EDITOR: | May 12th, 2015 | 4 Comments

The Lithium Connection: Why Europe eyes South America

| May 12, 2015 | 4 Comments
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LithiumBolivia has long been waiting in the wings to become a lithium power. Now it seems to be on its way with two German and one Swiss company bidding for the right to build a lithium processing plant in the South American country. The government in La Paz announced that only these three firms [Germany’s K-Utec and Ercosplan, with Swiss SEP) had met Bolivia’s technical specifications.

This development is particularly significant from Europe’s point of view. The European Commission’s European Innovation Partnership on Raw Materials is working on lithium extraction technologies with the aim of being ready to go in 2018. The EC has set out that ”a successful project will secure a sustainable long-term supply of lithium in Europe and allow for strong development of the downstream applications such as the high growth potential battery market and the ceramic industry”.

It goes on to say that project will be focused primarily on brines from South American salt lake aquifers (and secondarily on geothermal; brines in Italy, France and Germany). Europe produces no lithium — but it does consume 24% of world output.

The Bolivian government wants to develop lithium mining at Salar de Uyuni, a vast salt flat in the Bolivian highlands. According to the German broadcaster, Deutsche Welle, Bolivia plans to spend €570 million ($620 million) to get lithium mining and then processing into lithium carbonate production by 2020 to target supplying the growing demand for batteries.

It has been reported elsewhere that President Evo Morales wants Bolivia’s lithium reserves to be processed and industrialized at home and he has said foreign partners will be brought on board only if they agree to build a lithium-ion battery plant and electric cars in the Andean nation. The processing plant seems to be on its way, although you would have to think that an electric car industry is something of a stretch; Brazil maybe, but Bolivia?

A Chinese-built lithium-ion battery pilot plant — intended primarily for the training of Bolivian technicians — was inaugurated in February 2014. InvestorIntel reported in September 2013 that Chinese technicians from Linyi Gelon New Battery Materials had arrived in the South American country to help set up the lithium project

Fortune magazine reported last month that Bolivia’s main problem has been finding the right experts. “The Bolivian state has faced serious management and technical hurdles in extracting the massive, high-density lithium deposits in the other-worldly salt flat Salar de Uyuni,” the magazine noted, adding that the China’s lithium producers Quinghai Lithium and Citic Guoan MGL had also faced technical issues with the salt lakes neighbouring Tibet and had halved the estimates of annual production.

As I noted in a 2014 post on InvestorIntel: “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.” Deutsche Welle notes that the push for electric cars in China would ensure a very large market for batteries within a few years.

It looks as if the Europeans are going to be making the running in Bolivia instead. The EC raw materials partnership is working on a new method of extracting lithium from brines to avoid having an impact on ground water supplies. And it aims to be more efficient: conventional processes of evaporating water from brine achieves about 50% in terms of lithium recovery ratio; the Europeans are aiming at 80%.

Footnote: As the German broadcaster explains, the salars (“salt lakes” in Spanish) are what is left over from a series of enormous prehistoric lakes dating from the most recent Ice Age. After those lakes gradually dried, they left the Andean salars with their salt and brine deposits.


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Comments

  • Simon_Strauss

    Hi Robin if the CSIRO’s prediction* that there might be an El Nino this year or in 2016 comes to fruition, there is a possibility that the changes in rainfall and cloud cover over the “lithium triangle” could cause a swap back to hard rock lithium producers. That would likely put Australia** in the spotlight for a couple of years.
    * https://theconversation.com/will-last-years-predicted-el-nino-happen-this-year-40839
    **http://www.australian lithium.com
    This link will show you what happened during the 1997-8 El Nino: http://www.earthweek.com/online/ew070223/ew070223e.jpg

    May 12, 2015 - 2:28 AM

  • Jack Lifton

    Robin,

    The lesson of your article is that China and the EU, the 2d and 3rd largest economies in the world are organized to plan strategically (i.e., for the long term) for the protection of their manufacturing industries by actively encouraging their business entities to find secure sources of critical raw materials. The USA by contrast simple muddles through with Wall Street pulling Washington’s strings to enrich itself by financial engineering with no thought whatsoever for the future of the rest of us.

    By the way I note that notwithstanding the commenter’s fear of El Nino, it hasn’t rained in those deserts for thousands of centuries. Perhaps he could profit by opening a raincoat emporium in the Bolivian salars. Of course parasols would also be a good business.
    Jack

    May 12, 2015 - 11:42 AM

  • Simon_Strauss

    Jack I’m happy to wait and see.

    May 13, 2015 - 4:56 AM

  • Simon_Strauss

    But in the meantime some might to look at what is currently happening:

    On the lithium side of things, SQM reported last week that it had halted some of its operations in Chile’s north as a preventative measure due to heavy rains and flooding. No damages or injuries were reported, but the company said in its release that road conditions were making it difficult to transport workers to and from mine sites.

    Moving over to Argentina, FMC said via email that while the Salar del Hombre Muerto has “been hit with rainfall that is nearly 15 times the monthly average for March,” the rain hasn’t significantly impacted the company’s operations. However, FMC added that it has been “affected by transportation issues with raw materials going to the salar and causing some delays of finished products crossing the mountain passes to the port.” The company continues to monitor the situation.

    Orocobre chairman James Calaway said that the heavy rains experienced in the north of Chile haven’t reached Olaroz or Orocobre’s operations. As with FMC, he stated that the company’s borate operations further south have seen greater-than-expected rainfall, but that it hasn’t had a significant impact on those operations.
    http://lithiuminvestingnews.com/10454/chile-floods-heavy-rain-lithium-supply-sqm-fmc-rockwood-albemarle-orocobre/

    The near past:
    “In 2013, Galaxy sees some upwards price pressure on lithium carbonate due to disruptions in South America due to abnormal weather events. At the Salar del Hombre Muerto in Argentina, 110 mm of rain fell in the first 45 days of the year. Another producer has experienced supply disruptions due to abnormally heavy snowfall.” http://www.galaxyresources.com.au/Investor/gxy_ar_dec2012.pdf

    May 13, 2015 - 9:50 AM

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