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Shares of Sociedad Quimica Y Minera de Chile S.A. (NYSE: SQM), one of many greatest shares in Chile and a key worldwide provider of lithium for electrical automotive batteries, jumped 5% by 11:25 a.m. ET.
You possibly can thank China for the excellent news.
The Bureau of Pure Sources in Yichun, Jiangxi Province, plans to cancel 27 lithium mining permits in January, as Mining.com reviews right now. Lithium costs in China reacted instantly, rising 7.6% Wednesday, and this pushed world lithium mining shares larger.
Granted, “all the licences had already expired, some greater than a decade in the past, and most had been registered for ceramic clay or limestone mining,” as Mining.com observes. And that raises a query: Will this actually impression lithium costs?
Lithium analysts do not assume so. One analyst is quoted saying, “the licence cancellations would have little impression on provide, as not one of the revoked permits coated working mines.” But, so long as the licenses remained energetic, mining would possibly doubtlessly have resumed at any of the websites, legally, and that will add to the worldwide lithium provide. It will probably’t occur now till the licenses are formally renewed.
Lengthy story quick: The prospect of lithium provide rising simply acquired just a little smaller — and the possibility of lithium costs rising sooner or later acquired just a little larger.
That is excellent news for traders in Sociedad Quimica, aka “SQM,” and this is even higher information: SQM is likely one of the few lithium firms that is already worthwhile with out these potential value hikes. Final yr, SQM earned $525 million, and generated optimistic free money circulate besides.
Valued at 35 occasions trailing earnings, SQM is not precisely “low cost,” however for those who’re betting on a lithium value increase, SQM is a significantly better guess than most options.
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