The Energy Report: Jonathan, please tell us about lithium and its core uses.
Jonathan Lee: Lithium metal is used mainly in the glass and ceramics industry and in lithium-ion batteries, which, collectively, comprise about one-half of all lithium used. The other remaining uses are anything from greases, casting and aluminum production to pharmaceuticals. It's a very versatile metal.
TER: What is the investment thesis for lithium?
JL: Lithium is an important component of the batteries that power electric vehicles (EVs). We believe in the electrification of vehicles over time. It's a transition; Nissan's LEAF has come to commercial production, the Tesla Roadster has come out and the Chevy Volt also has come into commercial production. We focus on the metals that play a role in the electrification of our transportation mechanisms and associated infrastructure. Obviously, lithium came up as one of the key metals that will be used in this revolution.
TER: The green revolution?
JL: The green revolution is a nice way of saying it. Demand for lithium will continue to grow at a much higher rate than gross domestic product (GDP) over the next 10 years.
TER: What has lithium's supply/demand curve looked like during the past few years?
JL: Lithium experienced a dip in 2009, but production has been around 120,000 metric tons (120 Kt.) lithium-carbonate equivalent since 2008. That's equal to about 23 Kt. lithium metal. In 2009, lithium demand, along with many other materials, dropped pretty severely to under 100 Kt. Estimates for last year, 2010, range from less than 100 Kt. to about 120 Kt. It's hard to get very exact numbers because it's a fairly opaque market.
Four major players dominate the market: Sociedad Química y Minera de Chile S.A. (NYSE:SQM; SSX:SQM-B, SQM-A), FMC Lithium Corp. (NYSE:FMC), Chemetall, which is a unit of Rockwood Holdings Inc. (NYSE:ROC), and Talison Lithium Ltd. (TSX:TLH). We estimate there was about 108 Kt. tons in 2010. FMC, a large lithium miner in Argentina, estimates it at 100 Kt.
TER: Do you think the lithium market will become more transparent and perhaps trade on the LME, for example? (more)
We always love to find next promising play like Orocobre just before Toyota investment - now Mr Market gives us this opportunity. Rodinia Lithium has received investment from Chinese Shan Shan last Fall and this week International Lithium has announced that Chinese Jiangxi Ganfeng Lithium buys strategic stake in its IPO. Recent M&A activity in Lithium space shows that every significant end user would like to have secure supply of Lithium for this Green revolution.
ReplyDeletehttp://sufiy.blogspot.com/2011/04/energy-report-lithium-powers-green.html