Pilbara Minerals Rides the Battery Boom

Why Pilbara Minerals Share Price Rose?

Shares in lithium mining company, Pilbara Minerals Ltd [ASX:PLS] rose a further 4% to $1.20 today, after a gain of 11% yesterday. Pilbara Minerals’ stock is up a huge 130% for the year, following strong growth from September.

The gains stem from a lift in lithium prices released by lithium supplier Orocobre Ltd [ASX: ORE] earlier this week for the June 2018 half. Orocobore expects prices to rise 25% on the December 2017 quarter, as a result of renewed contract negotiations.

Contract prices are rising in all markets and we expect this to continue in the foreseeable future as new demand for lithium chemicals exceeds new supply,’ said Richard Seville, Orocobore’s CEO and managing director.

Pilbara benefitted from a $28 million deal with China’s Great Wall Motors Company announced in September. This lifted its share price (at the time) to 66 cents. The equity investment gives Great Wall 56 million Pilbara shares, for a 3.5% stake in the company.

China expects sales of electric cars to grow to two million by 2020, with global sales set to hit 25 million by 2030. Worldwide demand for lithium-ion batteries and a projected future parity of prices between electric and petrol cars should ensure continued demand for the base product.

What Now for Pilbara Minerals?

Pilbara’s managing director, Ken Brinsden believes Pilbara will become one of the biggest lithium mining operations in the world, outstripping Chile, Argentina and Bolivia. Mr Brinsden says that WA’s hard rock lithium is of a higher grade with fewer impurities, and will therefore prove more cost-effective in the long term.

Pilbara Minerals has grown from a $140 million company two years ago, to a market capitalisation of $1.9 billion with today’s result.


Craig Henderson,

Junior Analyst, Money Morning

 PS: Our resource analyst, Jason Stevenson has compiled the top 10 Mining stocks trading on the ASX right now. What do find out which ones will benefit from the resurgence in commodity prices? Click here.

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