The astonishing rise of battery metal miners, according to BDO
Investors have pumped more cash into would-be lithium miners than any other commodity over the last decade – with only one exception.
Interest in junior fossil fuel companies has been in structural decline over the last decade, according to new figures released by accounting firm BDO, as banks and investors piled into mining hopefuls targeting new metals required to green the global economy.
New figures released by BDO chart the extraordinary rise of lithium to become the most prominent sector of Australia’s junior mining community, as emerging lithium stocks raised more money than Australia’s more traditional commodities over the last three years – with the sole exception of gold miners.
For the last 10 years, BDO has been collecting data on the cash raised by junior mining and resources stocks – pre-production companies required to file quarterly cash flow statements to the Australian securities exchange.
The report tracks both the total amounts raised in the junior exploration sector, as well as more significant debt and equity raising from explorers on the cusp of turning discoveries into mines.
The BDO reports do not track equity and debt raising by majors and other profitable miners – such as BHP, Newcrest Mining, or successful mid-tier miners like Evolution Mining.
From the group of companies on BDO’s so-called “fund finder” list – those companies that raised more than $10m in a single issue – more than $2bn was raised by lithium-focused listed companies in 2021, and another $1.2bn in 2022.
Lithium companies raised another $753m in debt and equity in the first half of 2023 – and that figure does not include Liontown’s $1.1bn debt and equity funding package for the company’s Kathleen Valley project, which will push the sector’s total for the year to close to $2bn.
Of those captured in BDO’s fund finder list, only emerging gold companies have raised more cash in the period – with gold companies, traditionally the powerhouses of Australia’s mid-tier mining sector, raising $4.2bn over the same period.
BDO’s global head of natural resources, Sherif Andrawes, said investment in the gold sector had swung in line with trends in the broader global economy, rising in times of political uncertainty over the last decade – particularly the emergence of the significant economic uncertainty around the pandemic in 2020, to a peak of just under $2bn in 2021.
Gold’s traditional role as a store of value, and hedge against inflation, has helped keep up investor interest in gold hopefuls since then, he said.
But the data also highlights the stunning rise to prominence in the financial community of Australian lithium plays over the last three years, particularly after the emergence of the Covid-19 pandemic in 2020 pushed governments into massive stimulus packages across the globe – many aimed at encouraging electrification of power grids, and introducing policies aimed at reducing carbon emissions, such as the wide-scale adoption of electric vehicles.
Australia’s four major lithium mines were all built by 2020 – but a supply glut forced the sector into quick retreat in 2019, until the pandemic again lifted demand for the battery-making commodity.
The capital influx kicked off in earnest in 2021 – but in the six years before that, emerging lithium miners raised only a total of $2.1bn, less than half of the amount investors and lenders have poured into the sector since then.
And, more broadly commodities associated with emerging green technology – including lithium, graphite, rare earths and cobalt – have raised more than $10.5bn since 2015, more than emerging ASX-listed gold and copper miners combined and more than five times the $1.96bn raised by fossil fuel hopefuls in the coal and oil and gas sector.
“An overarching theme in recent years has been climate change, and the accelerated efforts by governments to decarbonise their economies. This has led to lithium and other battery minerals such as cobalt and graphite dominating the Australian exploration space whilst leading to the structural decline in oil and gas,” Mr Andrawes said.
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