EDITOR: | November 29th, 2016 | 6 Comments

Lifton on the global race for lithium ion battery materials

| November 29, 2016 | 6 Comments
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ctms2017_final_ver_banner_logoWhat are the fundamental business type start-ups the creation of which point to a permanent increase in demand for a natural resource? For technology metals the business type that small investors must pay attention to is “recycling“. In particular the investor must note the time between an increased demand for a natural material and the creation of or increased commercial recycling of the end use products containing that material in order to recover the material for re-use. Lithium today is already widely recycled from electric vehicle, computer, and small consumer product batteries in China. This fact has been overlooked by non-Chinese “lithium” entrepreneurs.

It took the Chinese battery industry, the world’s largest, very little time to institute recycling once it was clear that lithium ion battery production was a stable and growing business. China has large domestic hard rock and clay lithium resources and these today produce about 25% of the world’s total. Lately China has purchased control of or outright ownership of enough overseas’ lithium production resources, so that Chinese companies (ie, China) control(s) more than half of the world’s productive lithium capacity. Even so lithium ion battery recycling continues to expand within China. I met in China two weeks ago with BRT New Materials in Shenzhen. BRT today produces all of the fine (finished) chemicals that go into making lithium ion battery cells. It buys newly produced raw material precursors and it also recovers such materials from recycling for re-refining and finishing. BRT supplies both Panasonic and Samsung, for example, with 1000 tons a month of engineered graphite for lithium ion battery anodes. What does that indicate?

Three things: First of all that it is the considered opinion of those companies in the world’s largest national lithium market that the demand for lithium will grow steadily and will soon outpace the supply;

Second, that the concomitant demand for battery grade cobalt and engineered graphite will also grow and, in fact, has probably already outpaced the supply of cobalt.

Third, and perhaps most important of all, the demand for technology metals and materials for lithium ion battery production is limited as much, if not more, by the existing capacity to produce downstream fine and engineered chemicals and materials than it is by lack of natural resources of these metals and materials.

So, investors should be least interested in junior ventures that are designed only to produce mineral concentrates

More interesting are those ventures that intend to produce and refine the metals and materials downstream to end user ready products from which to manufacture components (cells) of Li ion battery cells.

Most interesting are those projects that are designed to produce finished battery components such as anodes or cathodes.

The more integrated a battery materials producer is the more likely it will be successful.

Globalization will not collapse with a bang, it will recede slowly as the world’s national “great powers” decline, recover, or emerge, and, in all cases, re-align. China is forging ahead to cement itself as the regional power in Southeast Asia, currently, collectively, the site of more than half of global GDP. The USA, still the world’s greatest military and economic power will now retreat but still leads a North American regional hegemony. Europe is at a turning point; it could fracture into its historical mix or re-align as two military Great Britain and France, and three economic powers with the addition of Germany.

The EU and Great Britain are already pursuing natural resource and energy self-sufficiency and the EU has identified multiple domestic (continental European) sources of lithium, the rare earths, and graphite, which were ignored until this year, for immediate developmental focus so that the EU can convert to vehicle electrification and stationary storage as rapidly as possible. Recycling projects for lithium, cobalt, the rare earths, and graphite are already in operation and many more are in process.

North America has no lack of energy storage materials as natural resources; it has up until now lacked the will to capitalize both security of supply and green production systems. This is changing rapidly.

“Global” competition for natural resources for energy storage is well underway, and China is far ahead of all of the competitors. Recycling won’t achieve domestic self-sufficiency anywhere but without it there can never be either security of supply or national self-sufficiency anywhere. The battle is joined.


Jack Lifton

Editor:

Jack Lifton is the Sr. Editor for InvestorIntel Corp. and is the CEO for Jack Lifton, LLC. He is also a consultant, author, and lecturer ... <Read more about Jack Lifton>


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Comments

  • Mike England

    Great analysis Jack. If anyone understands this market it is you!

    November 29, 2016 - 1:17 PM

  • Ann Bridges

    Unfortunately, the great center of business start-ups, Silicon Valley, is paying little attention to the need to create that integrated technology and secure a domestic supply chain. The VC community and entrepreneurs moved to a software and services focus years ago, and now rely on high margins, quick liquidity events, and internet-based scalability to justify high valuations. Perhaps world events will incentivize them to re-invest in hardware again.

    November 29, 2016 - 3:56 PM

  • Jack Lifton

    Ann,
    Could a conference be organized in “Silicon Valley” with the theme, “Sourcing Technology Metals and Materials, The Efficient Market Myth meets Reality”? I would be glad to moderate and to bring speakers who are hands-on players in the real world of secure sourcing of critical materials not academics, governmental mouthpieces, or credentialed sourcing personnel from silicon valley (small caps intended).

    Jack

    November 30, 2016 - 9:26 AM

  • Dr. Mike Hirschberger

    Hi Jack

    As always you have pinned another insightful and timely article. J join you in raising a hand of caution in chasing the Junior “Lithium Rush”. This type of sudden nirvana is path sluen with many a fallen hero-need we remind anyone reading this website.

    But, integration is much more challenging step for Juniors given that the role of an intermediate processor actually requires a desk or two in material science and processing technology. This position is usually relegated to larger corporate entities-many of which already dominate the current supply market for Li.

    FMC for example-cannot be sitting there idly watching a mid stream processing position slip away unaddressed.

    Really your article sounds an alarm to the vulnerability and raise the spectre of a possible ‘shakeout’ of single focused juniors scrambling to the next NR announcing the next world class Lithium discovery.

    Certainly a further fuel to this consolidation fire would be the emergence of a successful business model focused on EV Li battery recycling-as a single business venture or part of and integrated model. As I understand it, Li as a battery metal lends itself to recycling more so than previous battery materials.

    I would venture that Li Battery recycling is a far more attractive business opportunity at least in North America than chasing the tail of Li raw material supplier. But, Asian business models do exist for Li recycling, so anyone planning or in the development phase of Li recycling should be encouraged to press the accelerator as this point in time as this opportunity is not operating in a vacuum.

    November 30, 2016 - 9:38 AM

  • Jack Lifton

    Mike,
    I am in complete agreement with you on all points. We are now beginning to see announcements of “recycling” ventures, which will be judged by the criteria you set out. You are quite right about the Asian predominance in technology materials recycling already operating, and unsurprisingly they are not freestanding but are part and parcel of the operations of “processors” of fine chemicals for battery cell manufacturers. Junior lithium players, as you point out, are ill equipped for the sophistication and manufacturing business savvy required. Besides experienced processing skills they lack sourcing and end-use product marketing skills, but when did that ever stop juniors?
    North America and Europe are primed and ready for an independent technology metals and materials recycling business. 2017 will end with some serious startups in this field. Count on it.

    Jack

    November 30, 2016 - 12:01 PM

  • Tracy Weslosky

    I just could not resist! Jack will be speaking at the 6th Annual Cleantech & Technology Metals Market Summit being held on Monday, May 15th and Tuesday, May 16th from 8AM – 6PM in Toronto. News release out next week! Email neil@investorintel.com if you want more information!

    November 30, 2016 - 3:58 PM

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