Recent price appreciation has got many in the market very excited, but we're yet to see if the signals, particularly through China, which precipitated this price rally, are to actually eventuate in terms of impacting the fundamentals. It's certainly great to see the price appreciation, but it's a little bit early to call a major shift in the market at this time.
Why is China moving to address supply issues now?
Well, what we've heard through what's been reported is China is looking at a number of assets and looking at the approvals of those assets. So, when we take that on face value, it's around environmental approvals and so on and so forth. That appears to be what the sort of the basis of the change and the basis of the potential supply chain curtailments they're making. Of course, there's other speculation that perhaps there's another strategy at play, but we're yet to see any evidence of that.
Is that other strategy possibly China looking to shore up its own critical mineral supply chain?
Look, it's hard to say. Look, China's positioning is very strong in terms of critical minerals as it relates to lithium. They of course have their own domestic supplier, but they of course import as well from suppliers including the likes of PLS. But beyond that, they've built out an incredible industrial base for EVs and so on and so forth, which of course is serving the world. So there's of course a broad strategy underway, and I guess we'll find out in time.
Does the fact that China wields so much power in terms of the market demonstrate the value of a critical mineral strategic reserve as proposed by the federal government before the election?
Well, I think as it relates to critical minerals, I think everyone agrees it's a big part of, you know, the industrial future in terms of what it enables — the technology, the renewable energy shift, so on and so forth. So because of that, well, many governments are thinking about supply chain security and how to, you know, promote these very necessary industries for a brighter future. So what we're seeing through that is many different strategies being deployed, not only through China but elsewhere and abroad. And it's very much sort of taking flight live in front of us. So we watch with interest.
Should lithium be included in that reserve?
Well, as it relates to critical minerals, of course, lithium is one of the critical minerals. As it relates to the strategic reserve that the government has been talking about, well, we're yet to see the details around that, but we are of course very open to the engagement and we're looking forward to understanding how they see that working. Once we understand that, well, then we'll be in a position to understand is lithium best served through this vehicle or not for Australia.
But why wouldn't it be? Do you hold concerns that it might create an artificial spike in demand that could see some operations go bust?
Well, the devil's in the detail with all of these things, but certainly the mechanics are important and understanding if there's any unintended consequences like the one you just described. There's also a scale factor. These commodities and these industries, well, a billion dollars or so does not go very far, particularly if there's many different mineral types involved. So yes, we're yet to see the details, and the details are very much important to understand if the regime will be successful.
And so it is just too early to ask whether you've been thinking about whether that reserve should include lithium or whether it should have battery-ready chemicals?
It's too early to form a view. As I mentioned, the details are really key to understand how it would function and how it would best support the industry, not only in the short term but the long term.
Is it clear what impact US tariffs are now having on electric vehicle and battery manufacturing sectors and, in turn, the demand for lithium?
