OK....Blast off time...
Toyota Tsusho Corporation Acquires 100% Sales Right From Lithium Venture
Jan. 14, 2015 1:06 PM ET | About: Toyota Industries Corporation ADR (TYIDY), Includes: OROCF, TM, TYHOF
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
On the heels of production start up Toyota Tsusho announces they will take all lithium carbonate production in Argentina.
An overview of Toyota Tsusho activities in the lithium production space and a highlight of the Argentine venture.
Why Toyota Tsusho lithium brine venture is strategic to Toyota Motors.
Tokyo based Toyota Tsusho Corporation South Sea Corporation (OTC:TYHOF), a member of the Toyota Group is one of the largest trading companies in Japan and the 6th largest in the world. The company has a worldwide presence through its many subsidiaries and operating divisions which include over 900 subsidiaries represented through 150 offices. The company's main goal is to support Toyota Motor's (NYSE:TM) automobile business and other Toyota Group companies through the supply of strategic material and components. Through a strategic relationship in Argentina the company has recently entered the global lithium supply chain in a very significant way.
A previously established joint venture between Toyota Tsusho and Australian-based Orocobre Limited (OTCPK: OTCPK:OROCF) will begin to see its first commercial activities from the "Olaroz Lithium Project" in the current month. Orocobre is a company who has been aggressively developing the world's next low cost lithium bring project in Jujuy, Argentina. Toyota Tsusho was brought in as a financing vehicle and raw mineral off take partner who assisted with the bankability of the project. Today, Orocobre holds 66.6% ownership of the project, with Toyota owning 25%, and 8.5% belongs to the Juju Province Mining and Energy Company (JEMSE). The gradual ramp up has begun to an ultimate production capacity of that could produce 17,500 tonnes per annum of low-cost battery grade lithium carbonate.
Toyota's Bets Big On Olaroz
In 2012, Toyota Tsusho and Orocobre formally entered this long term relationship with the signing of a definitive shareholders' agreement on the Olaroz Project which allow Toyota Tsusho a 25% interest in the project along with first off take purchase rights. As mentioned above Toyota Tsusho's primary objective is to support the business of Toyota Motors so it is unsurprising that Toyota Motor Corporation holds a 22% interest in Tsusho while Toyota Industries (OTCPK:TYIDY) holds an additional 11%.
In December 2014, Toyota Tsusho provided an update on the Olaroz Project. Here is a notable section of the press release:
Toyota Tsusho has acquired 100% sales rights to the lithium carbonate produced at the plant and aims to build a complete lithium supply chain,extending from upstream to downstream processes, in order to meet the expected growth in demand from Japan and other countries around the world. Shipments of lithium carbonate from the plant to Japan are expected to begin in January 2015.
It is in my opinion that the most significant aspect of the announcement is that Toyota Tsusho has acquired 100% sales right to the lithium output at the Argentine plant. This is a clear indication that Toyota Tsusho has either firm orders from Toyota Motors or has identified other lithium carbonate clients in Japan or elsewhere. This news follows several key developments at Toyota Motor over the past couple of years.
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