NALCO, Hindustan Copper: Dividend Paying Metal Stocks Rally 5% On Lithium Deal In Argentina

To secure a vital component for the booming electric vehicle (EV) industry, Khanij Bidesh India Ltd (KABIL), a joint venture among National Aluminium Co Ltd (NALCO), Hindustan Copper Ltd, and Mineral Exploration Company Ltd, has inked a groundbreaking deal with Argentina's CAMYEN SE for Lithium exploration and mining. The move has sent shares of NALCO and Hind Copper soaring by almost 5% each.

As per the agreement, KABIL gains exclusive rights for the evaluation, prospecting, and exploration of five Lithium brine blocks in the Catamarca Province of Argentina. These blocks, covering a sprawling 15,703 hectares, include Cortadera-I, Cortadera-VII, Cortadera-VIII, Cateo-2022-01810132, and Cortadera-VI. The deal, costing Rs 200 crore, opens the door for the commercial production of Lithium following its discovery.

Argentina, often referred to as part of the "Lithium Triangle" along with Chile and Bolivia, houses more than half of the world's Lithium resources. Among the trio, they collectively possess the second-largest Lithium resources, third-largest reserves, and fourth-largest production globally. The latest agreement positions India to tap into this rich resource pool and marks a significant milestone in the quest for Lithium supply.

"This will not only boost its quest for sourcing Lithium for India but also help in bringing technical and operational expertise for Brine-type Lithium exploration, exploitation, and extraction," NALCO stated in an exchange filing.

KABIL, established as a joint venture company among the three Public Sector Undertakings (PSUs), was spearheaded by NALCO. The venture focuses on the exploration of critical minerals worldwide, making strategic moves to secure resources essential for India's industrial growth.

India's pursuit of Lithium has been gaining momentum, especially as it plays a pivotal role in manufacturing batteries for electric vehicles. The first Lithium deposits in India were unearthed in Jammu & Kashmir last year, marking a crucial step toward self-sufficiency in this critical mineral. The government, recognizing the importance of securing such resources, invited bids for 20 critical mineral blocks, including Lithium and Graphite, in November of the previous year.

Shares of NALCO surged by an impressive 64% in 2023, reflecting the positive sentiment among investors. The stock continued its upward trajectory, rising by 4.4% to Rs 143 per share after the Lithium deal was announced. Similarly, Hind Copper witnessed a remarkable gain of 150% in 2023 and experienced a 4.9% jump to Rs 268 per share following the news.

While NALCO shares had closed 3% higher on the previous trading day, Monday's announcement fueled additional investor confidence, leading to the notable surge. On the other hand, Hindustan Copper's shares, despite a 2% dip on Monday, have doubled over the past 12 months.

The Lithium exploration and mining agreement between KABIL and CAMYEN SE secures a steady supply of Lithium for India as well as marks a strategic move in acquiring technical expertise in Brine-type Lithium extraction. The success of this venture is anticipated to further bolster India's standing as a key player in the renewable energy and electric vehicle sectors.