot trading mechanism,
05:03coupled with more futures exchange options, which to date are very nascent.
05:09And to your question, well, there's actually limited opportunity to hedge, albeit more instruments are starting to merge.
05:18So what does that mean for upstream miners like ourselves?
05:22It's really a case of setting the business up to withstand this volatility, which, of course, is what we've done at PLS.
05:28Do you think, then, as a business, you would be interested in increasing more of your sales then through the spot market instead of term contracts?
05:36And do you think that spot sales is maybe a better idea going forward to take advantage of those swings that you were talking about in the market as well?
05:44Yeah, great question.
05:47In this regard, we've taken a portfolio approach to our sales strategy.
05:52What that means is a combination of a smaller component of spot sales to help with price discovery.
05:58That's important not only for our business but for the industry.
06:02So we do that whilst, on the other hand, we sort of set aside a large proportion of our sales committed on medium and long-term off-takes.
06:12Now, through that combination, we believe we get the best of both worlds, price discovery plus certainty through partnerships with those strong supply chain participants.
06:23You mentioned as well, of course, this deal that was inked between Australia and the US for critical minerals.
06:29Do you as a company expect to receive any direct funding?
06:32We saw that yesterday as well for some companies being announced.
06:34Look, it's too early to say, but as to this initiative of the Australian and US government, very, very positive.
06:44This is the types of initiatives we need to see to build out these supply chains for the world.
06:50Because, as I mentioned earlier, it's growing from a very small base.
06:54Much more needs to be built out.
06:56These are global, future-facing industries, so it needs this type of support.
07:01So we're very positive on this step and we're looking forward to seeing more details in time.
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