Friday, 17 March 2017

International Lithium And Ganfeng: International Cooperation Brings Big Lithium Hopes For Argentina.


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




International Lithium And Ganfeng: International Cooperation Brings Big Lithium Hopes For Argentina.


Kirill Klip, Executive Chairman, International Lithium Corp.


The ongoing Green Energy rEVolution is hungry for resources. When "reds are going green", dragons are coming back into the commodity sector with an increased appetite. China is heading now the 4th Industrial rEVolution and very quickly building a manufacturing base for the 21st century. China's New Energy Plan has been carefully crafted to leapfrog the old technologies and straight into the post carbon world. China is leading the world now in Solar and Wind Generation capacity and the world's biggest market for electric cars is already in China. There are more electric cars sold now in China than in Europe and the US combined. To secure its geopolitical advance, "China will plow $361 Billion into renewable power generation by 2020."






Maybe you have missed it, but China became the Centre of the Lithium Universe. BYD, the Chinese company backed by Warren Buffett, is the largest EV manufacturer in the world, thus the Chinese companies are producing the largest amount of lithium chemicals for the batteries required to make them. The market is booming and there are currently more than 25 companies making more than 70 models of electric cars in China. Over 500,000 EVs were sold in China last year alone. By comparison, it took GM 7 years to sell 100,000 Chevy Volts since 2009 which was eclipsed by the EV sales by BYD in just the last year!

Now there are reports that China is pushing for the very aggressive California style Zero Emission Vehicle (ZEV) program. "8% of new cars to be electric by 2018, 12% by 2020.” Let’s put it into perspective: this year there are just over 1% of new cars sales in China. By 2018 they are talking about a factor of 8x that and 12x by 2020. That’s a 12x increase in the number of electric cars to be produced in China! Let’s digest it all for a moment…

Chinese companies currently control the majority of the Lithium Hydroxide market, a critical chemical product (so-called battery grade lithium) that goes into EV batteries. The same product that also goes into Tesla batteries, the lithium cells that Panasonic makes in Japan and with Tesla now at Gigafactory in Nevada.






Still unknown for the mainstream investors, the Chinese companies have taken over supply of the critical commodity powering Energy rEVolution. Lithium is the magic metal at the very heart of China's New Energy Plan. We all are following Tesla with its Gigafactory and the coming tide of electric cars with Tesla Model 3 entering into the mass market production this July. However, there are already more than 70 models of Electric Cars on sale in China. Lithium battery demand is following up the trend and there are Megafactories rising all over China to produce the much-needed lithium batteries with more than $20 Billion dollars in allocated investments.

Demand for batteries is driving lithium market. According to Benchmark Mineral Intelligence, batteries were driving only 22% of the global lithium demand in 2006 but by 2016 this number has jumped to 42%. Now the best electric cars are becoming more affordable and this demand is expected to increase rapidly. Next stage will be coming with the exponential growth of Solar and Wind Energy Generation which is driving the demand for home and utility-scale energy storage systems. 

Goldman Sachs estimates that every 1% increase in sales of electric cars leads to an additional demand of 70,000 tons of Lithium Carbonate Equivalent ("LCE"). The global lithium market was around 200,000 tons in 2016 and electric cars have just crossed over the 1% mark in auto sales last year. China is leading the way with 1.4% followed by Europe and the US in third place. 

Now you can do the maths and guess what will happen to the demand for lithium when electric cars will really take off. Like the recent jump in the EV sales in the UK with almost 4% of the total auto sales in the last months and countries like Norway have been beating all world records in EV sales for a long time already. Now the largest markets like China, Europe and the US are getting ready. 

Mr. Market is getting notice and lithium prices are up 74% last year with the new lithium supply increasing by only 14%. New lithium giants from China Ganfeng Lithium and Tianqi have broken "The Old Lithium Big Three" and now their revenues have grown over 100% in sales of lithium-related products just in 2016. Security of lithium supply takes the central stage in this competition.





Joe Lowry from Global Lithium is talking about Argentina taking over Chile as the center of lithium production from brines in a few years. International Lithium and Ganfeng were very early into this game and now, finally, have stricken it big with the announcement of initial resources estimation at Marina brine lithium project located in Salta, Argentina. Companies have just announced that indicated resource for Resource Area 1 contains an estimated 747,000 tons of lithium carbonate equivalent (LCE). The full resource report is coming in a few weeks time which will include inferred resources as well. It is safe to say that Mariana lithium brine system is a very significant one and not only for Argentina but it can be placed among top ten lithium brine projects in the world. Its economic potential is still being assessed, but the size of the system owned 100% by International Lithium and Ganfeng JV is expected to put it on the industry's radar screens.

Kirill Klip, Executive Chairman of ILC stated, “I am very pleased that as part of our successful strategic transition at International Lithium we are announcing a maiden resource estimation of our main project in Argentina, the Mariana lithium-potash brine project, together with our strategic partner Ganfeng Lithium. Now we are working on the clear, transparent and most cost efficient structure to advance our joint ventures with Ganfeng in order to ensure the rapid advancement of the projects.” 

International Lithium stands out among other companies developing lithium resources with its Strategic Partner China Ganfeng Lithium Co. Ltd.

Ganfeng has a strong commitment to supply Lithium products to various industries worldwide,” stated Ganfeng’s Director, Wang Xiaoshen, “so we clearly have a vested interest in these projects and have been very hands-on in the evaluation of ILC’s properties. I feel confident that these projects fit our resource strategy.”

Ganfeng is the largest integrated lithium producer in China, with a total capacity of around 30,000 tons per annum LCE. Ganfeng’s products include lithium metal, lithium hydroxide, lithium carbonate, lithium fluoride, lithium chloride, and other chemical products of lithium. Ganfeng was founded in 2000 and trades on the Shenzhen Stock Exchange with a market capitalization of around US $3 billion. Last November "Strategic Partner Ganfeng Lithium Increased Equity Ownership in International Lithium."





I am very pleased that Ganfeng Lithium is reinforcing its strategic stake in International Lithium. Ganfeng is a worldwide leader in lithium materials production based in China. They provide not only the capital to advance our joint venture projects in Argentina and Ireland but the technology to facilitate potential production to their particular needs as a lithium end-user. Ganfeng holds 19 patents and is the only company producing lithium chemicals both from brine and hard rock spodumene sources” states Kirill Klip, President of the Company.

Now we know, that this international partnership is bearing first fruits and brings the big lithium hopes for Argentina, which is becoming a real powerhouse ready to make its comeback into the international business arena with the Energy rEVolution.

International Lithium develops lithium projects on three continents: in Europe, Argentina and Canada. This year $17 million Canadian dollars were allocated to all ILC projects for development until the end of 2017. Two J/V with Ganfeng Lithium are financed by ILC’s Strategic Partner: Avalonia in Ireland and Mariana in Argentina.

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 email; 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.