Saturday 30 May 2015

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.

The Lithium-Ion Battery Megafactories Are Coming: Production To More Than Triple by 2020.

  We have the rebirth of the interest to the lithium industry on the investor's radar screens these days. Behind the scenes after the initial hype the best players were growing very fast. Just look at the incredible rise of our strategic partner Ganfeng Lithium! We are very lucky, after years of hard work to secure the financing of our two J/V projects by Ganfeng in Ireland and Argentina. Elon Musk has brought attention back to the lithium technology these days and finally our shares are finding some bids. I am writing and talking a lot about Tesla, EVs, Lithium and our companies. This is where my passion and my money are, do not hesitate to contact us with all your questions. We will never discuss any material information which is not public, but we will help you to navigate in our very young, but growing very fast industry. I will never ask you to buy our shares or give any investment advise, but just share with you my very personal vision on the future. For me it is clear - it will be lithium technology for years to come: the chart above make my point more apparent. Please follow Simon Moores and his new Benchmark Mineral Intelligence for industry insights. You will find other names on the links I am providing.
  What makes International Lithium different from other junior miners - access to the capital. Our very deep technical team headed by Gary Schellenberg has identified our projects at the very beginning of the lithium interest in 2008. It took us few long years to bring Ganfeng Lithium to the table. Now this giant from China is financing our J/V projects after studying for years other lithium projects all over the world. Based on the previous results we are drilling now both J/V projects with more information to come in the coming weeks. China controls now 75% of battery grade lithium hydroxide and Ganfeng Lithium is one of the major players in this market. International Lithium is building the supply chain for this vertically integrated lithium business in China. Stay turned and I  welcome all our new shareholders to the very exciting new industrial rEVolution we are building our business to be the part of.

Video - Elon Musk Presentation Of Tesla Lithium Energy Storage: PowerWall and PowerPack With "Infinite Scalability".

Joe Lowry:

What the Beginning of a Shortage Looks Like

The two price charts below show what the start of a tight lithium market looks like. 
The high end price for lithium carbonate has broken through $7,000/MT and will likely continue to increase. Heavy demand from Asia, the continuing delay of Albemarle/Rockwood's carbonate expansion and Orocobre's slow ramp up have contributed to spot shortages. SQM clearly cannot fill the gap. FMC continues to apologize to customers for their limited ability to supply. Suppliers are actually trying to buy back customer's inventory in some cases. Carbonate producers in China have little incentive to export given strong domestic demand and the VAT situation.
Price on the low end is constrained by annual and other long term contracts.
Hydroxide prices are also moving up. Asia demand is strong despite less than planned purchases from the Panasonic/Tesla supply chain.
FMC is benefiting the most from high hydroxide prices but production problems limit their ability to fully leverage a great opportunity. The high hydroxide price and the fact that Chinese producers have a similar cost structure for carbonate and hydroxide due to their spodumene based production process; has created a great opportunity for companies like Ganfeng, Sichuan Nike Guorun and Sichuan Yahua to export. The hydroxide price premium vs carbonate provides all the incentive they need.

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