Having said that, the revenue is down from the December quarter.

Wealth Within senior analyst Fil Tortevski shows the charting methodology and macro factors that may suggest Lynas is lining up for a ‘huge opportunity’.

“In light of what is happening around the world with the rare earths, there is a huge opportunity,” he said.

“Lynas is – bar China – the biggest rare earth player out there. So, this could open up a whole bunch of new supply chains for the stock.”

Wealth Within’s chief analyst Dale Gillham says LYC trading volumes have increased immensely and more consistently since 2017-18.

Hear their full analysis in this week’s Hot Stock Tips show.

Lynas last traded at $8.60.

Join the discussion: See what HotCopper users are saying about Lynas Rare Earths and be part of the conversations that move the markets.

The next stock discussed in this week’s Wealth Within video, is Telix Pharmaceuticals (ASX:TLX), which plunged some 8% after the U.S FDA delayed approvals for Telix’s new drug for imaging rare brain cancer – despite prior approval.

So is it time to take profits – given the stock has tripled in vertical-type rises in just over a year?

Wealth Within’s Gillham and Tortevski discuss what’s likely to happen, based on chart analysis.

Despite the news from the FDA, Telix last traded at $26.95.

Join the discussion: See what HotCopper users are saying about TLX.

Flight Centre Travel Group (ASX:FLT) is the third stock discussed today.

It has downgraded its FY25 profit guidance due to weaker U.S. travel demand. It has also announced a $200 million share buyback and cost-cutting measures.

Mr Tortevski said while it might look like a ‘sell right now’, it could present opportunities if the company makes the right structural changes.

Mr Gillham added: “It looks all doom and gloom downgrading profits, but that whole buyback is good capital management by the company’.

“That’s a great thing that it’s buying back shares, so I love what it’s doing.

“Obviously the times are a little bit tougher for them at the moment, but as we see interest rates come down we’ll see the economy being stimulated, travel will pick up.

“This is a stock that you would watch.

“Maybe in six months time it will give you a great buy, that once in a life time opportunity to pick up a really good stock while the news is a little bit bad on it.”

FLT last traded at $12.73.

Join the discussion: See what HotCopper users are saying about FLT.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

“Don’t panic. The worst thing you can do now is crystalise a loss,” says Andrew Baxter.

Baxter is an investment advisor, educator, author, and regular HotCopper commentator. In this interview, he discusses what’s been happening in markets this week – and how to handle the volatility as an investor.

We explore whether it might be time to buy the likes of CBA (ASX:CBA), BHP Group (ASX:BHP), Santos (ASX:STO), and Woodside (ASX:WDS).

Baxter also talks about Australia’s underlying inflation issues, the cost of living crisis, and what Trump’s tariffs might mean for interest rates.

For more info about Andrew Baxter’s Money and Investing series you can go to his regular podcast; read The Wealth Playbook: Your Ultimate Guide to Financial Security and The Wealth Playbook on Audible.

Join the discussion: See what’s trending right now on Australia’s largest stock forum and be part of the conversations that move the markets.

Disclaimer: Wealth Magnet Pty Ltd (ABN 52 618 868 830) trading as Australian Investment Education is a Corporate Authorised Representative (CAR no. 1255231) of Grange Financial Services Pty Ltd (AFSL No. 488609).

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

The company has this week signed a non-binding memorandum of understanding (MoU) with French multinational Eramet for manganese ore.

Eramet will supply 80,000 tonnes of manganese annually – and 20,000 tonnes quarterly – for Stage One of Firebird’s proposed operations at the plant. This is well beyond the required 66,000tpa set out in Firebird’s feasibility study, with the additional tonnage to act as a strategic buffer to mitigate potential disruptions.

The MoU comes after successful testing of a 200-kilogram sample of Eramet’s ore-producing battery-grade MnSO4 (high-purity manganese sulphate monohydrate) andmanganese tetraoxide (Mn3O4) – at Firebird’s Jinshi R&D centre.

The plan for Stage One is to produce 50,000tpa of battery grade MnSO4 and 10,000tpa Mn3O4 utilising third party ore.

For Stage Two, the company will be turning to its Oakover project in Western Australia, targeting expanded production of around 300,000tpa MnSO4 in China alongside 100,000tpa of battery-grade MnSO4 in Western markets.

“I am very pleased to announce that Firebird has entered into a MoU agreement with Eramet, a world-renowned supplier of manganese ore and a truly high-calibre partner,” Firebird managing director Peter Allen said.

“Securing this reliable and strategic supply of manganese ore marks a pivotal step in accelerating our journey to production and building a strong foundation for sustainablecash flow generation.”

Firebird last traded at 9.6 cents – a fall of 2.04% since the market opened.

Join the discussion: See what HotCopper users are saying about Firebird Metals and be part of the conversations that move the markets.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

And looking at the new President’s actions within his first week – particularly concerning policies around renewable energy and building a ‘greener’ economy’ – one could be forgiven for thinking of the paradox of ‘an unstoppable force’ meeting ‘an immovable object.’

That is to say, Trump appears to present an immovable position of disdain towards environmentally friendly policies and clean energy transport – and a desire to emphasize fossil fuels instead.

However, he is faced with the unstoppable force of a global energy transition, underscored in particular by the growing popularity of electric vehicles (EVs).

And market-watchers might also ask, what could this mean for ASX-listed companies focused on critical minerals?

In his first week – starting January 20 – Trump signed a swathe of executive orders, including one promising to get rid of what he described as an ‘electric vehicle mandate’ imposed by the Biden administration.

This referred to an executive order signed by Joe Biden in 2021 which was pushing for half of all vehicles sold in the U.S. by 2030 to be EVs. While the latter was more about encouraging buyers rather than restricting their access to other cars, Trump has sought to frame the issue as a matter of promoting ‘true consumer choice.’

His own order, ‘Unleashing American Energy,’ also ends Federal funding for vehicle charging stations – subject to completion of a review process – and works to end a federal exemption relating to California which allows the state to phase out the sale of vehicles fuelled by petrol (gas) by 2035.

The first of these has already received pushback from Democrats pointing out Biden’s charger funding was part of a wider bipartisan infrastructure law, together with climate law the Inflation Reduction Act – noting any attempts to remove funds already allocated would be illegal.

To further underscore his antagonism to environmentalism, Trump has also considered a U.S. withdrawal from the Paris Agreement, with a definite order to new UN ambassador Elise Stefanik to take the country out of any commitment made in the framework of the United Nations Framework Convention on Climate Change.

Key to the electric vehicle story is the critical mineral of lithium, which has been locked in a volatile cycle, reaching a high point of 5750,000 Chinese yuan per tonne (CNY/t) in late 2022, before a dramatic fall of 86% over the last two years, as the market responded to the problem of oversupply, mainly from China.

The situation was still dicey coming into the new year; lithium prices had fallen 25% year-on-year throughout 2024.

China has also become the protagonist of an optimistic narrative for the metal as Beijing policymakers push for clean cars to make 20% of vehicles on Chinese roads by 2025.

Consumers there have been offered subsidies to buy EVs, and this was doubled in July 2024, with Chinese buyers flocking to purchase these vehicles: The latter trend was indicated by 31% growth in EV sales, year-on-year, for the first nine months of last year.

Additionally, recent data has shown the output of new energy vehicles within the country soared by 30.5% in December.

So will this demand and production mop up the lithium glut?

On one hand, the outlook for this critical metal appears to be improving – with experts tipping the global supply of lithium carbonate (LCE) to fall from 150,000 tonnes in 2024 to 80,000 in 2025.

Again, this is largely based on Chinese demand right now.

Closer to home, the commodity’s continuing low price has affected local producers and explorers, exemplified by IGO Ltd (ASX:IGO)‘s decision (taken together with joint venture partner Tianqi Lithium) to close operations at its lithium refinery in Kwinana.

While design issues at the plant were part of the story, IGO acknowledged a weak lithium price had also prompted anticipation of a net loss in the first half of the year.

This followed pullbacks from other players in the lithium space, such as NYSE-listed Albemarle: Which in August 2024 announced that expansion efforts at its Kemerton lithium hydroxide conversion site – also in Western Australia – would be rolled back, with the workforce to drop by 40%.

On the other hand, ASX-listed companies such as Chariot Corporation Ltd (ASX:CC9) – which is approaching lithium at the exploration stage, with a large tenement portfolio in Wyoming, Nevada, and Oregon – are holding tight to their assets and waiting out the price headwinds while the EV market and lithium demand rebuilds.

Saxo Head of Commodity Strategy Ole S. Hansen believes that although Trump’s new policies and approaches may stifle the United States’ drive towards electric vehicle ownership, the overall trend remains positive.

“Demand for critical metals towards the energy transformation, and specifically the EV industry, may see a slowdown in demand from the US,” he said.

“But ultimately, I do not believe it will have a material impact on the demand outlook as the energy transition will continue — also in the U.S. — as long the industry can compete with traditional producers.

“The 50% target (of Biden’s) I believe was never realistic and it’s not my belief that miners have based their demand outlook on that assumption.”

Join the discussion: See what’s trending right now on Australia’s largest stock forum and be part of the conversations that move the markets.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

On Tuesday, China’s Ministry of Commerce announced it would be banning the export of a suite of critical minerals – including gallium, germanium and antimony – to the US. These three are minerals key to the manufacture of multiple products, from military equipment to semiconductors, as well as having a general industrial purpose.

The announcement was both a ramp-up of Beijing’s previous restrictions on commodities central to the tech industry, but also a response to Washington’s decision the previous day to add to its restrictions on the export of advanced chips to China.

In terms of the former, one can track back to October 2023, when China placed tight regulations on the sale of graphite products, which play a central role in the manufacture of car batteries. This followed an announcement in July of that year, that exporters from the country would have to apply for special licences to export gallium and germanium to the United States.

Regarding the latter, we have the US government’s announcement on Monday that they would add to restrictions on chip-making equipment going to China, including the export of high bandwidth memory (HBM) chips – which play a key role in high-end applications such as AI training – plus 24 other chipmaking tools and three software tools.

Shipments of chipmaking equipment from Singapore and Malaysia to the US were also restricted, and Washington added140 Chinese companies to a list of those banned from trading with US firms.

US officials said their goal was to hinder China’s development of advanced AI, and weaken its production capabilities in relation to semiconductors used for high-tech products.

The latest series of explosions in the ‘tech war’ between the two countries has the potential to seriously disrupt the supply chain for critical minerals, impacting Australian-listed companies which are building their businesses around critical minerals products.

This includes Golden Deeps Ltd (ASX:GED), which since 2023 has been exploring the potential for high-grade gallium and germanium at its Nosib discovery in Namibia, and Battery Age Minerals Ltd (ASX:BM8), which is seeking germanium (as well as lead and zinc) at its Bleiberg project in Austria.

It remains to be seen where the tech war may go.

Join the discussion: See what’s trending right now on Australia’s largest stock forum and be part of the conversations that move the markets.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

This is based on construction of a refinery designed to produce 18,270 tonnes per year of green lithium carbonate, which will become feed for LFP batteries.

The plant itself will have a small, off-the-shelf design, and will springboard from the technology, know-how and partnerships developed at Galaxy Resources’ Jiangsu lithium refinery in China – a project which involved many current employees at Lithium Universe, dubbed their ‘Lithium Dream Team’.

Among these is LU7’s head of lithium carbonate refinery John Loxton, who was previously project manager with consultancy Hatch – which provided full EPCM services, commissioning support, advice and other engineering services for Jiangsu.

Mr Loxton was one of several members of the ‘Dream Team’ who features in a recent series of videos produced by Lithium Universe to provide investors with an insight on how the Bécancour project is moving forward.

Mr Loxton said that knowledge accrued through this process had been essential to guiding plans for Bécancour.

“We’re taking the lessons we learned and the knowledge we have from the Jiangsu plant, and applying it to a Canadian location,” he said.

“So in undertaking a project such as Becancour, there are two critical things.

“First, use of proven technology, and second: embed a team with operational and development experience into the design, so that you can be certain that the plant will start up and operate as required.”

He said that the Canadian refinery would only be changed from the design in China when absolutely necessary, since introducing changes also introduced risk.

In terms of the key refinery processes, they would remain the same, he assured investors.

“We are not changing any of the process: the process is contained within a temperature-controlled building, so there is no change because of winter,” Mr Loxton said.

However, there would be some variation in terms of layout, especially when it came to the distance between different processes.

“We had the benefit of having a clean site, so we took the unit processes and laid them out end to end, minimising the distances between them in a logical sequence,” he said.

“This also allowed us to lay them out so that we could get an efficient building that would envelope the entire process plant, which was required to deal with the winterisation in Canada.”

Lithium Universe’s non-executive director Dr Jingyuan Liu – who with Galaxy Resources oversaw engineering and construction of the Jiangsu plant – said in another video that the use of lithium-iron-phosphate (LFP) as battery cathode material was becoming more popular than the previously dominant nickel-manganese-cobalt (AMC) batteries.

The former uses lithium carbonate, so this was the product which LU7 chose to produce from its Canadian refinery, as opposed to lithium hydroxide – which is the central feed stock for AMC batteries.

“In the last few years the lithium conversion industry in China and outside China has been focused on lithium hydroxide production,” he said.

“However, recently, LFP batteries’ capacity has increased a lot by optimisation of the battery geometries.

“Most of the Chinese lithium hydroxide plants switched to lithium carbonate production. In 2024, LFP batteries are expected to gain 87% of energy storage.”

Dr Liu said the process of creating both was quite similar at the front end.

“The only difference is in production. The lithium carbonate uses sodium carbonate, the lithium hydroxide uses sodium hydroxide as a reagent,” he said.

He added that the production of lithium hydroxide was also riskier, with high alkaline levels meaning that workers had to wear heavy masks.

“We believe that LFP batteries will be adopted gradually….and that demand for lithium carbonate will grow faster than that of lithium hydroxide,” Dr Liu said.

The PFS videos can be viewed here.

At 14:01 AEDT, Lithium Universe was trading at 1.4 cents – a rise of 16.67% since the market opened.

Join the discussion: See what HotCopper users are saying about Lithium Universe and be part of the conversations that move the markets.

With the PFS already showing that financial dimensions of the refinery project are looking good – with the PFS indicating a pre-tax net present value (NPV) of US$779 milllion, with an internal rate of return (IRR) of 23.5% and payback of 3.5 years – CFO John Sobolewski explained how LU7 had come to these figures.

He said that his previous experience as CFO in charge of Galaxy Resources’ Jiangsu lithium refinery in China had given him plenty of scope to assess how a similar project could be undertaken in Canada.

This was aided by the fact that plant designer Hatch was a key actor in construction of both projects.

“We’ve worked with Hatch throughout this process and we’ve worked with the same supplier and procurement strategy. We’ve done this to replicate the success we had at Jiangsu,” he said.

“By doing this, we’re utilising proven designs, reducing engineering work – in many cases, we’re able to get quotes from the actual suppliers as opposed to the budgeting exercise.

“So it gives us some confidence that the numbers we’re using – particularly for the Capex and Opex – are real numbers.”

Managing director Alex Hanly featured in two videos in the series – one introducing the PFS, and one helping investors to understand how LU7 had approached the question of lithium pricing as a factor in the project.

This is particularly important given the questionable fortunes of lithium, which is now trading at 75,500 Chinese yuan per tonne (CNY/t), after dipping to 72,500 CNY/t in September (its lowest point in over three years).

He said that to get a comprehensive overview, LU7 consulted multiple sources to understand how pricing was situated for both the feedstock of spodumene (SC6) and the resulting material produced by the plant, lithium carbonate.

“What we’ve done is use ten different sources – eight of which were from technical studies up to feasibility study – to get an understanding of the average, both across SC6 and lithium carbonate,” he said.

From this information, the company then had to develop a ‘pricing ratio’.

“The pricing ratio itself is – put very simply – the price at which we buy spodumene into the merchant refinery and the price at which we sell the lithium carbonate to the offtaker,” Mr Hanly said.

“And what we found through our different evaluations of these different projects was that some of these projects took an overly optimistic view, some 22 times the spodumene price, and some upwards of 26 times.

“Now, this is obviously a pricing ratio which would never exist in the real environment.

“So what we’ve done – in doing our analysis – is take a ratio which we believe is quite conservative, a ratio of under 18 times, which is considered to be the median across the long-term average.”

From this, LU7 was able to identify a ‘goldilocks zone’, which was “a range of this pricing ratio between inputs and outputs at which the merchant refinery can be exceptionally viable,” according to Mr Hanly.

LU7 has been trading at 1.5 cents.

The plant will be located in Jinshi High-Tech Industrial Park, and so the main discussions involved the Park Committee meeting with he Hunan Chemical Engineering Design Institute (or HCEDI) and Firebird subsidiary Hunan Firebird Battery Technology Co (HFBT) to discuss some of the plant’s key technical considerations and provide advice on the design.

Looking ahead to the imminent detailed engineering phase, the Committee also offered feedback, acknowledging that this stage would open the door to the issuing of the Buildingand Construction Permit.

The design – which was completed by HCEDI – forms part of a larger feasibility assessment for the plant, with this involving process design, engineering, financial assessments and thenecessary environmental, safety, and energy permits.

Reaching the preliminary design approval stage is significant for the project, as it indicates that 80% of requirements for gaining a Building and Construction Permit have been met.

Firebird managing director Peter Allen said this was an important milestone.

“The company has taken another big step forward in the development of our battery grade manganese sulphate plant, in Jinshi, Hunan Province, China,” he said.

“The approval of the preliminary design of our plant and building is another key milestone achieved and impressively, over the past year, we have delivered all our stated objectives on time and under budget, which represents excellent value to all stakeholders.

“To be in the position we are in just over 12 months since establishing our China-based LMFP battery strategy is a huge testament to drive and dedication of the entire Firebird team.

“Through the hard work delivered over the last year, we have set a strong platform to work towards a Final Investment Decision in coming quarters.”

Firebird has been trading at 12 cents.

Join the discussion: See what HotCopper users are saying about Firebird Metals and be part of the conversations that move the markets.

Firstly, the Federal Reserve in the USA made a 50bps jumbo interest rate cut, which set off a risk on rally in many markets.

While there remains risk from the US slowdown, the loosening of rates has set off a great rotation in global markets to prepare for a weaker US dollar.

This signals a period where the US economy is slowing, but global liquidity is loosening. 

Rates are going down, Figure 1.

There are risks of a US recession.

However, emerging market economies that were squeezed by high interest rates, will now see looser conditions.

Secondly, the People’s Bank of China (PBOC) finally stepped up with a package of stimulus measures to support recovery.

The market reaction for China sensitive stocks was immediate.

Luxury stocks in Europe soared on a possible bling-led recovery on the China High Street and Australian iron ore miners shot the lights out, went through the ceiling, flew across the nation, and ruined a Sydney/Perth/Brisbane/Melbourne/Adelaide/Darwin day for those caught short!

Using our trusty unrealized profit and loss indicator, we can estimate which investors have been made whole on their positions, by the recent market move, and which investors are still nursing losses.

The picture for the top ASX-listed names, along with Brazil-listed major Vale is improving, Figure 3.

The steel makers Bluescope Steel (ASX:BSL) and Bisalloy (ASX:BIS) are doing well.

This is due to cheaper steelmaking input costs, and their largely Western market exposure.

Note that Fortescue (ASX:FMG) and Mineral Resources (ASX:MIN) are still in mild bear territory, with investors nursing unrealized losses of -5.5% and -9.9% respectively.

Look for a test of confidence at $21.26 for FMG and $54.51 for MIN.

Investors still seem to be favouring BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO).

The cash costs for BHP are the best, followed by Fortescue and Rio, Figure 4.

Expect the smaller names to perform in line with their breakeven costs once the iron price rallies out of the danger zone below $US100/mt.

We have just been through a major market panic over the iron ore price falling back towards the Australian Treasury forecast of $US60/mt.

Never say never, but our recent research suggests that this price is too low.

The key reason is that China is perhaps more dependent on imported iron ore than may have been previously thought.

Furthermore, our estimates of the average grade of crude ore in China have been revised down from a former 30% to a figure more like 15%.

The reason for this change lies in a reporting anomaly buried in the National Bureau of Statistics (NBS) data from China.

The two steep lines below show the raw data from Chinese domestic iron ore production from the NBS, and the World Steel Association (WSA).

The lower lines restate this to a useable ore grade (62% Fe). This adjustment was first carried about by UN agency UNCTAD, and later refined by the WSA, Figure 5.

Don’t be giving up on China yet, because of the stimulus, and don’t be giving up on the lucky country trading partner from which it buys the bulk of its iron ore requirement.

You see, because of the above data anomaly the official market share of Chinese ore for world use looks like 40%.

Once you adjust properly for the lower grade it is more like 10%. The Chinese need our ore, and we could do with the cash if we are sensible enough to put the stuff on a boat and sell it to them.

The global Australian iron ore market share is considerably more robust when you make these adjustments, Figure 6.

We continue to like the majors BHP Group and Rio Tinto. The first for lower costs, and the second for its superior growth exposure and the geopolitical hedging provided by their Simandou project.

The geopolitics today is fraught. The USA is clearly pressuring Australia to not sell minerals to China, which is fine for them, but bad for us.

Rio Tinto, in Guinea, West Africa, and Vale, in Brazil, provide natural hedges to the risk that Australia loses its greatest and most valuable export market.

Disclaimer: This article contains information and educational content provided by Jevons Global Pty Ltd, a Corporate Authorised Representative (AR1250727) of BR Securities Australia Pty Ltd (ABN 92 168 734 530) which holds an Australian Financial Services License (AFSL 456663). The Market Online does not operate under a financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given.

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Today, Firebird told investors it had received the Environmental permit and is anticipating the final one – for Energy – to be received in the following weeks. The quick delivery of both appear to show confidence in the project within the government of Jinshi, where the plant will be located.

A key issue behind the awarding of the Environmental Permit was the project’s zero waste program, and Firebird’s ability to demonstrate the environmental benefits of operating within circular industries in China.

For example, the company entered into Memorandums of Understanding (MOUs) with several cement companies to supply them with leach residue from the plant which could then be used within cement production. This formed part of the Permit’s Environment Impact Assessment.

Following the receipt of an Energy Permit for the plant, the company will progress to FID – expected in the fourth quarter of 2024, with construction to kick off shortly afterwards. This is anticipated to take between 12 and 15 months, meaning that operation should commence in late 2025.

Firebird Managing Director Peter Allen said the timely achievement of these steps had built confidence in the overall veracity of the project.

“We continue to execute steadfastly on our vision and set the platform for Firebird to become a near-term low-cost high-purity manganese sulphate producer,” he said.

“We have now been awarded two of the three critical permits required for the Company tocomplete construction of the plant and commence stage-one operations.

“The speed at which the Company is progressing in China is testament to the significant levels of support we have had and continue to receive from the Jinshi Government and we look forward to receiving the Energy Permit in the coming weeks.

“Firebird is in the most exciting position the Company has ever been in since listing in 2021, as we look to progress and finalise offtake discussions, make a final investmentdecision in late Q4 and work toward starting production in late 2025.”

Firebird has been trading flat at 10.5 cents.

While some have been answered in videos in our From the Floor section, we have received more answers from conference presenters: Argonaut executive director & head of funds management, David Franklyn, and, Eden Group founder, chair and chief investment officer, Nicholas Boyd-Mathews.

We hope this helps you in your investment decisions:

Viewer question: Do you think we should allow uranium mining?

David Franklyn: Australia has a large Uranium resource and uranium will be an important part of the decarbonisation energy mix. As such I support Uranium mining in Australia.  

Nicholas Boyd-Mathews: Yes, absolutely. Uranium has been a source of reliable, low-carbon, base-load power for decades and it is critical for sustaining several major economies including the USA, Europe, Japan, China and South Korea. The safety and power density of nuclear energy is unmatched by any competing technology, and the scaremongering around its use is both unscientific, erroneous and foolhardy. Having a ban on uranium mining in certain Australian states is the height of ignorance, arrogance, and unsophisticated politicking.

Viewer question: We have resources stories like Uranium and where it can go. Do you think the number side also adds up over the next decade?

David Franklyn: There is ultimately an abundance of uranium in the world. The problem is getting the funding and approvals to get it out of the ground and into production in a timely and environmentally sensitive manner. My view is that the next five years is the time to be an investor in Uranium, as demand is increasing and supply is constrained. After this point I would then reassess the demand/supply situation.

Nicholas Boyd-Mathews: Yes, absolutely. Nuclear energy is experiencing a resurgence, with a near-global political consensus recognising it as a scalable, reliable, and zero-carbon solution. Unlike intermittent power sources such as wind and solar, nuclear provides consistent baseload power. The 2021 images of frozen wind turbines in Texas underscore the importance of non-intermittent energy sources. Furthermore, nuclear power boasts one of the lowest operating costs and is exceptionally energy-dense. Currently, about 10% of the world’s electricity is generated from nuclear energy. With the growing trend towards electrification and advancements in next-generation reactors, nuclear energy offers a compelling proposition in terms of cost, scalability, and sustainability. At the recent UN Climate Conference in Dubai (COP 28), over 20 countries committed to tripling their nuclear energy output by 2050, just 25 years from now. Additionally, the number of new reactors under construction or planned is at an all-time high, as more countries aim to boost their GDP and standard of living through increased energy availability. Emerging economies such as India and parts of Southeast Asia are embracing nuclear energy as their manufacturing industries become more ambitious and their populations transition up the ‘standard of living’ curve. No other energy source provides the same energy return-on-investment.

Viewer question: Are oil and gas ASX stocks still a viable investment, say, over the next few years?

David Franklyn: Gas is increasingly being recognised as a transition fuel, and oil is also hard to replace in many applications. As such there will continue to be investment opportunities in this space. The key is to focus on value and recognise that the market will apply a discount to earnings streams generated from carbon sources.

Nicholas Boyd-Mathews: Well-run oil and gas companies with demonstrable positive free cashflow could be interesting investments. In the first quarter of 2024, US natural gas traded at over 50 times its oil-equivalent price, a level not seen since 2012. However, today’s gas market is vastly different from that of 12 years ago. Increased electricity usage by data centres and a decline in shale supply could lead to a new era of high US natural gas prices, impacting most oil and gas markets and stocks globally. With surging demand and faltering supply – along with rising geopolitical tensions, especially in the Middle East – oil and gas prices are unlikely to drop significantly, even if the global economy enters a recession.

Viewer question: Are mining companies getting worried about China’s control on rare earth minerals?

David Franklyn: Companies are worried about China’s ability to influence rare earths’ prices due to their dominant position in raw materials production and processing capacity.

Nicholas Boyd-Mathews: Governments, not miners, would likely be worried as REEs are strategically important elements for several modern technologies including military defence systems. Western nations allowed the offshoring of REE processing to occur so have only themselves to blame.

Viewer question: When will onshore processing happen with critical minerals?

David Franklyn: In most critical minerals markets Australia will struggle to be a cost effective processor. Greater government support is required to level the playing field and stimulate a processing sector.

Nicholas Boyd-Mathews: I cannot ever see a scenario where REE refining and value-added manufacturing (such as alloys and magnets) are ever viable in a country like Australia due to the endemic low productivity and very high-cost base. Governments may wax lyrical about grants and funding for such initiatives, but it is all ‘pie in the sky’ in my opinion.

Viewer question: Why are we letting China influence ASX-listed mining companies?

Nicholas Boyd-Mathews: Perhaps you mean: Why are certain individuals with apparent links to the Chinese State allowed to invest in ASX stocks? China has almost complete market dominance over the REE market, including the supply of raw materials and the downstream processing of ores into value-added products. This major investment by the Chinese State is underpinned by their recognition of the strategic importance of REEs as they do not, for example, have vast resources of oil or other critical commodities. Hence, it should not be surprising that Chinese-backed entities may be interested in investing in companies with REE resources, such as the Browns Range heavy REE deposit owned by Northern Minerals (ASX:NTU). It should be remembered that China is Australia’s largest trading nation and Australia has no existing refining capabilities for REEs or any value-adding manufacturing capacity.

Viewer question: How are lithium players managing the short sellers?

Nicholas Boyd-Mathews:  The best way to manage short sellers is by proving them wrong. Any Li company that can consistently meet production targets profitably shouldn’t have any concerns.

Viewer question: How has the boom in lithium exploration over the last three years changed the forecast supply side of lithium going forward to 2030?

David Franklyn: Lithium remains a small, fast growing market with volatility in demand and supply and, hence, price. The big factor recently has been the entrance of lepidolite production and increased production from Africa which forced the market into oversupply.

We expect that the lithium market will continue to mature, with solid demand growth and consistent additions of supply. Price spikes will be muted by the ability to activate higher cost lepidolite production when price rises are excessive.

Nicholas Boyd-Mathews: The current general consensus is that Li prices are likely to be depressed for the next ~5 years as EV adoption rates decline below previous very high forecasts, inflation pressures bite into the general consumer, and, hybrids are more widely adopted. The size of the Li market is such that it will tend to experience volatility periodically until it becomes larger and more established.

Viewer question: How and when will lithium prices rise?

David Franklyn: When demand exceeds supply prices will increase. We expect that medium term spodumene prices will settle between A$1,500t and A$2,000 tonne (6% spodumene).

Viewer question: What are your thoughts on what’s going on with nickel at the moment and the future for nickel mines in Australia?

David Franklyn: There’s rapid expansion of low-cost nickel production in Indonesia, supported by China. This will keep prices subdued in the medium term and makes it difficult for higher cost producers in Australia.

Nicholas Boyd-Mathews: It will likely be several years before nickel mines are profitable in Australia due to endemic low productivity and a very high-cost base. A large supply of nickel laterite-sourced material ex Indonesia hit the market in recent times causing price volatility and uncertainty for higher-cost producers.

Viewer question: Could niobium be the next lithium?

Nicholas Boyd-Mathews: Niobium is currently ‘flavour of the month’ for ASX investors due to the recent ‘unicorn’ success of WA1 Resources (ASX:WA1). However, it has completely different uses and market dynamics to Li.

Viewer question: What do you think about the emerging green steel sector?

Nicholas Boyd-Mathews: ‘Green’ steel has been on the agenda for miners and technology suppliers like Metso for several years and it is great to see Rio Tinto (ASX:RIO) recently announce progress with their BioIron project. In terms of commercialisation, it will likely be several years before the technology is mature enough to challenge the incumbent tech.

Viewer question: Do you think South Australia will lead the ‘made in Australia’ with steel manufacturing?

Nicholas Boyd-Mathews: No. In my view, the cost of doing business is not competitive enough in South Australia.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

Retail sales figures in the US came in better than expected, and with fears the Israel, Iran conflict could escalate, gold rose and so did bond yields.

The Nasdaq fell 1.8 per cent, the S&P500 dropped a per cent and the Dow Jones well over half a per cent (0.65%). Customer Relationship Manager platform company, Salesforce, lost more than 7%, with Apple and Visa also losing ground.

There’ll be important data out of China today – it’ll release its gross domestic product figures for the quarter to March.

Perhaps providing insights for this, Rio Tinto (ASX:RIO) will this morning provide an update to its production for the same period.

To other news, a public hearing for the supermarket pricing Senate Committee inquiry will continue in Canberra – it involves Woolworths Group (ASX:WOW), Bunnings and Coles Group (ASX:COL); there’s also a public hearing in Queensland into regional bank closures, while The State Entertainment Group (ASX:SGR) will continue to front the NSW Inquiry into its Sydney casino operations.

In other stocks to watch, Telix Pharmaceuticals (ASX:TLX) has been granted Fast Track Designation by the US Food and Drug Administration for its brain tumour imaging product TLX 101-CDx; A subsidiary of Southern Cross Electrical Engineering (ASX:SXE) has been awarded work at data centres in New South Wales and the ACT totalling about $50 million; and Wia Gold (ASX:WIA) has upped its gold resource in Namibia to 2.12 million ounces.

The Australian dollar has fallen to five-month low of US64.4c, gold is around US$2385 (A$3700) an ounce, iron ore’s been trading just above US$106 a tonne, brent crude is above US$90.50 a barrel, and natural gas has taken a fall of nearly 5 per cent to US$1.68 per million British thermal units.

Last Monday, Albanese announced a $2 billion fund to boost projects benefitting Australian trade and investment in SEA, particularly those connected to the region’s embrace of clean energy, in addition to infrastructure investment.

A new SEA Investment Financing Facility (SEAIFF) will be managed by Export Finance Australia to provide loans, guarantees, equity and insurance for favoured projects.

But that facility also represents a larger macroeconomic story. It’s a direct result of long-held expectations and strategising on how Australia might harness the potential of a region set to collectively comprise the world’s fourth-largest economy by 2040.

The SEAIFF fund was unveiled during the Prime Minister’s meeting in Melbourne with eleven leaders from the region last week, each representing the ten member states of ASEAN (Association of Southeast Asian Nations) together with intended-member state Timor-Leste.

They had been meeting as part of an ASEAN-Australia Special Summit celebrating 50 years of Australia’s partnership with the body.

Mr Albanese had pre-empted the tilt towards SEA by declaring last week that the region was ‘Australia’s economic future’.

The relationship between Southeast Asian countries and China – currently Australia’s largest two-way trading partner – was a topic haunting the ASEAN summit last week, as Philippines President Ferdinand Marcos Jr said his country would not give up ‘a square inch’ of its territory in the South China Sea.

But there are clear divides among ASEAN constituents when it comes to the Red Dragon.

Indonesia’s President Widodo instead slated Western countries for their ‘China-phobia’. A series of Chinese-backed nickel developments in Indonesia have recently allowed the country to become the world’s largest producer of the metal.

But while Albanese points to SEA as Australia’s future, the Australian government has been steadily strengthening its relationship with Beijing at the same time.

This was most clearly reflected in Mr Albanese’s visit to China last November during which he affirmed support for the China’s growth and global engagement, with President Xi Jinping himself stating the two nations were on the ‘right path of improvement’, after turbulence through COVID.

Chinese Premier Li Qiang, meanwhile, called Albanese a “handsome boy.”

Such political engagements are believed to have cleared the way for China to reverse its block on Australian exports which began in 2020 after former PM Scott Morrison repeated tenuous claims COVID escaped from a Wuhan laboratory. Only in recent months have tensions begun to ease.

Meanwhile, diplomatic visits will be two-way. China’s foreign minister Wang Yi is set to visit Australia in late March, ahead of Premier Li Qiang’s visit later on this year.

Nevertheless, despite what appears to be an enthusiastic desire to collaborate with China coming from Canberra – a country with no shortage of Foreign Direct Investment (FDI) in Australia – Saxo Asia Pacific Senior Sales Trader Junvum Kim said the SEA story was one to watch, particularly in terms of potential upside for Australian miners.

“Indonesia plans to become a major player in the Electric Vehicle supply chain space, aiming to join the world’s top three EV battery producers by 2027 and reach 2.5 million EV users by 2025,” he said.

“Indonesia has the world’s biggest nickel reserves but little lithium – this opens the door for Australian lithium miners such as Pilbara Minerals, Mineral Resources and IGO, which have recently struggled with weak lithium prices.”

Kim pointed to Western Australia’s well-established lithium reserves – suggesting the West would continue to be the nation’s economic powerhouse regardless of who our major trading partner(s) could become.

“Australia supplies half of the world’s total lithium, most of which goes to China. However, there are now some opportunities to export lithium to Indonesia, as Chinese EV maker BYD plans on building a production facility in Indonesia later this year.”

In a broad sense, SEA is already an exciting region to watch in the future, based not only on projections for its combined economies but also its consumer base.

Indonesia alone – one of the most populated countries on earth and the largest member of ASEAN by population – is set to provide the world’s fourth largest consumer market by the end of the decade.

Indonesian President Joko Widodo, who denounced China-phobia, has before stated a desire to access Australian lithium and connect it with his country’s nickel market to build such a supply chain.

However, whether Indonesia’s move into green energy – as both a global nickel producer and emerging key consumer of batteries and electrical vehicles – truly offers upside for Australia remains to be seen.

Indonesia’s definitely motivated to be seen, at least, as a desirable location for sustainable investment. The country has even introduced a carbon tax trading scheme in recent history while being very likely to remain reliant on coal into the 2040s, per S&P Global.

But many Australian nickel miners still see Indonesia as an unwelcome market disruptor, and a lot of them are banking on a belief global consumers will come to prefer Australian nickel due to an ESG premium. Environmental regulation in Australia remains far more restrictive than that in Indonesia.

Then you’ve got a near-term political consideration as far as Indonesia is concerned.

Indonesia’s recent elections, for which March 20 is the date we get an official result, are also widely perceived to have guaranteed strongman competitor Prabowo Subianto will win. What Subianto’s stance will be on Australia’s struggling lithium sector isn’t yet clear.

Indonesia’s investment in green energy is definitely something the country is enthusiastic to set up for its own benefit – LG and Hyundai are set to begin operating near Jakarta later this year.

Vietnam, meanwhile, is following suit through development of the Vinfast battery factory in Ha Tinh province, a joint venture between EV automotive company Vinfast and Chinese battery manufacturer Gotion High-Tech, with production also set to begin this year.

Additionally, Mercedes Benz has been producing plug-in hybrid batteries in Thailand since 2019.

Australia finds itself at an interesting crossroads – but if we truly can navigate the tangled geopolitical terrain in years ahead between each SEA country, and their respective relationships with China (as well as our own,) it’s not hard to see why Canberra are $2-billion-dollars-serious about the opportunity.

The Hong Kong bourse fell 2.6 percent by afternoon trade after Premier Li Qiang announced there would be no significant government stimulus to boost the Chinese economy, which has been experiencing turmoil due to property sector crisis, local government debt, and deflation.

Premier Li delivered this news as part of the Government Work Report at the NPC, which this week is running concurrently with another key economic policy meeting, the Chinese People’s Political Consultative Conference (CPPCC).

The NPC and CPPCC are collectively known as the ‘Two Sessions’ and are crucial events for investors seeking clues as to where the Chinese government will be putting its economic focus.

Another crucial announcement from the Premier was targeted growth for the Chinese economy in 2024, which was set at an optimistic 5 percent, the same figure as last year.

This matched Chinese economists’ expectations, although international economists had expected a slightly weaker growth figure of either 4.5 or 4.6 percent, citing the aforementioned economic headwinds, which have caused significant short positions and weakened investor sentiments.Saxo Chief China Strategist Redmond Wong noted some divergence between the Hang Seng sell-off and the mainland A-share market, which remained relatively stable after the announcement. “In contrast to the Hong Kong market, the mainland A-share benchmark indices displayed a more resilient performance following the delivery of the Government Work Report on Tuesday,” Mr Wong said. However, he added that the “Government Work Report and the outcome of the first day of the NPC meeting aligned with general expectations, offering no significant positive surprises.”Other announcements from the Work Report included a predicted fiscal budget deficit of 3 percent of GDP for 2024, and an increase in 1.1 trillion yuan bond issuances (this being the first such sale since 2020), which is set to provide extra funding to strengthen infrastructure investments.

Mr Wong said the Report had yielded some indications of China’s economic commitment to industries like advanced manufacturing, artificial intelligence, green energy, and quantum computing, adding that more detail on this would become clear throughout the week. “The emphasis on high-quality development, as highlighted by President Xi Jinping, underscores China’s commitment to industrial policies fostering technological advancement and innovation,” he said.

“Investors eagerly await insights into these policies during the upcoming press conference, where key officials will address questions and provide details on China’s industrial strategies, plans, and financial system reforms. “Of particular interest is the assessment of the regulatory environment of China’s equity market by the new CSRC Chief, Wu Qing, adding a layer of significance to the unfolding events in China’s economic landscape.”On Tuesday, China announced a 10 percent increase to its annual budget for science and technology, which rose by 10 percent to an unprecedented 370.8 billion yuan ($51.6 billion).

How can investors respond to this weakness, and seize on opportunities as they arise?

While the CSI 300 Index managed a relatively moderate year-to-date loss of 6.7 per cent, this belies the heavy intervention from government funds in some of its leading stocks, including state-owned banks and energy companies. It also masks the brutal selloff of most stocks in China’s equity market – specifically, those which have not been actively supported by the so-called National Team, a group of government-controlled investment funds tasked with stabilising the market.

The lacklustre performance of the Chinese equity market is interwoven with numerous challenges confronting the nation’s economy, from anticipated defaults and bankruptcies among property developers, to the pervasive downward adjustments in home prices. Local governments also remain hamstrung by debt, limiting their infrastructure spending and public service provision.

As the economic recovery unfolds sluggishly and uncertainties persist, caution also pervades entrepreneurs and private sector management, hindering new investments. Regulatory tightening and uncertainty exacerbate this cautious approach, perpetuating a cycle of declining confidence.

The Chinese equity market’s predicament is further compounded by projections that the potential growth rate of the Chinese economy in the medium term is set to decline to 4 per cent, and towards 3 per cent in the longer term. Factors such as a diminishing working-age population, decreased fixed capital formation, and declining productivity contribute to this downward trajectory. The contribution of total factor productivity growth to real GDP growth in China has dwindled from over 4 per cent in the mid-2000s to around 2.5 per cent in recent estimates. Some economists anticipate this figure sliding to an average of 1.3 per cent over the next 10-15 years.

The external environment is also challenging, with the US and its European and Asian allies engaging in technology containment and supply-chain ‘de-risking’ practices. In response to heightened geopolitical risks, multinational businesses have accelerated the diversification of supply chains and production capacities away from China to ASEAN countries, India and Mexico, as well as re-shoring back to the US or Japan. More recently, Donald Trump has threatened China with the imposition of tariffs above 60 per cent if he’s elected US President in November.

Equity investors, well aware of the persistence of these economic challenges, have been anticipating more forceful monetary and fiscal stimulus measures to boost the Chinese economy and loosen financial conditions. However, the Chinese authorities have been rolling out stimuli that are relatively tepid and fall short of the desired stimulus ‘bazooka’. This timid policy response is unlikely to result from a lack of understanding by the Chinese leadership, but rather a conscious policy choice.

President Xi Jinping initiated a nationwide deleveraging initiative in 2017, starting with crackdowns on the shadow banking sector, followed by the property sector and excessive local government debts. There is no sign from the Chinese leadership of pivoting from these strategic goals.

Also in 2017, Xi coined the concept of ‘high-quality development’, emphasising China’s priorities in technological self-reliance and food security through agriculture modernisation. It signifies the transition of the Chinese leadership from pursuing high-speed economic growth to other goals deemed more important.

Previous development impetus, which relied on massive inputs of labour, resources and investment in capital assets is considered unsustainable, and the associated economic structure is deemed unbalanced. In short, there’s been a sidelining of short-term growth stimulation.

Against this backdrop, the Keynesian stimulus measures in investor minds have found little empathy in the Chinese top authorities’ policy deliberations – the stimulus ‘bazooka’ has not arrived, and is very unlikely to come. The determination not to bail out failed property developers and shadow banking entities signifies that the deleveraging initiative from 2017 persists.

The resistance to calls for Keynesian-style aggregate demand-boosting measures that can lift short-term growth (but not the long-term growth potentials of an economy) has a sound foundation in neoclassical economic growth models. Less comforting, however, is the lack of signs indicating that Chinese policies are moving towards increased private sector marketisation and galvanisation. The much-anticipated Third Plenary Session of the 20th Central Committee would be an effective venue for the Chinese leadership to formulate and communicate its economic development strategies over the next five years – but there is no indication as to when this will occur.

The intertwining theme of Xi’s directives is the logic, concepts, and narrative of the Marxist political economy – that is, eliminating any potential for development strategies that enhance the role of the market and the private sector. A return to the Marxist paradigm, and an environment in which ‘getting rich is no longer glorious’ and government officials are incentivised to watch their steps, means the economic challenge in the Chinese economy remains formidable.

Navigating the tumultuous waters of the Chinese equity market poses numerous challenges. In this intricate scenario, it may be advantageous to remain nimble and flexible.

Short-term traders can find opportunities amid volatility – the stocks of central state-owned enterprises and large-cap stocks of the CSI 300 Index and MSCI China A50 Connect will tend to benefit from the buying of the National Team.

Meanwhile, longer-term investors may await clearer signals from the Third Plenary Session when it occurs. Furthermore, research and accumulation of positions in industries benefiting from China’s industrial tailwinds, such as technology and advanced manufacturing, remain strategic.

Despite cyclical swings, themes like productivity enhancement and technology self-reliance persist. Additionally, sectors like energy and green metals, supported by enduring themes such as energy security and green transformation, present opportunities amid China’s uncertain path to recovery.

Disclaimer: Saxo Capital Markets (Australia) Limited (Saxo) provides this information as general information only, without taking into account the circumstances, needs or objectives of any of its clients. Clients should consider the appropriateness of any recommendation or forecast or other information for their individual situation.

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.