Joe Lowry provides a very sobering outlook for the lithium supply side for the next ten years. He estimates that demand will rise 150% from 160k T of LCE to over 400k T per year - I can even call it conservative in case if electric cars really will take off in the next few years. China is rapidly growing into the world largest market for electric cars matching its biggest auto-market size and state "War on Pollution". Chinese companies are controlling now 75% of lithium hydroxide production. Where all this lithium will come from? Joe is pointing out to the problems in the lithium sector with unproven technologies and junior miners without access to the capital to develop new projects. This is where International Lithium is standing out on its own. Ganfeng Lithium finances our J/V project developments in Ireland and Argentina and we have access to the latest technology from this leading lithium materials producer from China. Now our bulk sample from Mariana project in Argentina is being analysed for the potential lithium and fertiliser products by Ganfeng in China at its R&D facilities.
Dump The Pump: Warren Buffett And Elon Musk To Spark A Lithium Boom.
I find it quite symbolic that Oil Price has published this article by James Stafford. Our lithium story is getting on the investors' radar screens, the process is slow and masqueraded by the carnage in commodity sector. People and companies who are building their portfolios cannot imaging more opportune time: Elon Musk and Warren Buffett are making the broad market appeal for electric cars and solar energy, but lithium market itself is still full of smoke and mirrors. And now just wait for the official confirmation from Apple about electric iCar to spark all electric cars market and hedge funds start fishing upstream all supply chain. This is where Lithium comes into play as the strategic commodity, where security of supply is the most important now. The disparity in commodity and technology valuations creates great opportunities for those who can think long-term and cherry pick the best assets at the rock bottom valuations. Where to go: always do your DD and follow the smart money from industry insiders. I will provide links for your research and share all publicly available information about International Lithium and our strategic partner Ganfeng Lithium. Please do not hesitate to contact myself on any of the social media platforms or at International Lithium. We are here to make this rEVolution happen. Dump The Pump. Read more.
Latest Views of Tesla's Massive Gigafactory And Lithium Demand Picture.
Now we can better appreciate the scale of this construction. Tesla Gigafactory will be the tipping point for the lithium battery production and will drive prices lower to the magic $100 per kWh, when mass market for electric cars with Tesla Model 3 will be started. This is just the first one for Tesla and other Megafactories are coming being built by Foxconn, LG Chem, Boston Power, BYD and A123. Where lithium will come from? Tesla is supplied with lithium cells from Panasonic now, Panasonic is already buying lithium from Ganfeng Lithium. International Lithium is building the supply chain for lithium with Ganfeng Lithium in Ireland and Argentina, where Ganfeng finances our J/V projects. You can find more research on Lithium supply and demand below. Read more.
International Lithium and Ganfeng: China's Lithium Battery Market to Quadruple to $8.7 Billion in 2025.
This is where we are going: International Lithium is building the supply chain for Ganfeng Lithium and is part of this vertically integrated lithium battery business in China. Ganfeng Lithium finances J/V projects with International Lithium in Ireland and Argentina and we have the very encouraging news coming out. Western Lithium has taken out Lithium Americas with Cauchari lithium brine project and as you can see on the map below we have just a very few Salars left without ownership by major lithium player. Read more.
Global Lithium Supply and Demand - the Next Ten Years
Between one and two billion dollars of investment will be required to keep lithium supply in a marginal balance with demand growth over the next ten years.
Below is one scenario which is less aggressive than many on the demand side and allows for approximately a doubling of supply in Chile, a new brine resource in South America outside of Chile and more than a doubling of capacity in China. These capacity adds are far from certain. The only certainty is that these projections are not exactly correct; however I am willing to bet they are close.
Only the blue portion of the bars (capacity in Chile) can be considered world class. Tier 2 brine (mostly in Argentina) is significantly higher cost than world class. Tier 3 brine and spodumene have a similar cost structure which is more than double world class brine for lithium carbonate.
Fortunately lithium is not a major cost driver in most applications so the growth of high cost capacity will not limit demand - only overall lithium profits. Lithium prices are on the rise and the upward trend is likely to continue based on tight supply and high cost capacity additions. Albemarle/Rockwood and SQM are well positioned to grow their upstream lithium margins in the coming decade.
A plethora of junior mining companies talk about using new technology to convert either mediocre brines, spodumene or hectorite clays to lithium products at a low cost - don't bet on it. They have been talking for years.
Simbol Material's project to produce lithium from the geothermal brines used to produce electricity in Southern California seemed to hold great promise but investors continue to "kick the tires" rather than put up the capital required to test the innovative process technology.
Over the past ten years Chinese investors, who require lower rates of return than their western counterparts, have kept lithium supply in balance with demand by building several conversion facilities; however the supply of spodumene from Australia that feeds these plants has limits.
Unfortunately China's domestic spodumene and brine resources are high cost. Nevertheless, look for Tianqi, Ganfeng and Sichuan Yahua to continue to find creative ways to meet the rapidly growing demand in China likely with investments outside the country.
Emerging large consumers of lithium such as Tesla seems to be believe if "they create the demand, the lithium will come" but that belief seems risky at best.
Disclosure: I am/we are long TRRXF, ILHMF.