NetworkNewsWire Editorial Coverage:
In business for over 100 years, the automotive industry is about to
embark on a radical, convulsive transformation. The Washington
Post (http://nnw.fm/0P4Do) recently pegged 2017 as the year
electric vehicles (EVs) went from a promising fad to an
industry-wide inevitability due to broader economic and cultural
developments. With the forecast demise of the internal combustion
engine, the demand for lithium, a crucial component of Li-ion
batteries, is certain to surge as EVs proliferate. Lithium demand
has already been projected to grow over 300% in the coming years,
but that figure could prove to be a woeful underestimation given
the massive transportation transformation that’s now on the
horizon. The global race for much-needed lithium is on, and it’s
being led by several established producers and prospective miners
like Standard Lithium Ltd. (TSX.V: SLL) (FRA: S5L) (OTCQX:
STLHF) (STLHF
Profile), Albemarle Corp. (NYSE: ALB), FMC Lithium (NYSE:
FMC) and Sociedad Quimica y Minera (NYSE:
SQM), all of which are being driven further by current EV
makers like Tesla, Inc. (NASDAQ: TSLA).
One development tilting the scale toward EVs is the fact that at
least seven countries plan to ban the use of internal combustion
engines. With an air pollution problem that has hit critical
levels, the Chinese government is seeking to cap carbon emissions
by phasing out vehicles using gasoline and diesel. Led by China’s
2030 fiat, the impending changes will prove momentous. India is on
a similar trajectory. With a population nearly as large as China’s
and an auto industry that ranks sixth-largest in the world,
authorities in India are hoping that only fully electric vehicles
will be sold after 2030. Norway wants to advance that target within
its own borders by 2025. Germany, with the fourth-largest auto
manufacturing industry in the world, plans a total ban on all
internal combustion engines by 2030, while the UK has set its
deadline for 2040. The Netherlands is mulling similar plans, and
France wants all petrol and diesel cars off its roads by 2040. In
addition to air pollution, oil spills are also a great global
concern, posing ravishing and long-lasting economic and
environmental consequences (http://nnw.fm/kwHt0).
Naturally, more electric vehicles on the road means more
lithium-powered batteries, and, consequently, demand for the metal
is climbing. Standard Lithium
Ltd. (TSX.V: SLL) (FRA: S5L) (OTCQX: STLHF) is gearing
up to play its part in boosting supplies. The Canada-based junior
exploration company is intent on acquiring more domestic
lithium-rich properties, looking to unlock value from overlooked
U.S. lithium assets by applying new technologies and processes. Its
first project in San Bernardino County, California, at the Bristol
Dry Lake has already started to show signs of promise. Test results
from a new geophysical survey of the 25,000-acre Bristol Lake site
indicate that high concentrations of lithium-bearing brines are
present throughout the company’s mineral lease agreement
claims.
In a recent interview (http://nnw.fm/K0Srt), CEO Robert Mintak explained why
the company is excited about Bristol Lake:
The project had, he said, ticked off all the boxes. “It had low
geological risk for us because we knew we had access to brine that
we could immediately begin analyzing for lithium values. It had
infrastructure in place because it is a producing mine. It has a
paved highway right up to the front door… power and water and, as I
mentioned, most importantly, we are working with a permitted mining
partner. So a lot of the initial challenges that companies face in
getting permits and access to sites to begin work are out of the
way.”
The permitted mining partner at Bristol Lake is National
Chloride Corporation of America (NCCA), a well-established and
permitted brine producer. NCCA’s presence at the site means that
all of the necessary infrastructure is in place to give Standard
Lithium immediate access to conduct exploration brine sampling,
lithium extraction, evaporation and processing activities, all
within a fast-track project development schedule. Importantly, it
also means that Standard Lithium reduces much of the exploration
risks to which junior mining companies are typically exposed.
To improve the quality assurance standards necessary to produce
battery-grade lithium compounds, Standard Lithium has appointed a
Scientific Advisory Council (SAC) comprised of lithium extraction
scientists and process engineers who will oversee and direct all
required lithium extraction testing. In addition to the Bristol
Lake Brine Project, Standard Lithium in August signed a Memorandum
of Understanding with an unnamed NYSE-listed company on an option
for Standard Lithium to acquire lithium exploration and productions
rights on 30,000 net brine acres overlying the Smackover formation
in a region with a history of commercial-scale brine processing.
Management said it believes that lithium-bearing brines are likely
present in this area. Smackover brines are metal-rich brine
anomalies in reservoir rocks along the Gulf Coast from east Texas
to Florida that are known to be a prime lithium resource. This
asset may be one of the most promising to develop, given that a
large-scale brine extraction, processing and re-injection industry
is already well established.
Albemarle Corp. (ALB) is also poised to benefit
from the global governmental promotion of EVs, touting itself as
“the industry leader in lithium and lithium derivatives.” In 2015,
it acquired Rockwood Lithium and started a new production plant for
lithium sulfide in Langelsheim, Germany, triggering a steady rise
in share price. Over the past year alone, shares of Albemarle have
risen about 69%. South American miner Sociedad Quimica y
Minera de Chile (SQM) has also experienced a rise in share
price, gaining more than 100 percent over the last year. According
to S&P Global Market Intelligence, ‘SQM's "lithium and lithium
derivatives" business earns gross profit margins of better than
38%.’ FMC Corp. (FMC), the parent company of FMC
Lithium, is enjoying a similar run, with shares increasing nearly
100 percent over the past year. Meanwhile, Tesla
(TSLA), which in June 2014 created its Tesla Gigafactory
in an effort to supply enough batteries to support its mission of
producing 500,000 EVs per year by 2018, is also on the rise. A year
ago, it was trading at $199.10; now, it is up 75% at $349.48.
Tesla’s Model 3 is the company’s first mass-market EV, and, with
a relatively affordable starting point of $35,000, it has garnered
considerable consumer interest and market buzz. The popularity and
accessibility of the Model 3 is another factor against internal
combustion engines.
Other major automakers including Audi, BMW, Ford, Mercedes,
Volkswagen and Volvo are also on the EV bandwagon with plans to
enter the EV market. General Motors has set a goal of producing 20
new EVs by 2023, demonstrating industry acknowledgement that the
tide is turning toward an all-electric future. With the odds
stacked against combustion engines, there’s little doubt that
fossil fuel-powered vehicles will be phased out and replaced by
EVs. This powerful macro trend makes lithium assets ever more
valuable and lithium companies an interesting investment
opportunity.
For more information on Standard Lithium please visit: Standard
Lithium Ltd. (TSXV: SLL) (FRA: S5L) (OTCQX:
STLHF)
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