"Boom Spurs Lithium Rush In Europe"
Excerpts from today's WSJ, page A8.
* "Rocketing demand and prices for lithium, coupled with China's stranglehold on supply, are reviving interest in mining Europe's reserves of the coveted metal some call white petroleum;
* Prices for lithium used in the batteries that power anything from mobile phones to Teslas more than doubled to $21,000 per ton in the past two years;
* Analysts expect the lithium-ion battery market to surpass$90 billion by 2025 as electric vehicles become commonplace and growing use of wind and sun power forces utilities to invest in large electricity storage facilities;
* But while European businesses use25% of the world's lithium, a group of Chinese companies has secured a potential stranglehold on the Australia and South American mines that produce almost all of the world's battery grade metal. That has sent a small group of pioneers on a race to reopen European mines where the conditions that gave rise to such metals as tin have left lithium-rich rocks and hot brines:
* Chinese companies dominate global lithium supply. Last year, auto maker Great Wall Motor bought a $28 million stake in Pilbara Mineral, an Australia lithium mine and signed a contract for delivery of 150,000 tons of lithium-yielding spodumene from the company's mine in Western Australia;
* Chinese firm Tianqi Lithium has attracted regulator attention in Chile due to its $4 billion bid to buy a stake in SQM (LAC's partner), the world's second biggest lithium producer. Combined, the companies would control 70% of the world lithium market; and
* With Europe's car makers now set of mass-producing electric vehicles, the need for the continent to secure its own lithium reserves is gaining urgency. Using historic mines saves a huge amount of time and money compared to digging a new mine.
My take:
American EV manufacturers, including Tesla and GM, will also want to avoid a Chinese stranglehold and secure their own lithium reserves IN THE USA. And what better spot than LAC in Nevada, where no mine is needed because its shovel ready and its the third largest lithium deposit, of extremely high quality, in North America?
And if, as some so-called experts (Morgan Stanley) have prognosticated, there's a danger of supply exceeding demand in the Li market, why the mad rush to re-open new mines in Europe? IMHO, the answer is clear -- no one has a realistic handle on how high Li demand will go and how soon. The Chinese do not operate a market economy. It is based on government decrees. Imagine if the Chinese govt. decides (because of the severe pollution there) to up its mandate on all cars being EVs. And imagine if the Indian government does the same thing? As far as I know, there has been no calculation of Li demand based on those very possible events, but it would be an incredible percentage ramp-up from current demand, or even the demand currently being considered for 2020 and 2025. In my view, there simply is no way that anyone can accurately gauge the demand for Li through 2025, a mere 7 years from now.
Stay the course all; it's going to be a long and extremely profitable ride for those that do (of course, that's just my opinon; I could be wrong).
LAC longgggg!!!
P.S. BTW, on April 13th, Motley Fool reported that Citigroup analysts reported that it believes "the lithium market is doing just fine, that Albemarle [and other lithium producers] will do fine as well, and that [investors] should buy." According to Citi, "we do not see a collapse in contract Li carbonate or hydroxide prices as predicted by the bears."
GLTA!!
