NetworkNewsWire
Editorial Coverage: Growing demand for powerful batteries,
coupled with attempts to break China’s hold on the market, are
leading to growth for Canadian lithium explorers.
- Lithium is essential for batteries used in personal electronics
and electric vehicles.
- The recent rise of electric cars, together with faster than
expected production of other electric vehicles, is creating a huge
rise in demand.
- The market’s current top global suppliers are China and
Chile.
- Emerging companies in Canada are starting work on alternative
sources of lithium that could reduce reliance on these two
countries.
One of the companies setting up new Canadian mines is
QMC Quantum Minerals Corp. (OTC: QMCQF) (TSX.V: QMC) (FSE:
3LQ) (QMCQF
Profile), which is using existing infrastructure in
Manitoba to quickly get production up and running.
Albemarle Corp. (NYSE: ALB), the world’s largest
lithium manufacturer, has seen a surge in production that has
almost doubled its earnings. Nemaska Lithium, Inc. (OTC:
NMKEF) (TSX: NMX) is setting up mining and processing
facilities in Canada as well as establishing supply agreements for
when that work is completed. Sociedad Quimica y Minera S.A.
(NYSE: SQM) is diversifying its lithium production, adding
mining to brine extraction operations. All of this is driven by the
work of companies such as Tesla, Inc. (NASDAQ:
TSLA), whose electric cars are responsible for much of the
demand.
To view an infographic of this editorial, click here.
The Changing Lithium Market
In the past 20 years, lithium has become one of the most
sought-after commodities in the world. Lithium-ion batteries, which
are used in everything from smartphones to electric trucks, are
increasingly ubiquitous. Lithium is essential to their production,
and as a result, demand for the mineral has soared. Mining
companies around the world are rushing to set up lithium extraction
facilities to get the precious metal to market.
This urgent need is leading to unexpected shifts in global
markets. China, already a strong player in the lithium market, is
attempting to corner its production. Previously neglected mines are
being revived as sources of lithium. Countries that previously
weren’t players in the market are emerging as potentially
significant lithium producers. One of those countries is
Canada.
Driving Up Demand
Recent years have seen a surge in lithium companies. Whether
this growth is by established players or by the emergence of
companies such as QMC
Quantum Minerals Corp. (OTC: QMCQF) (TSX.V: QMC) (FSE:
3LQ), one factor appear to be driving
this — electric batteries.
Most of the chargeable batteries now used in personal electronic
devices are lithium based. Mobile phones, tablets and laptops all
rely on lithium to stay charged, sparking a surge in demand since
the turn of the millennium. This demand is now being driven to
stratospheric levels by another source — electric vehicles.
All electric cars use lithium batteries, and the vehicles
require far more of the mineral than do smartphones. A Tesla Model S might need a hundred pounds of lithium in
its batteries compared to a phone, which needs only a few
grams. Becoming ever more common, electric cars are increasingly
seen on the roads as environmentally conscious consumers try to get
away from fossil fuels. Major manufacturers such as Volkswagen and
BMW are spending millions on developing electric cars, all of which
need the lithium that QMC and others can produce.
Production of electric trucks and buses are coming
more quickly than expected, causing demand for lithium to
further outstrip supply. With recent mandates by several cities,
governments and car manufacturers, such as Volvo and Volkswagen,
the demand for lithium continues to surpass production. Navistar
has developed electric dump trucks while BYD (Lithium Battery
Company) is producing electric buses.
Global lithium production is already at 600,000 tons per year
and demand is expected to grow by
another 600,000 to 800,000 tons over the next decade. Prices
have risen 30 percent over the past few years and are likely to
continue their ascent. This increase is great news for QMC. As the
owner of a 1.2 million-ton lithium oxide deposit in Manitoba, which
the company regards as a historical resource, QMC appears to be in
a position to profit from this growth. As an emerging company, QMC
may be especially appealing to investors, who can buy its shares
for a fraction of those in more established mining companies.
Competing with Chinese Lithium
The fact that QMC’s deposit is in Canada is particularly
important at this stage in the development of the lithium
industry.
The two largest lithium producers in the world are currently in
China and Chile, with Australia coming in third. China controls 30
percent of lithium production and is making moves to
gain control of more. Chinese manufacturers recently tried to
buy a large stake in one of Chile’s major lithium producers, only
to be blocked by the Chilean government until the two parties could
reach an agreement that granted the Chinese 24
percent of the company. As a major manufacturer of electric cars,
this important move supports one of China’s growth industries;
however, it’s also a strategic move, ensuring that China has access
to supplies of a resource with significant uses in infrastructure
and military equipment.
China’s focus on controlling lithium has created two strong
reasons for other countries to develop their lithium deposits. On
the one hand, there is the possibility of these countries
benefitting from Chinese investment, attracting the money that
Beijing businesses are throwing at the lithium supply problem. In
addition, there’s the desire to reduce reliance on Chinese lithium
and provide additional options — and independence — to electric
vehicle manufacturing around the world.
Manitoba, where QMC has its lithium claims, is rich with
potential for lithium exploitation. Recognized as one of the
world’s best mining districts, it has previously been a rich source
of other minerals. Many of these deposits, such as those being
explored on QMC’s Irgon Lithium Mine Project Property, were
discovered decades ago but never exploited, as lithium wasn’t a
profitable resource at the time. Now the old mining records are
being dusted off, and work is commencing in these neglected
claims.
Extracting Canada’s Mineral Wealth
QMC’s lithium operations show how companies outside of China and
Chile can compete with the big players, despite working on a
smaller scale.
QMC’s Irgon Lithium Mine Project is based around Cat Lake within
the prolific Cat Lake-Winnipeg River rare-element pegmatite field
of S.E. Manitoba. This year, the company acquired 18 new claims,
taking its total in the area up to 22. The lithium sources include
the former Irgon Mine, possibly the best and richest lithium
deposit in the whole of Manitoba. The quality of lithium ore in the
area is also particularly rich – 1.51 percent lithium
oxide, one of the higher grades of any company’s deposits in the
country.
The region’s old mining industry also provides opportunities.
Past surveys have put QMC ahead of the game in mapping out and
analyzing the available lithium. Existing infrastructure for power and access can be reused,
speeding up the establishment of mines. QMC’s project is road
accessible with skilled workers readily available in the area.
The methods of mineral extraction used on these sites will be
faster than those widely used in China and Chile. There, lithium is
extracted from brines, with areas flooded, and the water evaporated
to extract the minerals. In its Manitoba claims, QMC can simply
mine and process the rock. This means a much faster turnaround time
to set up extraction and see the results. Between its mining
methods and the existing infrastructure, QMC is in a good position
to quickly start extracting large quantities of high-quality
lithium ore. Bottom line, QMC is poised to jump into the Lithium
production market and could prove to be a big player.
Lithium Production across the Americas
The lithium industry’s importance in both North and South
America is reflected in the growing number of companies and their
wealth in the sector.
The biggest lithium manufacturer in the world, Albemarle
Corp. (NYSE: ALB) has benefited enormously from the
changes of the past few years. While it also produces bromine and
catalysts for the chemical industry, lithium is now its most
important resource. It produced 29 percent of the world’s lithium
in 2017, thanks to its heavy investment in the Chilean lithium
industry. This has led to stellar financial performance. During the
second quarter of 2018, it saw a 16 percent rise in
net sales on the same period for the previous year, producing a
197 percent increase in earnings.
Quebec-based company Nemaska Lithium, Inc. (OTC: NMKEF)
(TSX: NMX) is working to set up lithium mining and
processing facilities in Canada, with an aim of catering to the car
market. Like QMC, it will be extracting lithium from mineral-rich
ores. As of this
month, work is on schedule to get the mine and processing plant
up and running. Based on this, the company expects to start
producing concentrate in the second half of 2019 and lithium salts
in 2020. It already has a supply agreement
with green battery manufacturer Northvolt, ensuring a market
for some of its product.
Like Albemarle, Sociedad Quimica y Minera S.A. (NYSE:
SQM) produces lithium from Chilean brine sources. As
demand for lithium grows, SQM’s operations do as well. It is moving
into lithium rock extraction, with mining at Mount Holland expected
to begin in 2021. As the producer of 23 percent of
the world’s lithium in 2017, it’s second only to Albemarle as a
lithium producer while also manufacturing other industrial and
agricultural chemicals.
One of the most prominent companies driving the demand for
lithium is Tesla, Inc. (NASDAQ: TSLA). Famous for
its work in electric and self-driving cars, Tesla has seen huge
growth in demand for its vehicles, leading to a 40 percent rise in vehicle production in the first
quarter of 2018.
Rapid growth in the electric vehicle market is leading to great
demand for lithium batteries. Lithium producers that can quickly
bring new sources online could profit tremendously from this
surge.
For more information on QMC Quantum Minerals Corp., visit
QMC Quantum
Minerals Corp. (OTC: QMCQF) (TSX.V: QMC) (FSE: 3LQ)
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