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Jack Lifton
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Jack Lifton is an Independent consultant and commentator, focusing on the market fundamentals and future end use trends of the rare metals. He specializes in the sourcing of nonferrous strategic metals and on due diligence studies of businesses in that space. His work includes exploration,... More
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Technology Metals Research
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  • Attention Hummer And Tesla Electrification Converters: There Isn't Enough Lithium Produced For Both You And The Rest Of Us

    A recent article in Wired entitled Hybrid Hummer promises 100 Miles Per gallon made me think.

    The celebration of the proposal of using of public money for the creation of sophomoric toys for elites ignores the fact that the supply and demand of lithium is a zero sum game. When the demand for high end toys for people with unlimited discretionary spending ability is high the demand for practical devices for the person of average means will go unfilled. Each 53 kWh battery for a Hummer, for example, will, if a lithium-ion type, use 53 kg,, or 116 lb, of lithium carbonate; it would cost today as much as $53,000 at retail just for this battery!

     
    This article in Wired says that an internal-combustion-en... Hummer fitted as a hybrid with a 53 kWh lithium-ion battery weighing (the battery that is) nearly 1/2 ton will deliver performance in range, speed, and acceleration like the same Hummer fitted only with a large V8 gasoline fueled internal combustion engine but give the overall equivalent of 100 miles per gallon of fuel consumed.

    Let's look at some of the cost figures associated with this "conversion."

    1. A 53 kWh lithium-ion battery today will cost 1000.00 per kWh to buy,
    2. The 53 kWh lithium-ion battery will require 53 kg,, 116 lb, of lithium carbonate to construct, and
    3. The 53 kWh battery will weigh nearly 1000 lbs.

    In 2008 there were 27,600 metric tons of lithium mined in the world; this equates to 165,600 metric tons of anhydrous lithium carbonate.. Of this total 25% was consumed in the production of rechargeable batteries for personal electronics, portable computers, and power tools.  The USGS figures for 2008 indicate that there may have been a surplus of lithium of as much as 5000 metric tons, 30,000 metric tons of lithium carbonate, from the 2008 production. Let's assume that this is true.

    Let's also assume that the Tesla automobile uses about the same size battery, although in fact it uses a smaller battery of only some 43 kWh capacity.

    This means that if there were indeed a surplus of 30,000 metric tons enough lithium carbonate was available from the 2008 production to make a grand total of 250,000 Hummers and Teslas and not any other battery powered car whatsoever. Each Tesla or Hummer would require the use of enough lithium to make 3 Chevrolet Volts, so if we made no Hummers or Teslas we could make 750,000 Chevrolet Volts from the surplus.

    Last year there were produced around 65,000,000 cars and trucks altogether globally. The highest number of electrified cars, of the size of a Chevrolet Volt,  using lithium ion batteries that could have been made would have been around 1.2 percent of them if the surplus of 30,000 metric tons is an accurate figure.

    Now let's look at what would be the case if there were no surplus of lithium in 2008, If demand equaled supply.

    In that case lithium-ion battery cars could only be built with new incremental production of lithium, and since there is steady growth in the existing categories of uses for lithium the car battery production would have to be at the expense of the use in an existing category.

    The solution to this problem of course would be to increase lithium production, but this is a slow process of first meeting regulatory requirements and then making investments of time and money to develop mines and separation and refining facilities while building battery factories and hiring and training workers in order to wait for raw material flows to start. Simultaneously automotive supply and assembly plants would have to be built and staffed so the bodies could be ready once the power trains were available.

    This is a huge and international type of cooperation that has never before been accomplished in a fluid competitive atmosphere of proprietary technologies and processes.

    In any case let's assume that all of this can be done and that lithium production can be quadrupled in the next 10 years. Let's say that in this case we could then have 120,000 metric tons a year of new lithium carbonate production available for batteries, and we could build 3,000,000, Chevrolet Volts or 1,000,000 Hummers and Teslas altogether in 2019.

    It is projected now that the global production of personal size motor vehicles for 2019 will be between 125 and 150 million units. Lithium mining production optimistically can produce only enough material in 2019 to make a maximum of 2%  of that total as electrified Chevrolet Volt size and performance cars, or 2/3 of 1% of that total as high performance Hummer or Tesla size and type vehicles.
     
    Let's be more optimistic and say that 60% of all of the lithium produced in 2019 will be used to make electrified cars of the size and performance of the Chevrolet Volt. Then the maximum number of Chevrolet Volt size and performance cars that could be built would be 9,000,000 or the industry could produce 3,000,000 Hummers and Teslas in 2019 or a range from 2% of the world's production to 6%. The truth is that the Chevrolet Volt's limited range and performance is due to the small size and capacity and capability of its battery, so lest strike a medium and say that a Chevrolet Volt size car with 3 times the range and performance characteristics of the proposed 2010 model would be the production model of choice in 2019. In that case it would need a battery three times larger thus bringing the maximum number of Chevrolet Volts to be built back to 3,000,000 due to resource production limitations. Thus the totasl proportion of electrified vehciles using lihtium-ion batteries in the 2019 global fleet would be less than 2%.

    Is there any doubt that in 2019 electrified cars using lithium-ion batteries will only be for the few and/or the very privileged?

    If so, is there any point to using public money to develop them?

     
     
     
    Apr 27 9:54 PM | Link | Comment!
  • Diasappointed Expectations: The American Market and the Electric Car

    By world standards, Americans live, on average, geographically far apart and expect to cover long distances in a hurry. No other country in history has had its personal travel ethic organized in this way. On top of this unique approach to spreading out and moving fast America has been the victim of a voracious OEM automotive industry that ran to extinction the logical build up of mass transportation among its cities other than in a narrow corridor on the east coast within which the elites of finance and government lived without any interest in the effect of the absence of mass transportation in "flyover" country. To this day these same elites ignore the effect of legislating cost onto personal transportation for the ordinary person just so the elites can feel good about "being green" as well as being ,economically, just plain stupid. The idea of the electrification of the motor car is actually too late and too narrow to do much good for the majority of Americans.

     
    The electric cars being developed today for the mass market are essentially inner city mass transportation devices produced for individual or small group use.

    They are thus simply replacing the internal combustion engine, ICE, powered cars used today for that same purpose.

    It is interesting that we do not hear about the electrification of long distance freight hauling road using vehicles, which produce, with their huge gasoline and diesel fueled ICEs probably most of the "pollution" generated by ICEs. Certainly, in pollution creation , there is no contest between the production of an "18 Wheeler" carrying 22 tons of champagne and caviar to Palo Alto, California against even dozens of cheap, poorly maintained, private cars carrying low paid workers from cheaper places to live than the silicon valley in order to clean the toilets and cut the grass of the offices and homes of those who live in silicon valley and drive enormous high powered ICE powered cars as positional goods and status symbols each producing more pollution than a fleet of small cars.

    An orderly electrification first of the largest means of necessary transportation, mass transit both for people and for freight, followed by a condensing of the living space taken up for no purpose other than to show off personal wealth is step one. Then short range electric cars will make sense if they are for areas where it is too expensive to place mass transportation.

    The government of the USA has its priorities ass backwards it is bent on simply replacing ICEs with electrified private motor vehicles. This is too expensive and highly impractical from the points of view of critical metals resources, power production, power distribution untilization and capacity (for charging), and the need for a "smart" grid to be built

    We need to prioritize our reduction of the use of fossil fuels so that we make a logical transition to an electrified transportation economy.

    We haven't even started, and the pathetic overpriced impractical toys like both the Tesla nd the Volt are simply a waste of time that will actually add to our waste of fossil fuels by staving off a planned transition in which everyone has to give up something to gain something else. It is not class warfare I advocate it is the elimination of blind arrogance and stupidity in social planning.

    Politicians are too frightened of losing their jobs to tell their constituents that in order to accomplish environmental goals we all have to change the way we live. This inconvenient truth is not popular.

    Apr 25 12:49 PM | Link | Comment!
  • MolyCorp Issues Letter of Intent For The Purchase Of Great Western Minerals Group; A Rare Earth Play Gets Legs

    It was announced on April 20, 2009, by privately held MolyCorp that it had negotiated a “Letter of Intent”with Canada’s Great Western Mineral Group to buy a controlling interest in that company.

    What possible advantage can there be for MolyCorp, which was privatized in 2008 by a group of venture funds, one, Resource Capital,  specializing in mining, and which was underwritten by Goldman Sachs(NASDAQ:GS), in acquiring the publicly traded Great Western Minerals Group, GWMG,  (http://www.gwmg.ca)? It may be that GWMG's business model and operations  contain something that completes MolyCorp's business model for its Mountain Pass, California, rare earth mine, so that the sum of the parts is greater than the whole.

    MolyCorp was purchased and privatized from Chevron(NYSE:CVX) Mining in 2008 by a group of investors with specialized knowledge of rare earth mining, which was backed by Goldman Sachs, and included an entrepreneurial individual, who I think, must have been the driving force behind the deal.

    Great Western Minerals Group was, prior to 2001, Great Western Gold, which then became Great Western Minerals Group. Great Western Diamonds, a related company,  was a later spin-off of the diamond properties that Great Western Minerals Group held .

    Great Western Minerals Group has concentrated on trying to raise the money to develop a rare earths mineral body at Hoidas Lake, Saskatchewan in Canada. In 2007 GWMG purchased, from Energy Conversion Devices, Inc.,(NASDAQ: ENER)  the facilities of Ovonic Materials in Troy, Michigan, and in 2008 it purchased the operations, facilities, and business book of Less Common Metals, Ltd. of Birkenhead, UK, near Liverpool. Ovonic Materials was renamed Great Western Technologies, Inc.,(GWTI) and the plan was to merge the two operations under a common management as a wholly owned subsidiary of GWMG with the purpose of manufacturing specialty alloys based on rare earth metals. Less Common Metals was already a major producer of the powdered magnet alloys, neodymium-iron-boron and samarium-cobalt. GWTI was equipped to make the electrode alloy for nickel metal hydride batteries and other hydrogen storage alloys as well as rare earth containing aircraft alloys.

    The GWMG business model devised by its founder, Gary Billingsley, was called "mine to market," which meant that the rare earths from Hoidas Lake, first, and other properties later, would go directly to the GWTI locations for manufacturing rare earth magnet alloys and, perhaps, battery electrode materials, so that GWMG would be the only vertically integrated producer of rare earth based magnets and alloys in the world outside of China.

    The problem for GWMG was, as with all “exploration” companies, undercapitalization. The mining properties were not developed as of yet, so that GWTI could only process rare earths bought from China. Apparently without its own mining operations GWMG was not competitive as a magnet alloy producer. The investment climate was not inclined to fund the development of the mining properties, and finding itself challenged to maintain working capital GWMG decided to discuss mutually beneficial opportunities with MolyCorp, which could buy all of the shares of GWMG on the day before this announcement for under $10,000,000, so that control of the company could be had for just over $5,000,000.

    Why did MolyCorp, which has its own production startup problems, do this? The announcement speaks of a MolyCorp "mine to magnet" strategy, but MolyCorp has just now come up with this strategy, at least publicly, so it would have had to acquire or build and validate a facility and find a market for the output of the facility in order to make the "mine to magnet" model work. It was far cheaper to buy GWMG and acquire what most people in the magnet business consider to be a first class magnet alloy producer run by a first rate technical manager, Mr. David Kennedy.

    Even though MolyCorp will now have to assume the liability of paying the remaining indebtedness incurred by GWMG when it bought LCM as well as any other debts it probably got a bargain if, and only if, MolyCorp can begin processing ores  at Mountain Pass to feed the magnet alloy production.

    It is not clear whether or not Mountain Pass has been allowed by California regulators to reopen its mining operation  due to environmentalist resistance. But the rare earth ore processing plant is in operation, although at a low level, and even now produces neodymium-praseodymium materials for magnet use.

    One solution for Mountain Pass would be to upgrade the size and capacity of its ore refinery and process concentrates for other miners, outside of China, and take its payment in kind so as to feed its new magnet alloy division. The problem with this approach is that it may be putting the cart before the horse.

    There is today almost no non-Chinese rare earth ore production. And even if MolyCorp were to find the money to invest in the other rare earth properties in North America, Australia, or Africa to bring them into production there are two problems:

    1. No two ore bodies have the same process chemistry, so that each ore body would have to be studied to develop a process compatible with MolyCorp's facilities and processes in California, this could be very expensive and time consuming, and

    2. All non Chinese rare earth ores that could be produced today contain radioactive thorium and probably uranium, so that if these were not removed at the mine site they probably could not be shipped to California.

    When Goldman Sachs withdrew the funds it had raised for Australia's rare earth startup, Lynas, (ASX: LYN)  last month it caused Lynas to cancel the construction of what would have been the largest rare earth ore processing plant in the world outside of China. Today the only possible existing site for processing large quantities, reasonably soon, of rare earth ores outside of China would be at Mountain Pass. If Goldman Sachs decides that the risk of being stopped by California's regulators can be overcome it may now be shifting that capital formerly at Lynas to MolyCorp for the ramping up of the refinery there.

    There is an active  movement in Washington, DC, to reconsider the mining of strategic and critical metals within the US as a security issue for the armed services. This is on top of the realization on Wall Street, Bay Street, Washington, and Ottawa that there will be no development of wind generated energy without the guarantee of a large supply of neodymium. These may be the hooks hat MolyCorp is using to get Goldman Sachs to finance Mountain Pass, and the vertical integration of MolyCorp through the acquisition of GWMG's magnet alloys production capabilities may be key to this strategy.

    Watch for MolyCorp to now try to buy or finance the development of the rare earth properties of publicly traded Canadian junior Avalon Rare Metals (AVL:TSX), the other Canadian, and even of privately held Thorium Energy, inc., the large rare earth deposits of which are in Idaho and Montana.

    Even Lynas may now be looking for a home for rare earth ores from its Mt. Weld operations until it can refinance its aborted refinery in Malaysia.

    This is the most action in rare earth mining in North America in a long time. Now if only someone would put a shovelful of ore into the hopper.

     

     

    Apr 21 9:48 AM | Link | 3 Comments
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