Fortescue Metals Group will reportedly drill for lithium, as the electric vehicle market continues to drive up share prices for companies mining the key battery metal.
Lithium is a key component of many modern batteries, like the ones used in electric vehicles.
FMG boss Nev Power is said to have told reporters the miner plans to dip its toe into the lithium market, at a Melbourne conference this week.
The miner has reportedly responded to the lithium market by developing a plan for a drilling campaign in the Pilbara, near a known lithium deposit.
“In the last six months or so, [we’ve been working on these] in earnest,” Power was quoted as saying. “It’s a matter of getting the tenement packages together and then getting a [drilling] program together.”
Fortescue last week announced 44 million tonnes of iron ore shipped in the September quarter, up slightly from 43.8 million tonnes in the same quarter a year ago.
Positive sentiment in the lithium market has driven share prices up for a number of junior producers. Pilbara Minerals, Galaxy Resources, and Kidman Resources have all seen theirshare prices double in the past two months, while Mineral Resources has seen its share price rise 16% to give it a market value of $3.4 billion.
An AFR report cited a bump in market conditions since the Frankfurt Motor Show in September, which drove up the market for electric vehicles. If a boom is to take place in electric cars, there will need to be an even more rapid boom in lithium mining.
“When China was urbanising, they were adding a new steel mill every 18 months, but it was taking iron ore suppliers the best part of five years to add meaningful new capacity, which led to prices being well above the cost curve for quite some time,” UBS analyst Lachlan Shaw was quoted as saying.
“People are now drawing analogies to lithium, where it can take 18 months to build a battery factory in China, but on the supply side, greenfields mines from exploration to ramp-up takes five years for hard rock or six to eight years for lithium brine.”