|Bid||52.09 x 1100|
|Ask||53.54 x 1200|
|Day's Range||52.77 - 53.33|
|52 Week Range||44.62 - 64.02|
|Beta (3Y Monthly)||0.51|
|PE Ratio (TTM)||6.62|
|Forward Dividend & Yield||3.02 (5.71%)|
|1y Target Est||55.35|
(Bloomberg) -- The ancient scooter gurgling through a languid summer afternoon brought groceries and a fistful of cash to Sasa Antic’s house. Like many of his neighbors, the 30-year-old Serb hasn’t had a job for some time so the family relies on the arrival of his mother’s pension.Yet buried in the ground beneath this forgotten corner of former Yugoslavia is the prospect of becoming a new European front in the economic battle with Asia. Geologists are exploring the hilly landscape for the metal that’s become ubiquitous in modern technology: lithium.“It would be a godsend if they can prove lithium reserves,” said Antic, as his mother counted out the dinars handed to her by a merchant who also delivered milk, rolls and butter to them in Klinovac, a hamlet of barns, stone houses and more goats than cars. “This is the least developed part of Serbia and we are at a dead end.”The global hunt for lithium is afoot as companies look to cut fossil-fuel use. BloombergNEF estimates battery demand for lithium material will grow eightfold over the next 11 years.Serbia’s estimated deposits are the largest in Europe and the insatiable appetite for batteries that power everything from iPhones to Tesla cars is prompting the likes of Rio Tinto Group to study the viability of mining it.President Aleksandar Vucic in February called it “one of the biggest hopes for Serbia” and urged companies to speed up work to start production. At the heart of Serbia’s lithium dreams is the terrestrial equivalent of kryptonite—the fictional rock from Superman’s home planet—discovered in 2004. The mineral, dubbed “jadarite”after the Jadar Valley, has a similar chemical structure to the compound that can be used to erode the superhero’s powers. It contains lithium and boron, which is used in ceramics, fertilizers and insulation.In central and eastern Europe, the Czech Republic and Austria are also studying the potential of lithium mining. Romania is re-opening mines for rare earth minerals. And international companies are expanding battery production in the region, including Daimler AG and Johnson Matthey Plc in Poland.But Serbia’s lithium lode, if it can be profitably extracted, is big enough to help the continent compete with Asian development, especially in China, the world’s third-largest producer of lithium and the top maker of lithium-ion batteries. Rio Tinto, one of the world’s largest mining companies, and Australia-based explorer Jadar Lithium Plc are testing just how much lithium there is in Serbia. Rio Tinto declined to comment. Jadar Lithium, which includes a group of unknown investors represented by JPMorgan Chase & Co., declined to pinpoint exactly where they are looking.Optimistic government estimates and preliminary exploration suggest there may be as much as 200 million tons of deposits in Serbia, while the U.S. Geological Survey said there were 1 million tons of identified reserves in the country, making it one of the richest sources of lithium in Europe.With global lithium production up by about 25% in 2018, according to the USGS, assigning an accurate ranking for Serbia may be difficult, as there is still little concrete data on the country as exploration continues, said BNEF’s Sophie Lu. Bolivia, for example, has no production despite what might be the world’s largest reserves.And a concern over a glut in lithium supplies that has sent prices tumbling. That prompted Albemarle Corp., the biggest producer of the metal, to put the brakes on plans to boost production. A worsening downturn in China could also deter potential investors—the prospects are bad enough that Bank of America Merrill Lynch has cut recommendations for six mining companies in its coverage. Though any extraction is still at least three years away, Serbian authorities are also advocating for the development of downstream activities, such as refining and battery production.Opening a battery factory would be key to raising living standards, said Nenad Antic, the deputy mayor of Vranje, the closest city to the Jadar Lithium exploration.He estimates that production would cut the unemployment rate in the city of 80,000, where about 10,000 have no jobs. Rio Tinto, on its website, called Jadar a “significant value for Serbia,” and said lithium and boron “play important roles in a more energy-efficient future.”Jadar Lithium, a company with A$4 million ($2.7 million), is in the south, studying an area between the Vranje and the border. The company has completed two phases of soil sampling and has detected a “number of areas with elevated lithium and borate values,” it said in a July filing to the Australian Securities Exchange.Luke Martino, Jadar Lithium’s chairman, said that Serbia could become a hub for the industry, from extraction to refining and battery production.“We are really on the quest over the next three to five years to explore and make a discovery and then link in with downstream producers and expand the company that way,” Martino said in a phone interview from Sydney. “We know China has locked up a lot of supply. So it’s Europe’s challenge here to start to centralize its own production of batteries and lithium hydroxide plants.”Across the hills and down a farming road several kilometers from Klinovac, Zoran Filipovic stood at his ramshackle gate and surveyed what is left of the dying village of Panevlje.“Opening a mine here would breath in new life,” Filipovic said. Right now “there’s absolutely nothing for young people. There is some manual labor to do around here, but otherwise it’s desolate.” \--With assistance from Irina Vilcu, Lynn Thomasson and Patricia Suzara.To contact the authors of this story: James Gomez in Prague at firstname.lastname@example.orgMisha Savic in Belgrade at email@example.comTo contact the editor responsible for this story: Balazs Penz at firstname.lastname@example.org, Rodney JeffersonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- All major miners agree that copper has a bright future. The trouble is how to get at it. Take BHP Group, set to be the world’s biggest producer this year after Freeport-McMoRan Inc. sold down its stake in Indonesia’s Grasberg mine. Costs at BHP’s massive Escondida pit in Chile, which accounts for about one in 20 tons of copper mined globally, keep on disappointing. They’ll rise from the current $1.14 a pound to a range of $1.20 to $1.35/lb next year, the miner said in annual results Tuesday, well above its ambitions to keep them shy of $1.15/lb.When the copper price is trading close to three-year lows at $2.61/lb, that still makes for a pretty profitable business. But with production for the whole copper business seemingly capped at around 1.75 million metric tons a year, it isn’t clear where volume growth will come from. Miners love copper because it’s seen as a way to make a bet on a clean-energy future. Electric cars contain between four and 10 times as much copper as conventional ones, and wind and solar generators are forecast to consume 813,000 tons annually by 2027. It’s not clear that projects currently in the pipeline will be sufficient to produce enough metal to keep the market supplied once those sources of demand start ramping up around the middle of the next decade.BHP’s main expansion at the moment is an extension of its Spence mine in Chile, which is set to go into production by December next year. That should add about 185,000 tons of annual production – barely enough to offset the the gradual exhaustion of the Cerro Colorado and Antamina pits, which have less than a decade of reserve life left in them.Beyond that is the potentially massive, geologically difficult expansion of South Australia’s Olympic Dam mine. That pit has long been a challenge. Its significant uranium content would make BHP a major and low-cost producer of the atomic fuel. The risk, though, is that such a large influx of supply would crash the uranium oxide market and weaken the high-stakes economics of the project itself. In theory, there ought to be interesting opportunities for M&A in the current environment. Freeport, for instance, could almost double BHP’s copper production, and has a lot less political risk attached now the long tussle with Jakarta over Grasberg is over.With return on capital employed of about 11%, it’s outperforming the underlying 6% return in BHP’s copper business and could be bought for about nine months’ cashflow. But with Elliott Management Corp. still a lingering presence on the shareholder register, management are unlikely to want to do anything too splashy. Indeed, BHP’s rivals are prime examples of the risks that can be run from being too bold around copper. Rio Tinto Group’s Oyu Tolgoi mine in Mongolia could cost as much as $1.9 billion more than forecast, with first production from the expanded project delayed until the middle of 2023, the company said last month. Glencore Plc this month announced plans to shut its Mutanda copper mine in the Democratic Republic of Congo due to rising costs and weak pricing for cobalt, an important by-product from the operation.There may be a lesson in that. For all the billions BHP has spent on copper over the past decade, its returns from the red metal are still among the worst in the group. Rather than chasing volume, it might be better off watching the pennies, letting the market tighten and hoping prices rise to justify the money that’s already been spent. When the cards on the table look weak, there are worse things to do than just stand pat.To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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