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14/1/2019 — Other Minerals and Metals
UK broker cautions on battery metals
By Ross Louthean

A stockbroking firm in the United Kingdom with a strong bent on metal use has joined the throng of global brokers seeing an interesting 2019 for gold and also cites manganese as being in the electric vehicle battery mix.

Hallgarten & Co said gold buffs were happy campers at the turn of the year and some still dream of the price getting up to $US4,000 an ounce or even $US10,000/oz.

However, Hallgarten said away from the gold zealots, market watchers are down in the mouth with perhaps those holding palladium metal or shares in that precious metal.

“The divergence in destiny between palladium and platinum in 2018 was one of the great head scratchers of the year. We heard complicated theories to justify the divergence but none were really persuasive considering the way the two metals are joined at the hip,” Hallgarten said.

The broking house said nickel got scant benefit in 2018 from the battery metal hype for electric vehicles (EVs) on the way up, and yet came to suffer the negative blowback when battery enthusiasm paled.

The two battery metals viewed by Hallgarten – cobalt and vanadium – both had “swinging retreats.” Vanadium ended up in the battery metal “doghouse” at the end of the year.

Hallgarten, however, is not as enthusiastic about gold as many other crystal ball gazers in Europe and Australia, and sees no great upside for the metal but believes silver, often linked to gold mining, has potential for greater market appeal.

All the metals linked to the batteries market have seen the respective metal market pushers trying to better each other “on ever more grandiose claims of the uptake of these type of vehicles and have linked the fate of a handful of metals to this cause.”

Except for vanadium, 2018 was a disappointment for battery metals, not helped by the fact major auto companies have only been “dabblers” in the EV space.

Hallgarten said the battery metals market has been battered by a number of other factors such as changing consumer tastes, uncertain signals on whether diesel has a future, rising interest rates and rising default rates on older auto loans.

There is concern about the finances of some major auto groups with such issues as current debt and the cost of retooling to grow into the EV market.

Hallgarten cited confused situations over Renault-Nissan and the financial health of General Motors.

“What does this bell for the battery metal players? The key metals of lithium and cobalt have fallen from market grace and, with rare earths and other contenders, there is concern now about survivors in the market.”

The broker said as many as 100 parties could be destined for the “scrapheap of history.”

“In our view of 2019’s outlook is selectively upbeat. Lithium and cobalt prices should trend higher but this will not refloat boats that are terminally holed.” The task now will be to do what those watchers of rare earths were forced to do – pick the names that will have long-term staying power and credibility and let the stragglers go to their fates.”

Euro Manganese was being seen as a company with scope in battery metals, and the company is now listed on the Australian and Toronto bourses, and through stronger support in Australia the company migrated Down Under.

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