Reports of battery-powered electrical vehicles displacing conventional cars are “misleading”, according to Irish exploration company Clontarf Energy.
The group, which focuses its operations on Ghana and Bolivia, announced its preliminary results for the year ending December 31st, 2023, on Monday.
Clontarf Energy chairman David Horgan said the group’s principal activity in the year involved “driving ahead” its lithium business in South America. Most plug-in hybrids and all-electric vehicles use lithium batteries.
Mr Horgan said all market penetration “follows the S-curve” pattern. “First come the early adopters willing to take risks and maybe pay a premium for new technology,” he said.
“Many of these also had an internal combustible engine in the garage, so had fewer concerns about range anxiety on occasional long trips.
“As EVs go mainstream, salesmen must convince less ideological, and typically less wealthy middle-class consumers. Finally, there will be hold-out purists like classic car owners or petrol-heads who will be harder to convert.
“The expected changes in penetration rates were exacerbated by arbitrary official policies, such as unsustainable subsidies and in some markets other incentives like free parking, free tolls, lower car tax, etc.
“As EVs penetrate, pressure increases to recover forgone income, leading to reduced subsidies.”
Mr Horgan said the overall lithium market grew by 30 per cent in 2023 to 925,000 tonnes. The fastest growth was in “high-value new applications”, with standard computers, smart phones and battery storage gaining share.
“We do not see such growth rates often in this industry,” he said. “There is much more uncertainty over future supply than likely demand.”
Clontarf’s results also show it cut its losses last year but the company said there remains a “material uncertainty” around its ability to continue as a going concern.
The group incurred a loss of £870,061 (€1 million) for the year, which was down from £4.8 million the year before.
It had net current liabilities of £1.3 million at year end, which were down from £2.1 million the year before.
“These conditions represent a material uncertainty that may cast doubt on the group’s ability to continue as a going concern,” the company said.
Included in current liabilities is an amount of £988,926 owed to directors in respect of their remuneration due at the balance sheet date. This was down from £1,114,861 a year earlier. The directors confirmed they will not seek settlement of these amounts in cash until after end of 2024.
The group had a cash balance of £182,516 at the balance sheet date, which was down from £931,902. As the group is not revenue or cash generating, it relies on raising capital from the public market.
Mr Horgan said South American authorities have adjusted dates and details for sampling, site visits, and financial criteria in terms of the lithium operations.
“This has inevitably sown confusion among shareholders and the wider market, so Clontarf has sought to promptly and frequently update the market as the process evolves,” he said.
“Despite the unavoidable confusion, Clontarf believes that our planned schedule is again on track.”
Mr Horgan said some shareholders who have contacted the company have been “distracted by the reported wild swings” in the supposed “spot prices” for lithium salts during 2023.
“Please note that high-purity lithium salts are more a specialty chemical than a fungible commodity,” he said. “Lithium is not like gold or crude oil. There is no meaningful spot price, since realised prices differ by application, buyer, purity, types of impurity and volume.
“Almost all of high-purity Lithium salts are sold via long-term contracts. That is why the average import price of Lithium into Japan, for example, was so much higher than the reported market price.”
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