Lithium story gets stronger as China and Japan nail down suppliers – and watch South America
It had has some bad publicity (think lithium-ion batteries and the Dreamliner, and Airbus’s decision to avoid the battery in its new A350). And it has been the subject of widely divergent opinions on whether there will be a shortage or a glut. But it is No. 20 on the British Geological Survey Risk List of metals, so it’s of interest to us.
And lithium seems in strong demand and, as with rare earths and graphite, new technologies are emerging each year. We have already seen how the lithium-ion battery grew off the back of lithium’s high energy density and is now vital to hybrid vehicles. There is growing demand from a range of technologies: electrical grid storage, iPods and iPads, power tools, cell phones and computers. Panasonic recently announced it was expanding production of the batteries.
General Atomics is to provide these batteries to the U.S. Navy for its new mini-submarines which have been designed to transport troops such as Navy SEALS who make their approaches to mission areas by sea; the submersibles allow them to arrive near shore without having to exhaust themselves. The lithium-ion batteries are also used in unmanned aircraft.
China is the world’s largest consumer. It has substantial reserves of its own, but has also been cementing relationships with miners around the world. This week Canada Lithium Corp (TSX:CLQ) announced it was to receive a $5 million pre-payment from Tianjin Products and Energy Resources Development for off-take from the mine. Canada Lithium is commissioning its project near Val d’Or in Quebec. Production is expected early next year.
Japan is also moving to secure reliable supplies. Toyota Tsusho has become the first Japanese company to make a capital investment in a lithium project, taking 25% of the Salar de Olarez brine project in Argentina in partnership with Orocobre (ASX:ORE). It hit on this project after studying various lithium plays around the world and construction of the plant began last December. Annual production will be 17,500 tonnes — enough to meet all Japan’s domestic demand.
Another South American development was the signing last week of a deal to build a lithium battery plant in Bolivia. An agreement was signed between the Netherlands and Bolivia and involves working with Bolivian state-owned mining company Comibol. The Dutch have beaten out other foreign interests who had their eyes on the enormous lithium resource contained in the brines of the salt lake, Salar de Uyuni, which covers more than 10,000 sq km. The reason they did this was they met La Paz’s non-negotiable position that the processing and industrialisation of the lithium be done on Bolivian soil. The Dutch will also train Bolivians at Delft University of Technology near The Hague.
Get our daily investorintel update
This development will throw further focus on South America. Although definitive figures are not available, it is generally accepted that at least half the world’s resources of lithium are to be found in three countries: Argentina, Chile and Bolivia, many of them on salt flats or salars.
Bolivia’s Salar de Uyuni is believed to be the world’s largest undeveloped lithium brine project in the world
A recent study by Toronto-based brokers Euro Pacific says South America’s lithium basins are found mainly in the 400,000 sq km Puna Plateau which extends into Atacama in northern Chile, and the Hombre Muerto in northwest Argentina, and from there extending west into Bolivia.
Chile actually has the world’s largest lithium-producing brine operation, the Salar de Atacama in the Antofagasta region. Its resource is estimated at 6.8 million tonnes of contained lithium. Other regions being investigated include Salar de Maricunga by Li3 Energy (OTCQB:LIEG) and four salts lakes by Talison Lithium, based in Perth, Australia.
And a word of caution: as Euro Pacific points out, there are many lithium deposits around the world but many are not economically viable. Some of the brine and hard rock ones have high levels of impurities that make processing very expensive. Others are in isolated locations that would mean high infrastructure outlays. And, in the case of brines, you need to have weather that is conducive to evaporation processes.
InvestorIntel is a trusted source of reliable information at the forefront of emerging markets that brings investment opportunities to discerning investors.