The coal and lithium events were the highlight and the lowlight of another week of erratic trading on the Australian stock market which edged up by 1.1%.
Lithium stocks, which were the target of a WA Government bundle of delayed taxes and charges designed to partially offset a low commodity price, failed to get the support of investors who continued to sell stocks exposed to the battery thematic– just as they had previously sold nickel stocks for the same reason.
The message from the market is the latest warning that the promise of low pollution new energy from solar and wind is taking longer to arrive than forecast and proving to be more expensive than expected.
In time, renewable energy will displace fossil fuels but what just happened is a sobering reminder that the shift will not be fast, smooth, or profitable.
Events in the U.S. where the incoming President Donald Trump is favouring old energy over new energy, could further extend the time required for a successful shift.
Trump’s return is also making Australia’s claim to be a “new energy superpower” look sillier by the day, especially with electricity blackouts threatened in Sydney as the temperature rises to a relatively mild 33 degrees.
The $6 billion coal deal saw Peabody Energy of the U.S. acquire the bulk of the coking (steel making) coal mines from London-based Anglo American which is surgically dismembering itself to thwart BHP’s takeover overtures.
Because most of the coal mined by Anglo American is used to make steel, the transaction is not seen as a true old energy v new energy deal, but it is another example of how the world cannot function without fossil fuels which remain hugely profitable whatever their end use.
The same cannot be said for new energy metals which have stumbled over the past 24-months, first with the collapse of the Australian nickel industry and now with the need for a lithium rescue.
Pilbara Minerals, the local lithium leader, lost 36c (13%) over the week to trade at $2.39 while emerging major producer Liontown slipped 5c (6%) lower to 75c but did trend up late in the week after receiving a buy tip from Wilsons Advisory, which sees the stock rising to $1.40.
Other lithium moves this week included:
- Wildcat Resources losing 2c to 24c despite reporting what it described as Australia’s largest developed lithium resource of 74.1 million tonnes of ore at 1% lithium at its Tabba Tabba project in WA.
- Patriot Battery Metals slipping 1.5c lower to 25c despite reporting high grade lithium assays from the latest drilling at its Shaakichiuwaanaan project in Canada, a discovery screaming out for a new name, and
- Raiden Resources easing back by 0.4c to 1.8c despite reporting encouraging assays from drilling at its Andover South lithium project in WA.
The 2025 outlook for resources stocks is clouded by the need to first clear Christmas and then survive the Trump tariff blitz which has already rattled markets around the world.
Locally, the market is wary of political gimmicks in the lead up to a national election in April or May, an event which could clash with a State election in WA where the lithium rescue has the hallmarks of a political stunt, however well meaning.
Hedley Widdup, the man behind the Lion Selection Clock invented by his father Robin, reckons the mining investment cycle is moving in the right direction to be sitting at 4, which is a time for mergers followed by cash takeovers at 5.
As the Lion clock moves towards 6, which could be next year (or later), a shift in funds will occur as investors rediscover heavily sold small miners and energy stocks.
The next move of the clock should also see a return of initial public offerings (IPOs) which might have already started with 13 names on the ASX new floats list, double the tally of two months ago – though there’s no guarantee that all of the current crop will proceed.
Internationally, the big events which are moving markets (other than Trump and his tariffs) are talk of peace breaking out in Lebanon and possibly Gaza, but with ongoing conflict in Ukraine.
The Trump tariff threat, which was waved prominently at Canada, Mexico and China, during the week had a deadening effect on the currency market where the Australian dollar fell to a four-month low of US64.32 cents on Wednesday before creeping back up to US65c.
Gold, the world’s ultimate reserve currency, eased slightly early in the week before regaining lost ground to be trading at US$2632/oz (and A$4046/oz), more than enough to ensure strong profits for most miners of the metal.
Big producers held up reasonably well in the gold sector, but explorers and small producers weakened.
Genesis was the best of the gold leaders, adding 4c to $2.57, whereas Northern Star slipped 35c lower to $17.43 and Evolution was 8c weaker at $5.
Other gold moves included:
- Spartan Resources rising by a sharp 16c (13%) to $1.42 after reporting strong gold assays at its Freak prospect in WA, including 10.26 metres at 5.37 grams of gold per tonne.
- Yandal Resources went the other way, down 10c to 25c after a disappointing drill result at its Siona discovery in WA.
- Lunnon Metals, better known as a nickel explorer, lost 2.5c to 22c despite reporting a promising gold assay from drilling at its Lady Herial project near Kambalda in WA with a best hit of 16m at 2.94g/t.
- Antipa Minerals slipping 0.1c lower to 2.2c after reporting multiple sources of near surface gold at its Minyari Dome project in WA, and
- Brightstar Resources swimming against the outgoing tide with a modest rise of 0.2c to 2.5c after receiving a buy tip from East Coast Research with a price tip of 6.4c.
Bauxite focused stocks benefited from ongoing pressure in the aluminium sector where a shortage of ore (bauxite) is developing, prompting a one-time major producer Suriname in South America announcing a plan to re-start mining with a Chinese partner.
Metro Mining added 0.6c this week to trade at 5.9c while Shaw and Partners told clients that the stock was “set to soar” as the bauxite price in Guinea, the world’s major producer, rose to almost US$100 a tonne.
Arrow Minerals is also shaping as a winner from the global bauxite squeeze but sat out the week unmoved at 0.02c.
Hastings was the pick of a lacklustre rare earth sector, rising by 5c (18%) to 32c after resolving a funding dispute with iron ore billionaire Andrew Forrest and this week announcing a deal to become involved in the critical metals program of Saudi Arabia.
Lynas, the local rare earth leader, weakened over the week to close down 13c at $6.85. Australian Rare Earths was down 0.5c at 11c and Arafura was 0.7c weaker at 12c.
Other moves and news of interest this week included:
- Rumble Resources rising by 0.5c to 5c after reporting encouraging metallurgical results from treating material extracted from its Earaheedy zinc project near Wiluna in central WA.
- Equinox Resources, up 1.5c to 16c after reporting high grade titanium assays from drilling at its Mata da Corda project in Brazil.
- PhosCo adding 0.5c to 7c after achieving a breakthrough with the government of Tunisia over the proposed development of Chaletma phosphate (fertiliser) project.
- Nimy Resources rising by 1c to 5.3c after reporting encouraging grades of gallium in the soil geochemistry at its Mons copper project in WA.
- Havilah losing 1c to 19c despite reporting encouraging copper assays from the latest drilling at its Mutooroo project in South Australia with a best hit of 21m at 1.6% copper plus useful grades of cobalt (0.18%) and gold (0.31g/t), and
- Cyprium creeping up by 0.1c to 1.9c after confirming a 797,000-tonne ore reserve at its Nifty copper project in WA.