Lithium Supply Shortfall Caused by EV Boom Leads Suppliers and Buyers to Brace for Impact
LOS ANGELES, November 21, 2017 /PRNewswire/ --
USA News Group [http://usanewsgroup.com ] - The need to secure the materials in order to manufacture batteries in the age of the electric vehicles (EVs) and smart grid storage is going to require all hands on deck. In particular, the demand for lithium is pushing miners to the limit [http://www.digitaljournal.com/tech-and-science/technology/lithium-under-pressure-as-electric-car-revolution-takes-off/article/507870 ] , and even drawing recyclers to the fold [https://www.reuters.com/article/us-batteries-recycling-analysis/metal-recyclers-prepare-for-electric-car-revolution-idUSKBN1DH1DS ] .
Electric vehicle sales are expected to surpass 14 million per year by 2025, from less than a million currently, and the ramp up is going to be massive.
According to data specialists, Benchmark Mineral Intelligence, the lithium industry will need to produce an additional 81,000 tonnes of lithium per year just to meet demand by 2021. The gap is already incentivizing lithium mining companies including NRG Metals Inc. (TSX.V: NGZ) (OTC: NRGMF), Albemarle (NYSE: ALB), FMC Lithium (NYSE: FMC), Sociedad Quimica y Minera de Chile (NYSE: SQM), and Lithium Power International Limited (OTC: LTHHF).
And while there is a drive from recyclers to try and aid the cause, the reality they're being faced with is a drastic shortage of spent batteries with which to recycle materials from, and make their technology cost-effective.
But the pressure to get lithium into its most valuable battery-ready form is proving to be too much for the price to stay settled. The price of lithium has now jumped over 30%, to a record of $12,000 per tonne.
Keeping up with soaring demand growth has been difficult, to say the least. According to the US Geological Survey [https://minerals.usgs.gov/minerals/pubs/commodity/lithium/mcs-2017-lithi.pdf ], global lithium production increased only 12% last year, with the Lithium-ion battery market now consuming approximately 39% of it.
One company that's ambitiously rising to the supply challenge is NRG Metals Inc. (TSX.V: NGZ [https://finance.yahoo.com/quote/NGZ.V?p=NGZ.V ]) (OTC: NRGMF [https://finance.yahoo.com/quote/NRGMF?p=NRGMF ]). The Canadian-based junior mining company has put together an impressive pair of high-potential South American lithium brine projects within a stone's throw of producing majors, and has already begun aggressively targeting and developing these massive pools to begin satisfying their offtake partners.
They're among other lithium companies that have seen their share prices rise along with growing lithium demand, which include giants Albemarle (NYSE: ALB), FMC Lithium (NYSE: FMC) and Sociedad Quimica y Minera de Chile (NYSE: SQM), and Lithium Power International Limited (OTC: LTHHF).
EV COMPANIES SET TO HOG MORE LITHIUM
Drivers everywhere are noticing the spike in frequency of seeing EVs out on the roads. That number will continue to grow, as governments across the developed world push more favourable regulations, subsidies, and tax rebates.
According to the Automobile Association, data showed that from January through September 2017 [http://www.atimes.com/article/new-energy-vehicles-spark-demand-lithium ], production and sales of new energy vehicles reached 424,000 and 398,000, respectively, with year-on-year increase of 40.4% and 37.72%.
So while new innovations are coming from the battery and EV manufacturers at lightning speed, it's the materials they need to work with [https://arstechnica.com/science/2017/10/what-to-worry-about-when-youre-worrying-about-lithium-ion-batteries ] that are struggling to keep up.
Beyond the notable investment rockstars in the EV space, like Elon Musk and Warren Buffett, companies all over the globe are being incentivized to build more batteries. It's not a lack of will, but of the materials to sustain the push.
The European Commission, through funding its Horizon 2020 program, is dangling a carrot worth EUR350 million (more than USD $413 million) to foster new companies in a sustainable battery industry on the continent.
The UK alone is also doing its own incentives program, through the government's Faraday Challenge [https://www.energy-storage.news/news/uk-storage-gets-cash-boost-as-government-launches-250-million-battery-inves ] -worth GBP246 million (USD $320 million) to achieve the same goals.
And the UK is going to need to keep up, since UK electric vehicle registration has increased by more than 1,800% since 2011 [https://www.fleetnews.co.uk/news/environment/2017/11/01/uk-electric-vehicle-registrations-increase-by-1-800-in-five-years ] . In the EU, by 2030, EVs will be the only new vehicles that drivers will be able to legally purchase [https://www.bloomberg.com/news/articles/2017-11-08/europe-steps-up-electric-car-push-to-close-huge-gap-with-china ] . This is a massive sea change.
These massive investments into the sector don't even include private investment, nor does it count the progress being made in the United States, and China.
NRG METALS MAKING BIG STRIDES
The bulk of the world's lithium supplies currently are coming from Australia and South America. Today, it's Australia's hard-rock mining methods that are only slightly out-producing South America's lithium-brine extraction methods in terms of production.
But it's South America's "Lithium Triangle," and the region's considerably higher amount of lithium reserves that hold the key to the future of the lithium sector.
Witnessing the incredible potential in the region, NRG Metals strategically snapped up two significant projects in lithium-prolific Argentina.
In particular, NRG's flagship Hombre Muerto North Lithium project ("HMN Project"), that's already drawn the attention of Chinese lithium producer Chengdu Chemphys Chemical Industry Co., Ltd ("Chemphys").
Chemphys was intrigued enough by the potential of NRG's HMN Project, that it signed a strategic alliance deal that included financial backing, and a future offtake agreement upon the project's first lithium sales.
"We are very pleased with the investment in NRG by Chemphys and establishing a relationship with a high purity lithium manufacturer in China that supplies its products to the battery and energy markets," said Adrian Hobkirk, President and CEO of NRG Metals after the partnership's latest tranche of fundraising.
On top of the partnered HMN project, NRG has another high-potential asset in Argentina's prolific Puna Region, which is one of the Latin American country's most productive.
NRG Metals is also directing significant effort and investment into its Salar Escondido lithium project. The company is currently ramping up drilling operations in order to further establish management's assessment of the property's very large brine type lithium deposit.
But for now, most of the market's eyes will be on HMN, with its supportive Chinese partners, and its incredibly valuable real estate. HMN shares the same prolific basin as FMC's Lithium Fenix Mine, which has already been in production over the last two decades. And next door to the project is a project that was previously rated as the best undeveloped lithium project in the region- the Sal de Vida Project, owned by Australian explorers Galaxy Resources.
If the lithium supply gap is going to be bridged by any region in the world, it's most likely that it'll come from South America. The Lithium Triangle has the most room to grow, and has projects with the highest blue sky potential in the world. Companies like NRG Metals are in a great position to significantly contribute to the lithium market's overall supply.
POTENTIAL COMPARABLES
Albemarle (NYSE: ALB)
Albemarle Corporation globally develops, manufactures, and markets engineered specialty chemicals. The company offers lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and lithium specialties and reagents for applications in lithium batteries, high performance greases, thermoplastic elastomers for car tires, rubber soles and plastic bottles, catalysts for chemical reactions, organic synthesis processes, life science, pharmaceutical, and other markets; cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications. Albemarle Corporation was founded in 1994 and is based in Charlotte, North Carolina.
FMC Lithium (NYSE: FMC)
FMC Lithium is a subsidiary of the FMC Corporation, which is a diversified chemical company, that provides solutions, applications, and products for the global agricultural, consumer, and industrial markets. FMC Lithium offers lithium for use in batteries, polymers, pharmaceuticals, greases and lubricants, glass and ceramics, and other industrial uses. FMC Corporation was founded in 1884 and is headquartered in Philadelphia, Pennsylvania.
Sociedad Quimica y Minera de Chile (NYSE: SQM)
Sociedad Quimica y Minera de Chile S.A., is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.
Lithium Power International Limited (OTC: LTHHF)
Lithium Power International Limited, a lithium explorer, engages in the identification and acquisition of lithium assets in Australia and South America. It holds interests the Maricunga lithium brine project that is located in Chile; Centenario Lithium Brine project located in north-west Argentina; and Greenbushes Hard-Rock and Pilbara Hard-Rock projects in Western Australia. The company is based in Sydney, Australia.
For a more in-depth look into NGZ you can view the in-depth report at American News Group: http://usanewsgroup.com/2017/11/19/junior_lithium_players_are_soaring-2
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