EDITOR: | September 21st, 2013 | 7 Comments

China may be making lithium the world’s most strategic commodity

| September 21, 2013 | 7 Comments
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A model stands next to the all-electric I-Car, shown by Chinese state-owned automaker Dongfeng Motor at the Beijing auto show.

China is to provide subsidies of 60,000 yuan — that’s an astonishing $9,800 — for every electric car (and hydrogen ones, too) sold between now and 2015. The announcement this week saw the media concentrate mainly on the reasons for the subsidies — China needing to clean up its atmosphere — but the story has huge implications for one critical mineral in particular: lithium (meaning, the lithium-ion battery which is essential in the making of such cars.

China aims to put 5 million of what it calls “new-energy vehicles” on the road by 2020, according to the BBC. The broadcaster quoted the state-owned Xinhua news agency as saying that in 2012 there were about 27,800 of the new-energy vehicles (mainly buses) on the country’s roads so that means a huge growth spurt over the next two years.

And for lithium production, too. China does have some lithium-bearing brines (about 70% of the world’s lithium comes from brines, the remainder from hard rock) but not enough. They are looking at finding technology that will recover lithium from seawater; in the meantime, expect to see China securing deals with potential lithium producers around the world.

The problem for China is that it is already the world’s largest consumer of lithium but its own deposits amount to just 9% of known world resources of the mineral. Yet it is obvious that Beijing can see that China’s demand is going to become even greater and they will need more and more lithium — which would explain why an advance of $5 million was given by a Chinese off-take partner to Canadian Lithium (TSX: CLQ). Tianjin Products & Energy Resources Development is clearly anxious to get its hands as soon as possible on the lithium to come from the Val d’Or project in Quebec.

It will also explain why Chinese technicians from Linyi Gelon New Battery Materials Co are arriving in Bolivia to help set up a lithium battery plant (we have also reported the Dutch have similar plans). Xinhua reported that the plant should be in operation by April.

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China aims to put 5 million “new-energy vehicles” on the road by 2020.

You can expect to see China targeting South America: Bolivia has 42% of the world’s known lithium, Chile 23%, Argentina 16% and Brazil 7%. Those are brine resources.

Thanks to Euro Pacific of Toronto, I can tell you that China’s largest lithium deposit is lithium-bearing pegmatite at Jiajika in the eastern portion of the Tibet plateau. Lithium-bearing brines are found in the Qinghai-Tibet plateau. There is a zone of lakes there with 30 discrete brine resources.

Meanwhile, I am indebted to the website of Rodinia Lithium (TSXV: RM) for a concise outline of lithium’s story. This company is also targeting Argentina for lithium (with potash as a by-product) and has a lithium target in Nevada, too. You would have to concede that the company‘s summation below is a great scene-setter for anyone intending to study the lithium sector:

“Lithium was first discovered and defined in 1817 but was not produced commercially until 1923 by a company called Metallgesellschaft AG. Until now, lithium has been a minor commodity used in small quantities by manufacturers of glass, grease and mood-stabilizing drugs. In recent years demand has skyrocketed due to the increase in mobile phone, laptops and assorted electronic devices popular with consumers.

“Lithium-ion batteries have become the rechargeable battery of choice and are now almost used exclusively in cell phone and computer batteries with items such as shavers, power tools, and hybrid and electric cars switching over from the nickel varieties.”

Rodinia’s view: The lithium bonanza may just be starting. The green-car revolution could make lithium one of the planet’s most strategic commodities.

Expect to hear much more about lithium here on InvestorIntel.


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Comments

  • Rene

    Némaska Lithium NMX has the second largest lthium reserve in the world (hard rock ) Tianki Lithium Owns 19% of NMX

    September 22, 2013 - 10:40 AM

  • Jim S.

    This is an interesting development. Good news for the producers, great ready South America. Good article Robin.

    September 23, 2013 - 10:27 AM

  • Orbite Aluminae (+32.64%), Matamec (+30%) and Medallion (+29.52%) light the flame for rare earths and critical mineral sector recovery |

    […] award-winning journalist Robin Bromby wrote one of the most popular pieces last week, entitled: China may be making lithium the world’s most strategic commodity. Another great article was Robin’s: Egypt’s phosphate (not realizing potential) and critical […]

    September 24, 2013 - 3:53 PM

  • vacuum

    @ “Rodina … a lithium target in Nevada, too”

    in an August 29, 2013 corp update press release (which can be found on TSX.com using ticker symbol RM.v; or as a news item on Rodina’s website), Rodina reported that it has relinquished its Clayton Valley (NV) claim, but will instead focus upon Diablillos (Argentina). They need to update the company overview on the homepage of their website in order to reflect this announcement.

    Whether or not Diablillos is a good resource, it is logistically different than Nevada as far as US manufacturing is concerned. Moreover, capital controls in Argentina are a current concern among retail investors. Perhaps for this reason, and since Sept 02, 2013, RM.v has severely lagged the stock performance of the lithium ETF, ticker: LIT.

    September 28, 2013 - 2:27 PM

    • Veritas Bob

      The press release is at http://www.rodinialithium.com/news/index.php?&content_id=186 .

      How many claims are in the relinquished claim block? Per the PR, “Effective September 2012, the Nevada Bureau of Land Management increased the annual association mining claim fees from US$140 per claim to US$1,120 per claim. As a result, and in an effort to conserve cash and direct its resources toward Diablillos where more near-term value can be created for shareholders, Rodinia has decided not to renew its Clayton Valley claim block and to relinquish the claims that comprise the Clayton Valley project.” So the company is saving per year, $1120 times the number of claims in the relinquished claim block.

      September 28, 2013 - 3:29 PM

  • Nevada George

    Caveat:
    Be careful when investing in lithium juniors in Argentina.
    Global Environmentalist Groups have it on their watch list.
    I got stopped out twice 3 years ago.
    Do your geopolitical homework… They love to stick it to miners.
    This article opens up some old wounds.
    I am sitting on my Hotel balcony in Corsica regretting a lot
    of my junior mining investments in the past 5 years.
    Rare Earths is my major regret… However, holding on
    To 2016 to see how it all pays out.
    Nothing is constant but change.

    September 29, 2013 - 4:30 PM

  • Tenzin Norbu

    Chinese lithium craze has caused severe water pollution and public outcry…
    As of today the locals were successful in stopping the excavation (yet again)..but how long ? under the current political situation and industrial demand for this light metal…it remains a big and obvious question, who will prevail at the end of the day?…

    May 11, 2016 - 7:32 PM

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