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2016-05-02

Companies scramble to secure lithium supplies as “white petroleum” prices soar




The hottest commodity on the planet right now is not oil or coffee but lithium, according to a recent article on OilPrice.com. The ballooning battery market is expected to drive demand for the light white metal, and mining companies, battery producers and automakers are scrambling to secure supplies.
Goldman Sachs predicts that for every 1% rise in EV market share, lithium demand will rise by 70,000 tons per year. The company expects the lithium market to triple in size by 2025 if EV sales continue to grow.
According to The Economist, the price of lithium carbonate imported to China doubled in November and December of last year, reaching $13,000 per ton.
Despite the apocalyptic headlines about trading one commodity addiction for another, lithium is not comparable to petroleum. From the standpoint of an automaker, it’s more like steel – a material that’s used to build a vehicle and can later be recycled, not a fuel that is consumed. And, by most accounts, it’s not particularly scarce. However, there’s no question that demand is on the way up, and some believe that existing sources of supply won’t be sufficient.
The rush is on in Nevada’s Clayton Valley, the only current lithium-producing area in the US. The lithium exploration and development company Lithium X recently purchased a potential lithium lode there, just three hours south of Tesla’s Gigafactory. The company is also exploring in the Lithium Triangle area of Argentina, which is believed to contain up to 128 million tons of lithium carbonate.
“Right now, there is a lot of ‘smart money’ getting in on the lithium land rush. The big attraction is our lithium plays in Argentina, which is ground zero for the commodity in South America,” Lithium X Chairman Paul Matysek told Oilprice.com.
Four companies currently dominate the lithium market – Albermarle (NYSE:ALB) in Chile and Nevada; SQM (NYSE:SQM) in Chile; FMC (NYSE:FMC) in Argentina; and Sichuan Tianqi in China. Other players are joining the fray.
A Toyota joint venture has been mining Li in Argentina since 2013. Argentine Mining Secretary Jorge Mayoral recently said that “all the big auto makers have been present in Argentina trying to get a foot in lithium development.”