The Orocobre Limited (ASX: ORE) share price rocketed 33.3% higher in July. The huge share price surge earned the Australian mineral resources company a top spot among the biggest monthly gainers on the All Ordinaries Index (ASX: XAO) in July. The All Ords, in comparison, gained 0.9% for the month.
Orocobre’s shares joined most other Australian stocks in the late February and early March COVID-19 market rout. The Orocobre share price tumbled 41% from 21 February through 23 March. The share price didn’t turn around until hitting a 52-week low of $1.84 per share on 14 May.
By the end of July, the miner’s share price had rebounded strongly, up 61% from the 14 May low. Orocobre shares closed the month at $2.97 per share.
Since then, the Orocobre share price has gained another 10.5%, giving the company a market cap of $898 million.
What does Orocobre do?
Orocobre is an Australian based global lithium carbonate supplier as well as a producer of boron.
In partnership with Toyota Tsusho Corporation and JEMSE, Orocobre constructed and currently operates the world’s first commercial, brine-based lithium operation. The company announced the Stage 2 Expansion of its flagship Olaroz Lithium Facility in Argentina in 2018. This will significantly expand its lithium carbonate production capacity. It supplies the fast growing industrial, technical and battery markets.
Orocobre and TTC have also commenced building a lithium hydroxide plant in Naraha, Japan suitable for different battery technologies. Orocobre also owns Borax Argentina S.A, a boron chemical and mineral producer.
Why did the Orocobre share price soar in July?
In the June quarter, Orocobre reported selling approximately 1,600 tonnes of lithium carbonate at approximately US$4,105 a tonne.
Like many miners, pandemic-related shutdowns restricted the company’s ability to complete all of its sales during the quarter. Most of these issues have been addressed, but delivery levels are still below normal, with customers delaying shipment due to excess inventories.
There was no clear signal from the company that would have sent the Orocobre share price 33% higher in July. Lithium remains oversupplied and prices remain at near record lows. It would seem forward-looking investors may be buying shares of Orocobre with an eye on the rapid growth forecast for the electric vehicle and home battery markets, both of which should lead to an increased demand for lithium.
At the time of writing, the Orocobre share price is sitting at $3.28 per share, closing the day up by 4.56%.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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