Saturday 17 December 2016

Energy rEVolution: The World Just Before The INTERNET - Lithium’s Boom Year: 2016 In Review.



 "If you are going through hell, keep on going" - Winston Churchill. 

Should I really warn one more time those who are playing with matches that they are sitting in the middle of a gas paddle?

When the Activist Investor Knows Best

Some of the most combative shareholders are deploying the most powerful weapon possible — sound advice.

  If you would like to learn the subject - start writing about it. Start sharing with the other people what you know. You can not really do it before you learn at least something about it. Then the magic comes - people start listening.  Our very small Lithium Industry is just before its exponential growth phase climbing on "the S-curve".  
  In the summer of 2015, all Lithium Market measured in LCE was worth only $1 billion dollars in sales. Then by February with some prices tripling in China the Lithium Market became blipping on the radars in the City and on The Wall Street - traders get notice of something NEW with a "growth from $1 Billion to $4 Billon overnight." Serious money is coming now in the Next Big Thing. Put together the largest auto market in the world, Elon Musk, Warren Buffett and BYD; spice it all with cancer hazard ICE emissions and Volkswagen DIEselGate revelations - and you have The Switch in the making. 
  What is it all about? It is as easy and beautiful as everything brilliant genius Steve Jobs has done,  who was bending Universe around him with his every new bright idea making its way to the market. The Switch. I call it an iPod moment. You take something everybody loves: like his or her music. You make it cool and all in one box - all YOUR music now is at your fingertips. People and their desire to have THEIR music all in one place and literally in the pocket is here. BOOM. HISTORY. DONE. Billions of customers are switching. The Switch has happened. Now you already got my drift. 
  Even before Donald Trump has come out with his brilliant and brave idea to make America Great again (I still do hope that not as far back as reintroduction of slavery and that business approach will prevail with Solar and Electric Cars flourishing as the great business) few things in the land of Freedom were so sweet for so many of us just looking from far away in admiration. Bubble gum, Coca-Cola and Jeans - these simple things are making billions of kids happy even today. Now we are ready to start talking about Next Best Thing after the sliced bread and mortgage: the shiny, slick and beautiful. No not that girl next to the Car. We are all growing up in the end. Girls are growing up and playing with men, boys are growing up and playing with dolls and cars. Only some continue to play with matches sitting in the middle of a gas puddle. We are talking about cars here...
  I will throw a few numbers just to give you a teaser here. The rest is on this blog for those who are ready to learn. The cost of Lithium in your iPhone is $1 dollar, in Tesla's Lithium battery cost of Lithium is 2-3% in the price of the finished product. We are in a generational shift 2 to 7,000: 2 is the number of the batteries in your father's remote control, more than 7,000 is the number of lithium batteries in Tesla Model S. It takes 63 kg of LCE (Lithium Carbonate Equivalent) to build Tesla Model S 70 kWh battery. Every 1% increase in sales of Electric Cars as part of total auto sales brings new demand for 70,000 t of LCE. Total production last year was 160,000 -180,000 t of LCE. During all our humankind history 1,000,000 EVs were sold before 2015. This year alone we can get 1,000,000 electric cars sold. Worldwide we are still close only to 1% of Electric cars in total auto sales. BYD - EV automaker from China where Warren Buffett is holding a 10% stake, will sell this year 100,000 EVs, it took GM 7 years to sell the same amount 100,000 of GM Volts. China is talking now about California style Zero Emissions Mandate: 8% of all news cars to be electric by 2018 and 12% by 2020. Let's digest it for a minute. With sales of EVs now only above 1% mark, we are talking about the factor of 8X in  ... two years time and 12X increase in the number of electric cars produced in China by 2020! Now Goldman Sachs numbers can be really conservative: they are talking about 3 times increase in Lithium Demand by 2025. I am talking about the total disruption of $12 Trillion industries: 4$ Trillion Transportation and $8 Trillion Energy and Utilities.
  There is no investment advice here and this post can be confusing for some followers. I am talking about TOTAL CHANGE: it can be The Switch or it can be the total ANNIHILATION now.
  I am talking about all cars being electric very soon. You can just trust me on this one, when the stakes are so high you should never be the one playing with matches when you are sitting in the middle of a gas puddle.
  Now you will better appreciate the following fact that International Lithium Strategic Partner Ganfeng Lithium has more than doubled its total sales in 2015 in just 9 months of this year!  We are talking here about Energy rEVolution and Lithium is the magic metal at the very heart of it. Only a few experts, as usual, do really know what they are talking about. Joe Lowry, Chris Berry and Andrew Miller from Simon Moores' Benchmark are taking the floor below.

   And The Switch ... The Switch is the coming tide when literally millions of people will be switching very fast (as fast as all those millions of EVs can be made) to the electric cars. GM Bolt will give us the first taste of what is coming. The first two electric cars priced below $40k and with a range of over 200 Miles will change everything. Tesla Model 3 will start the real flood of affordable electric cars which are just better than anything else at the same price from the ICE age. Despite all headlines about Electric Cars on my blog, 99% of all new cars are still powered by the last century technology of controlled explosions and by burning oil in different compositions while killing us all and our planet at the same time. Do you remember the 90s - The World Before The WWW and Information Revolution? Now we have 21st Century and Energy Revolution: The World Just Before The INTERNET.
   So the question remains for another week do you really have to take those matches out? 

‘China’ the Centre of the Lithium Universe.

Please read legal disclaimer. There is no investment advice on this blog. Always consult a qualified financial adviser before any investment decisions. DYOR.

(Please note that International Lithium is an exploration stage company and not producing any lithium materials yet. Company does not have any resources and/or reserves as it is defined by respective policies for disclosure by mining companies other than properly reported in its public filings on SEDAR) 

Please Note that International Lithium Qualified Person - as it is defined by NI 43-101, was NOT able to Verify and Confirm Any Provided Information by The Third Parties in the Articles, News Releases or on the Links embedded in this blog post; you must NOT rely in any sense on any of this information in order to make any Resource or Value Calculation, or attribute any particular Value or Price Target to any Discussed Securities.

‘China’ the Centre of the Lithium Universe

Kirill Klip

President of International Lithium Corp.

"The recent Volkswagen scandal has once again shed light on polluting vehicles and the health hazard they pose to the public and environment. In hopes of ending this tainted legacy, governments have begun implementing regulations to phase out emission causing vehicles. Respectively, all major automakers have followed suit and pledged to build dozens of electric vehicles in years to come. Read more."

Lithium Investing News:

Lithium’s Boom Year: 2016 in Review 

2016 was a big year for the lithium sector. Here's what three analysts had to say about the lithium market in 2016.

"Ever since Tesla Motors' (NASDAQ:TSLA) said that it would be building a lithium-ion battery gigafactory, the lithium sector has no doubt been impacted by the announcement. 
In that regard, 2016 proved to be an exciting year for the lithium sector–perhaps its biggest one in recent years–in terms of demand and price.
Analysts have previously commented that lithium demand would grow to about 182,000 metric tons in 2016–and is expected to only go higher from there. Still, while Tesla plays a huge role in terms of the mineral’s demand, as Joe Lowry of Global Lithium pointed out, “Tesla is a story, it’s not the story.”
Looking over to the soaring lithium price throughout the year, some analysts have been shocked by its significant increase. Going forward, however, keeping an eye on how prices develop in China will be of interest.
To that end, the Investing News Network (INN) reached out to Lowry, as well as Chris Berry of House Mountain Partners and the Disruptive Discoveries Journal and Andrew Miller of Benchmark Mineral Intelligence, to get a lithium overview of 2016. Here’s what they had to say.
INN: What are your thoughts on the lithium market in 2016? 
JL:  The market developed pretty much as I anticipated with supply continuing to be short, prices in China remaining high within a fairly narrow price ban,  and the price outside of China moving up substantially. SQM (NYSE:SQM)–as the leader in lithium carbonate supply to the battery industry–best represents what is happening to price outside China. Their recently reported Q3 2016 lithium carbonate supply price was approximately $12/kg. It is obvious with each passing quarter that there is a new normal for lithium carbonate pricing outside China.  SQM’s lithium business is focused on upstream lithium chemicals, primarily lithium carbonate so they are the best indicator of pricing outside of China.
AM: Well we certainly thought it was going to be some tightness in the market, and perhaps not a huge surge in prices that we saw. It’s certainly led the way in how the industry’s been shaping up in terms of bringing supply to the market and the demands that we could see certainly from the battery sector.
Lithium has been the first of these battery raw materials to see a real price surge. This is just from incrementing increases in batteries so the industry has a long way to go to meet the future demand.
CB: The surprising price strength really stood out. The question now we ought to be asking is “what is the “new normal” for lithium chemicals pricing?” Factoring in the spot market prices in China as well as current contract prices when they are renegotiated will be a key metric to watch, though not the most important going forward. 
It would appear that auto makers are now serious about electrifying some–or all–of their fleet in the next few years, which will be supportive of lithium pricing. While I do believe in mean reversion, it seems entirely likely that lithium prices will normalize at a higher level than in years past – perhaps $10,000/t for battery grade material. As the cost of a battery continues to fall and energy density increases, this in a sense re-writes how energy will be generated, stored, and utilized going forward. The regulatory framework is also a tailwind as subsidy regimes and broader stimulus like the Paris agreement will help the overall business grow.
Despite the positives here, it’s important to remember that mean reversion is a very real and repeatable phenomenon.
INN: Were your predictions for 2016 correct?
JL: I think my price projections were very close to reality. I was also correct that new supply would be slow to come to market.
AB: Yes, definitely. We saw that there were going to be issues as with a lot of these critical minerals, the same as cobalt like we’ve just been discussing. With all of these critical minerals and metals, you see a very rigid supply structure and some big developments on the demand side. That’s certainly hinted to us that there was going to be some disruption in the market in 2017.
CB: Yes and no. I thought prices would start to move, but not quite as quickly as they have. This provided a tailwind for juniors. In June, I stated that the move higher in lithium junior miner share prices was over and based on share price returns, this has proven to be correct (though the call was a little early). 
The value creation in lithium mining has moved from discovery to execution. This means that the investible universe of lithium plays is dramatically smaller than what currently exists.
INN: Were there any surprises that affected lithium that the market was not expecting?
JL: After many years of false starts, I think the rate of growth in battery was a surprise to many. If you look at the supply, demand and price projections of a company like Macquarie you can see that big names still have a hard time getting the lithium story correct.
AB: It was a lack in raw material expansion really that had the biggest impact. It certainly increase demand, particularly inside China. Unlike many of these things, China doesn’t have its own domestic resources. It relies on imports. Consumers need much more material and–in essence–the supply, either from Australia and brine resources in South America, which weren’t able to expand at the regular industry meeting.
CB: The rapid price increases were really the story of 2016. Also, Donald Trump’s victory in the US presidential election took many by surprise though it remains to be seen how this affects the whole clean energy ecosystem
INN: What do you think was the biggest news in the lithium market? 
JL: In 2016, the “new normal” in pricing was definitely the big story especially when the CEO of the world’s largest lithium company talked about rapidly rising prices as an aberration. Given I was personally selling lithium hydroxide at over $25/kg to customers Albemarle (NYSE:ALB)and FMC (NYSE:FMC) couldn’t supply, it was clear to me that the market was not “in balance”. It took SQM’s more transparent reporting of prices quarter over quarter in 2016 to validate what I was saying.
AM: Looking at the lithium sector as a whole, it was good to see what we’ve been saying about these materials for a number of years now and the issues that the markets are going to have to resolve. We’ve seen some of what that can lead to this year. It’s opened a lot more people’s eyes to the issues in the battery supply chain that needs to be overcome if the industry wants to expand. I think it will serve a lot to learn some lessons from what’s happened with this year.
CB:  Chinese companies securing off takes from juniors and major lithium producers such as ALB, FMC, and SQM all announcing aggressive capacity expansions. This was driven by the clear need for a secure supply of material (on the part of the Chinese) as well as strong top line and EBITDA growth (on the part of the major producers). Based on recent statements by ALB management, it looks like they are trying to almost become a pure play lithium producer as the growth prospects in their other businesses pale in comparison to that of lithium. 
For better or worse, Telsa’s announcement of the Model 3 and the large number of reservations as well as the merger of SolarCity (NASDAQ:SCTY) was also significant.
Don’t forget to follow us @INN_Resource for real-time news updates.
Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence."

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