NetworkNewsWire
Editorial Coverage: Consumers are switching to electric
vehicles faster than previously thought, making an expected boom in
demand for battery-grade lithium ever more real. Current suppliers
including Albemarle Corp. (NYSE: ALB) and
Sociedad Quimica y Minera de Chile (NYSE: SQM)
will reap the rewards of a major paradigm shift in the car
industry. But newcomers to this market, from Nemaska
Lithium (TSX: NMX) (OTC: NMKEF) and Standard Lithium
(TSXV: SLL) (OTC: STLHF) (STLHF Profile) may also
profit as they bring new supplies online. Major buyers of lithium
including automaker Tesla Inc. (NASDAQ: TSLA)
could create massive new demand for this material.
Electric vehicle (EV) sales will surge to 1.6 million units
worldwide this year, from a few hundred thousand in 2014, according
to Bloomberg New Energy Finance. The growing popularity of EVs has
had an effect across the entire automotive industry: German
automaker Audi (NSU.DE) unveiled a new electric supercar at the
Pebble Beach Automotive Week this summer, and new manufacturers are
expected to enter the market as well.
Home vacuum manufacturer Dyson has revealed intentions to create
an electric vehicle, investing £200 million in a test facility in
Hullavington, Wiltshire, England. The test facility will be where
Dyson develops its first electric vehicle, which the company has
invested £2 billion towards so far. Dyson has partnered with
lithium-ion battery producer Sakti3, a firm that claims to have
developed a solid-state lithium-ion battery that produces over 400
Wh/kg energy density. Tesla’s Panasonic batteries are considered
the industry leader at only 240Wh/kg.
If consumers transition to EVs faster than expected, the scene
could be set for a lithium supply crunch as manufacturers seek the
raw materials needed in lithium-ion batteries used by the
automotive industry. A Tesla Model S battery pack utilizes 63
kilograms of lithium, an amount that eclipses the amount of lithium
currently used in mobile phones and iPads. That requires building a
new supply chain several times larger than the existing one.
Companies that might do well in this paradigm shift are those
that are working on new technologies to rapidly increase the global
supply of lithium. One such company is Standard Lithium
(TSXV: SLL) (OTC: STLHF). Standard Lithium is working
on a processing breakthrough to unlock one of the world’s most
exciting untapped lithium resources, which happens to be located in
the United States.
To view an infographic of this editorial, click here
Arkansas holds one of the world’s largest lithium
opportunities
Arkansas is not renowned for its role in new technologies. The
state has a mature oil and gas industry and is one of the world’s
largest suppliers of bromine, a chemical used as a flame retardant.
The bromine, extracted from wells deep underground, is rich in
lithium.
The Smackover Formation in Arkansas could hold 1 million metric
tons of lithium reserves or about a third of the reserves of the
massive Atacama Salt Lake in Chile. Albemarle and SQM operate two
of the world’s three largest lithium extraction sites in the
Atacama.
None of the chemical producers operating in Arkansas have
figured out how to separate this massive resource from the brine.
Albemarle owns a major bromine plant in Arkansas and is conducting
its own experiments to find a breakthrough. Lanxess AG
(NYSE: TTI) and TETRA Technologies, Inc. (FWB: LXS), two other
chemical producers based in the region, recently signed agreements
with Standard Lithium to pursue the commercial opportunity of
producing lithium battery materials from this strategic
resource.
Track Record in Lithium Extraction
Standard Lithium’s management team, led by Chief Executive
Officer Robert Mintak, has a track record in lithium
extraction. At Canada’s Pure Energy Minerals (OTC: PEMIF), Mintak
oversaw the development of a disruptive extraction process, leading
to a surge in the company’s share price.
Chief Operating Officer Andy Robinson, who holds a doctorate in
geochemistry, has overseen resource development projects around the
world. With his team of global experts, Standard Lithium has
developed a new rapid lithium extraction process that better
extracts the material from a variety of brine sources. The company
recently hired Prof. Barry Sharpless, a Nobel Laureate in
chemistry, to the company’s Scientific Advisory Council.
Mintak and his team are betting on being able to leapfrog
competitors in the lithium supply space by avoiding several of the
lengthy and time-consuming phases of developing a greenfield
lithium operation. A traditional brine project such as those
operated by Albemarle and SQM in Chile requires several phases
including resource assessment, permitting, earth-moving and
process-testing. Other lithium projects in Argentina have shown
lengthy development timelines, which can take up to a decade or
more to come online.
By working with permitted chemical producers such as Lanxess and
Tetra, which already extract raw material feedstock (brine) from
the ground, Standard Lithium can leverage existing infrastructure
to eliminate most of the steps toward commercial production. Quick
project execution will be key if the EV transformation happens
faster than expected.
Only about 2% of global lithium supplies are sourced from North
America, according to SQM. Domestic providers may stand to benefit
after President Donald Trump initiated a federal strategy to supply
critical minerals from within the United States. Lithium is one of
a handful of critical minerals that are deemed to be of high
importance to the industries of the twenty-first century under the
U.S. government strategy.
Tesla is particularly dependent on lithium supplies and has held
talks with SQM to sign a long-term supply agreement for a giant
lithium-ion battery factory known as the Gigafactory that it is
building in Nevada. General Motors is
introducing at least 20 EV models by 2023, including the
Chevrolet Bolt and Cadillac CT6 Plug-in, CEO Mary Barra said in
March.
Drop in Valuations Increases Opportunity
Lithium stocks tumbled this year after investment bank Morgan
Stanley said supply from new projects will exceed demand before
2021. That investment advice might not fully reflect the fact that
consumers are switching to EVs from internal combustion engines
(ICEs) faster than expected, according to London-based analysts
Benchmark Mineral Intelligence.
Some major Asian battery makers appear to be taking full
advantage of the recent drop in lithium company valuations.
POSCO (NYSE:
PKX), South Korea’s biggest steelmaker and producer of car
batteries, bought the lithium mining rights of Australia’s
Galaxy Resources Ltd. (OTC: GALXF) for $280 million in a deal
announced Aug. 27. The acquisition appeared to take advantage of a
temporary drop in valuations. POSCO, which supplies Korean
carmakers such as Kia Motors (OTC:
KIMTF), said it would build a lithium plant in Argentina and
supply 25,000 tons a year from the Salar del Hombre Muerto project
in the South American country. China’s Ganfeng Lithium Co. Ltd.
also purchased SQM’s stake in an Argentine lithium project in late
August.
Several countries, including China, are mandating shifts from
ICE production to EV production, a step that will rapidly
accelerate the demand for lithium-ion batteries, according to
London-based consultancy Roskill. With
government mandates accelerating demand for lithium, supply won’t
keep up with need. This could ultimately lead to major lithium
buyers looking to back an emerging producer with a large resource
such as Standard Lithium.
Other Actors in the Lithium Space
Albemarle (NYSE:
ALB) is the world’s largest lithium producer,
producing the material from rock mines in Australia and from brine
operations in Chile. Albemarle also produces bromine in Arkansas
and is experimenting with chemical processes to separate the
lithium found in its raw material feedstock. The company is looking
to expand its current lithium production capacity to 265,000 tons a
year, from 65,000 tons a year at present.
Nemaska Lithium
(TSX: NMX) (OTC: NMKEF) is developing a plant to
produce car battery-grade lithium hydroxide and recently signed a
take-or-pay 5-year supply agreement with Northvolt, a company that
is building Europe’s largest battery factory. Nemaska Lithium
recently obtained a $75 million payment as part of a multi-stage
loan to finance its Whabouchi mine.
Sociedad Quimica
y Minera S.A. (NYSE: SQM) based in Santiago, Chile was
traditionally the world’s largest lithium producer until it was
overtaken by Albemarle in recent years. Sociedad Quimica y Minera
S.A. recently secured an agreement with the Chilean government to
carry out a major expansion of its lithium brine operation in the
Atacama Desert.
Tesla, Inc.
(NASDAQ: TSLA) is rapidly expanding output of its
Model S and is having a wider disruptive effect on the global
automotive market as traditional carmakers switch to electric
vehicles from the internal combustion engine. Tesla is building a
lithium-ion battery factory in Nevada and is currently seeking a
long-term supply agreement with Chile.
Please also read and review and the following article: Will Access to “World Class” Lithium Brine Resource Send
This Lithium Miner’s Value Soaring?
For more information on Standard Lithium Ltd., visit Standard Lithium
Ltd. (TSX.V: SLL) (FRA: S5L) (OTC: STLHF)
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