Tuesday, 14 July 2015

Tesla Gigafactory: Lithium Supply Threatened by Scandal in Chile.


  Finally the news about the geopolitics of lithium supply and SQM are getting out. The security of Lithium supply becomes crucial for the exponential growth of EVs and Solar Energy Storage. You can find more information on my blog about the shortages coming to the very tight lithium market even before Tesla's Gigafactory is coming on-line. Ganfeng Lithium finances the development of International Lithium J/V projects in Argentina and Ireland and holds the strategic stake in our company. 

Chile, Lithium And SQM: What To Expect From The Chilean Lithium Industry?

  What is really happening with SQM and lithium production in Chile now? Is it really the perfect storm and the very tight battery grade lithium supply will be under further strain from political battle around Atacama? Daniella Desormeux from signumBOX will be one of the best sources to explore the ongoing situation.

  Now SQM is right in the centre of the political investigation in Chile. How will it affect the ongoing litigation and licences for the lithium deposits? Will buyers of lithium seek the "conflict free" sources of supply now? We have a lot of questions, but now you can better realise why the "Lithium Big 3" is not enough in the lithium industry any more and security of supply is the most important question.

International Lithium And Ganfeng Lithium: "The End Of The Lithium 'Big 3'.

"Daniela Desormeaux, signumBOX´s General Manager attended the 7th Lithium Supply and Markets Conference that was held in Shanghai, China, from June 17th to June 18th. 
In her speech, Daniela explained the lithium regulation in Chile, her participation at the National Lithium Commission and the opportunities for new players in the Country."

Security Of Lithium Supply: SQM Stock Still Down On News Chile Wants To Revoke Mining Leases.

  Here comes the perfect storm for the lithium supply chain. Politics, bribes and fight around the "hot assets" in Atacama are not the best ingredients for the hungry Chinese companies ramping up battery grade lithium supply for the coming Megafactories all over the world. Meanwhile Tesla Gigafactory is still relying on Panasonic to sort out all lithium supply issues. Price of battery grade lithium was going up even before these political games around SQM and now rain storms will add to the strains on production in Atacama. Now you can better appreciate why Chinese giant Ganfeng Lithium is financing and developing with International Lithium our J/V projects - security of Lithium supply is taking the central stage for the ongoing electric rEVolution.

Elon Musk's Gigafactory Battery Plan Spurs Lithium Producers To Weigh New Plants.


  News about the potential shortage in battery grade lithium supply is travelling fast and now hitting the mainstream media.

Tesla Gigafactories: Is There Enough Lithium to Maintain the Growth of the Lithium-Ion Battery Market?

Joe Lowry: Lithium Capacity Additions Will Be Short Of Demand.

"Joe Lowry is sounding the rising alert for all industry insiders about the coming shortage of lithium. Tesla is waiting for Panasonic to solve all the supply problems, but the growing demand is already pushing prices higher even before Gigafactory comes on-line! The ignition of mass market for electric cars and energy storage will come with lower lithium battery cost. Gigafactory promise us to bring the magic $100 per kWh. Supply of lithium will become crucial and its security will be even more important than its price.
  Our partner Ganfeng Lithium controls with other Chinese companies 75% capacity of battery grade lithium hydroxide now. We are moving into the new landscape for critical materials which are powering the green revolution. Stay tuned for the update from our lithium exploration programs on J/V projects in Ireland and Argentina."

Joe Lowry: What The Beginning Of Lithium Shortage Looks Like.  

  "Joe Lowry from @globallithium presents another evidence of growing constrains in the lithium supply chain. He knows International Lithium strategic partner Ganfeng Lithium very well and has covered its incredible growth in his previous articles, which you can find on this blog as well. Read more."

International Lithium Corp. Updates on Drilling Programs in Argentina and Ireland.

  We have great news today from our both J/V projects with Ganfeng Lithium! You already know about my personal vision for the lithium industry and our strategic partnership between International Lithium and Ganfeng Lithium from China. Now we have results coming in from our exploration and development programs.

Wall Street Daily:

What is it with South American countries and corporate scandals?
First, it was Brazil and the still-expanding improprieties surrounding Petrobras (PBR).
Now, the spotlight is shifting to Chile and Sociedad Quimica y Minera de Chile (SQM) – the world’s largest producer of a key battery ingredient, lithium.
SQM was privatized in the 1980s under the dictator Augusto Pinochet. His then son-in-law, Julio Ponce, conveniently bought up shares that made him chairman of the company and a billionaire.
But earlier this year, Ponce, SQM’s CEO Patricio Contesse, and others were forced out after investigations revealed insider trading, tax fraud, and illegal political contributions.
And, apparently, this is just the tip of the iceberg…

Government in Hot Pursuit

The Chilean investment agency Corfo is now trying to revoke the company’s land concessions involving lithium and fertilizer in the Salar de Atacama. This area is a huge salt flat rich in lithium, and makes Chile the “Saudi Arabia of Lithium.”
The agency claims that Sociedad Quimica y Minera de Chile underpaid contracts and sold its product at below-market prices. Officials said this behavior shows that SQM is not a “suitable” company to have any contracts with the Chilean government.
Of course, SQM is denying all allegations. The company says it has faithfully complied with all the obligations in the lease agreement.
The dispute is currently in arbitration proceedings, which will be closely watched by the lithium industry. Any disruption to Chilean supplies will surely have an effect on lithium supplies and prices.

Prices Power Up

Lithium prices were already enjoying an upswing prior to this brewing dispute.
This is partially due to the current double-digit growth in lithium-ion battery demand. Battery makers like Tesla Motors (TSLA), Panasonic (PCRFY), and LG Chem (051910.KS) are expanding their production and are expected to continue doing so.
In a report, Jon Hykawy of Stormcrow Capital forecasted that “overall lithium demand will more than double from present levels through 2025.”
The more interesting story is on the supply side, though.
Major producers, such as SQM, have always said that adding production is no problem. Yet, lithium prices have doubled since 2009 with little rise in output.
This is especially true in the upstream market. Tight supplies are apparent for both lithium carbonate and lithium hydroxide.
For insight into what’s really happening with lithium supplies, I contacted Joe Lowry, known in industry circles as Mr. Lithium.

Mr. Lithium Says…

Lowry is one of the world’s leading experts in lithium supply and markets, with more than two decades in the industry. These days, he travels around the world gathering intelligence on lithium for his advisory firm, Global Lithium LLC.
As for why lithium prices are up, Lowry pointed to several supply factors, including “the delay in the Rockwood Holdings expansion coming on line, Orocobre’s (ORL.TO) inability to ramp up thus far, and uncertainty in China over spodumene pricing and supply.” (Spodumene is a mineral consisting of lithium aluminum inosilicate that’s a source of lithium.)
Rockwood Holdings, now a part of Albemarle (ALB), is the global market leader for lithium compounds and one of the biggest producers of lithium raw materials.
Rockwood has a major expansion project in Chile. But it has experienced serious delays thanks largely to disputes with the Chilean government. It’s interesting to note that Rockwood is developing lithium brine holdings in Arkansas, and is sitting on one of the richest spodumene deposits in the world in North Carolina.
Orocobre is a junior lithium company that’s the first new global lithium carbonate supplier in over 20 years. Its flagship Salar de Olaroz lithium project is located in Argentina. Again, a tough political environment in which to do business.
And what about the SQM situation? After all, even before its current mess, the company wasn’t delivering as much lithium as promised to some customers.
“It is still too early to tell how the SQM situation plays out,” says Lowry.
It probably is too early to judge, since politicians are involved.
But with lithium being a key component for devices in everyone’s pockets, purses, and homes, it’s certainly a situation well worth keeping an eye on in the weeks ahead.
And the chase continues,
Tim Maverick"