Pan Asia Metals: centre of the Southeast Asian electrification revolution

This is the first in a 2-part feature series.

This article is a sponsored feature from partner Pan Asia Metals Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.

The revolution will be televised and chances are it will be watched on a smartphone powered by a lithium-ion battery.

There is an even greater chance that the lithium-ion battery will be manufactured somewhere in Southeast Asia – one of the highest growth and lowest cost regions globally.

In Southeast Asia, the electrification revolution is well underway as the region’s ‘young’ population of more than 600 million increasingly adopt green energy technologies and governments pursue ways to reduce their carbon footprints.

While the development of the industry in the region varies greatly, countries such as Thailand, Vietnam, Indonesia, and Malaysia are at the forefront of establishing production plants.

The region is also rich in geology and is underexplored. This means most projects are highly prospective and are situated in an economic and trade ecosystem in which companies can secure future opportunities to explore and develop battery and critical metals projects.

One such company is Pan Asia Metals (ASX:PAM), an emerging diversified clean energy organisation positioned to have exposure across the whole lithium battery value chain.

Pan Asia Metals is seeking to be a leading battery metals and chemical supplier in this burgeoning ecosystem. The company is already firmly cemented as a regional leader in lithium exploration and well progressed with its feasibility studies. It is now taking strategic steps to leverage this position to explore opportunities to move downstream.

As Managing Director Paul Lock explains, after 10 years of operating in Southeast Asia, Pan Asia is moving beyond the mine gate. It is eyeing to manufacture lithium chemicals and other advanced lithium products. And, the company has the potential to do so with a zero-carbon footprint.

Exploring a better future

In essence, Pan Asia Metals is exploring a better future.

“We see a lot of opportunity to move past the mine gate. Underwriting this strategy is the cost environment, and our understanding of the industrial landscape. These are key elements, as well as access to key markets.

All that adds up. When we’re operating in Southeast Asia, naturally everything we need is right there and our market is right there. That’s the advantage when it comes to cost.

With regards to processing, in progressing that strategy the steps we’re taking include engaging the governments and talking to consumers of lithium products such as CAM, battery and EV companies about offtake and processing opportunities.

“Our aim is to refine the battery and critical metals we mine into precursor chemicals”

Our aim is to refine the battery and critical metals we mine into precursor chemicals – highly refined metals which are needed by the battery manufacturers in the critical and lucrative electric vehicle and lithium-ion battery markets.

Ultimately markets will settle down. My belief is that at some point there will be an oversupply in concentrate and that gap we’re seeing now will be filled. And the margins will be at the chemical end of the market.

A key driver for the strategy is that if I’m just a mine gate seller of concentrate then I have one or two customers and not many options for growth other than the price cycle. If I’m producing a chemical, I have lots of different potential customers and plenty of opportunities for growth.

That could be further value adding, takeovers, or anything really. As you head downstream, that’s when you’re presented with more opportunities and your earnings and revenue streams tend to stabilise.”

Largest lepidolite style lithium resources in Southeast Asia

Pan Asia Metals actively looks for battery and critical metals that are recyclable, with the aim of producing the chemicals required for the ‘new energy and technology revolution’.

It is the only explorer and developer in Southeast Asia with advanced lithium assets, including 2 lepidolite style lithium projects – the Reung Kiet Lithium Project and the Kata Thong Geothermal Lithium and Hard Rock Lithium-Tin Project.

The style of lithium mineralisation Pan Asia Metals focuses on is lepidolite – a form of pegmatite rich in lithium and other minerals such as caesium and rubidium commonly found in Asia. Lepidolite is one of the cheapest sources of lithium due to its abundant by-products and the reduced need for energy-intensive processing including lower temperature and shorter processing cycles.

Pan Asia Metals has the largest lepidolite style lithium mineral resources in Southeast Asia.

The company is also on target to meet its strategic objective to build a 10,000 tonne per annum (tpa) Lithium Carbonate Extraction (LCE) Plant with an initial minimum 10-year mine life. To meet the objective, Pan Asia in 2022 engaged with Thailand government officials informing them that the company’s projects are being geared toward value adding across the entire value chain.

Of particular interest to the government was the company’s plans to produce lithium chemicals for use in Cathode Active Material (CAM) manufacturing in Thailand.

Market analysis, in conjunction with industry consultations, suggests that Lithium Iron Phosphate (LFP) CAM will be the CAM of choice in the region. This is why Pan Asia will focus on the production of lithium carbonate, the primary lithium chemical used in LFP batteries.

Lock says that late last year, Thailand introduced a new mining policy highlighting the importance of minerals to the country’s economy, which reduces dependence on imported metals and significantly boosts local projects. As part of that policy, there could be incentives for companies like Pan Asia such as an 8-year corporate income tax exemption and other related incentives for mining and downstream processing.

The Thai cabinet introduced the Policy on Mining and Downstream Industry, which aims to improve investment promotion measures for the exploration, mining, and downstream processing industries in Thailand.

The MD says the new policy will benefit Pan Asia’s local projects by securing Thailand’s supply chain through building security and stability. It will also encourage exploration, mining, and minerals processing through investment promotion and other benefits.

Thailand is rapidly transitioning to EV and lithium-ion cattery production and is expected to maintain its leadership position. Singapore, Vietnam, Indonesia, Malaysia, and India are also aggressively pursuing such green energy initiatives. These countries render the region one of the most strategic emerging EV-lithium battery manufacturing ecosystems globally.

Lock says this ecosystem presents companies such as Pan Asia Metals excellent opportunities for participation and future growth.

Electrifying economic ecosystem 

Front and centre of this ecosystem is Pan Asia Metals. While Hong Kong, Singapore, Japan, and South Korea have long been considered the tigers of the region, he says Thailand, Malaysia, Indonesia, and possibly Vietnam are no longer just cubs.

“China is clearly the leader in lithium-ion batteries and then South Korea and Japan are ramping up also. Now we’ve got Malaysia, Thailand, Vietnam and Indonesia who want a piece of the action. So, there’s a similar dynamic.

And driving that also, particularly in South Korea and Japan, they are looking to outsource some of their production. These countries and even China do a lot of processing and manufacturing in those 4 countries.

We are basically central to those countries – Vietnam, Indonesia, Malaysia and also India and Singapore. That presents a lot of opportunities and we see opportunities to go further than just mining, our objective is to go further down the supply chain.”

Pan Asia Metals has the advantage of being situated in close proximity to Thailand’s advanced industrial centres and the region’s rapidly growing EV and lithium-ion battery markets.

Lock says: “This is a low-cost manufacturing environment in which lithium plays a critical role.”

The company has several distinct advantages over the competition. Its projects are in close proximity to all required inputs for lithium chemical processing and the largest EV and lithium battery markets in the world, reducing costs, and carbon footprint.

“This is a low-cost manufacturing environment in which lithium plays a critical role”

Thailand is a low-cost advanced industrial and manufacturing centre, and the largest vehicle manufacturer in Southeast Asia. Its industrial policies focus on S-curve industries including EVs and lithium-ion battery manufacturing.

Thailand’s new mining policy further highlights the importance of minerals to the country’s economy, which reduces dependence on imported metals.

As the MD explains in part 2 of this series, while Thailand is emerging as an economic hub for the lithium battery value chain in Southeast Asia, the region as a whole is now the global leader.

Globally, the lithium-ion battery market is forecasted to have grown from US$41.93 billion in 2021 to US$48.86billion at the end of 2022 at a compound annual growth rate (CAGR) of 16.5%. The market is predicted to reach US$85.72 billion in 2026 at a CAGR of 15.1%.

Asia Pacific is emerging as the largest region in the lithium market, ahead of North America and Europe.

While development of the lithium battery industry in Southeast Asia varies greatly from country to country, Lock details in part 2 why Pan Asia Metals is in the right place at the right time to lead the electrification revolution.

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Images: Pan Asia Metals Ltd & iStock
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Written By Adam Orlando Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.