A COVID-19 stimulus program could kick start the battery materials market within the year
With the electric vehicle sector established in China, Europe looks poised to see the same due to a program designed to kick-start the automotive industry after COVID-19 disruptions.
The COO of Pilbara Minerals, Dale Henderson, spoke to Kitco on Wednesday.
Pilbara Minerals is an Australian lithium-tantalum producer. The company is developing its Pilgangoora Lithium-Tantalum Project, which the company said will turn Pilbara into one of the biggest lithium raw materials producers in the world.
The lithium market was struggling before COVID-19. The pandemic made the situation worse. In January Galaxy Resources cut production 60% due to weak market conditions. Lithium giant Orocobre reported a price per tonne for lithium being down 24%.
"We've seen some new entrants close their doors. In the developer space, we've seen some groups put their projects on ice," said Henderson.
He said it has been one of those classic boom then pull-back cycles.
However, Henderson said there have been some stimulus programs linked to COVID-19 recovery efforts that are bullish for lithium.
"Notably in France and Germany there have been some very significant EV subsidies."
France’s electric vehicle subsidy is being hiked from €6,000 ($A9,910) to €7,000 ($A11,560) for private vehicle owners from June 1 to December 31, 2020, according to a report by The Driven. Germany is adding €3,000 subsidy for electric cars costing less than €40,000 – resulting in a total subsidy of €6,000 from the government and total discount of €9,000 (~$10,000 USD), according to a report by Electrek.
Henderson said he sees the impact flowing through to his industry as soon as six-months from now. China adopted stimulus programs a few years ago to establish the EV industry in the country.
"What we've been waiting for is broader adoption outside of China, and that is why the European subsidies are the first material move to stimulate further growth."