Saturday 5 September 2015

Joe Lowry: Lithium Hydroxide - Not Just For Astronauts Anymore.

 Joe Lowry continues his education about the heating up Lithium market. Tesla has ignited the new rally by its deal with Bacanora. We have discussed it here at length and now market can see it for itself. In one brilliant move Elon Musk has ended "The Lithium Oligopoly" and signed the deal for Lithium Hydroxide supply with Lithium Junior even without any producing mine. 
  It is one more proof that nobody would like to be at the mercy of  "The Big 3" and everybody in this Coca-Cola business would like to have the access to the multiple sources of "sugar" or even better - to have its own secure supply of Lithium. 
  Ganfeng Lithium is building its own secure supply with International Lithium and financing two our J/Vs in Argentina and Ireland. Ganfeng has built one of the largest Lithium Hydroxide facilities in the world and can produce at its plant in China 6,000 T annually. It supplies among many others such notable lithium battery makers as LG Chem, BYD and Panasonic, which supplies Lithium Cells to Tesla Motors now.
  Finally, last week Mr Market has got a little taste of Lithium Fever and we had some volume. Now without putting any capital at risk Tesla Motors has ignited the Lithium Rush and I expect that venture money will find its way to the best lithium stories which are run by the best teams. Hedge funds start to look for the upstream of the electric cars' food chain and are finding lithium story. Maybe this coming volume is the sign of things to come. Tide will lift all boats, but do your DD and chose the best ones!

Lithium Race In "War On Pollution": Investors Swarming Lithium Battery Market In China.

I continue to map the fast changing landscape for Lithium Battery business. Today we can start to add more Megafactories to the list. Tesla Gigafactory is being chased not only by Warren Buffet with BYD, but other well established players that we have discussed before: LG Chem, BYD, Foxconn, Boston Power and A123. Today we can start to dig out 17 new players in lithium battery space. I think that in the end we will have very similar situation to the Solar Panels - lithium batteries will become a commodity and price will drop dramatically. For my personal Holy Grail we need $100 per kWh - it will bring us my magic 20/200: $20k electric car with 200 miles range. 
In the end we will have the overcapacity built and consolidation in the lithium battery space, but for now: the more - the better! State-level government policy to build new strategic industry: electric cars, brings its fruits already and new stimulus money which are fighting stock market collapse are sipping in the incredibly high growth lithium space.
The best players will be rising faster with this tide and Ganfeng Lithium is very well positioned for this growth. Ganfeng is building vertically integrated lithium business with International Lithium as strategic partner to develop the secure supply of lithium. Ganfeng newly built facility with 6,000 t/y of Lithium Hydroxide capacity is ready to supply this rapidly growing demand for high purity battery grade lithium. China now controls 75% of Lithium Hydroxide battery grade production facilities in the world. Prices are already going up even before all these Gigafactories will be coming on-line. Joe Lowry will be your best guide into the building shortages in the lithium market and a lot of broken dreams and promises in this industry. He forecasts the dramatic 150% rise in Lithium Demand over next 10 years and Apple Electric iCar is not even accounted for!
Ganfeng has bought a small Chinese mobile lithium battery maker last year and has secured 10% stake in revamped Boston Power, which is building its own Megafactory in China now. Check out our latest news from both J/V projects of International Lithium financed by Ganfeng in Argentina and Ireland.
"War on Pollution" and state-level plan are driving this incredible advance in technological leap into post carbon world by China now. Leapfrog into EV space mass production is happening already. Not a lot of people realise that Warren Buffet is one of the major players now in China with his BYD investment and Elon Musk talks Tesla production in China while building Superchargers Network. It will charge the mass market with Tesla Model 3 rolling out in 2018. Apple iCar will change our landscape overnight and connection with Foxconn can be a very interesting twist to the whole story. Ganfeng Lithium already supplies LG Chem, BYD, Boston Power and Panasonic which supplies cells to Tesla Motors and investing in Tesla Gigafactory. International Lithium new aggressive stage of development will bring us closer to potential production for this well established top lithium materials producer in the world.

International Lithium Corp. Reports on Continuing Work in Argentina and Ireland With Ganfeng Lithium.

Mr. Kirill Klip, President, International Lithium Corp. comments, "Our projects are advancing in tandem with rising lithium prices. The lithium supply chain is being stressed even before the commissioning of the Tesla Gigafactory and other megafactories from BYD, Foxconn, Boston Power and LG Chem. Our joint ventures with Ganfeng Lithium demonstrate that cooperation between companies with varying expertise in the raw materials supply chain can work to secure a supply of strategic commodities. In this case, lithium which is necessary for the clean energy initiatives announced by the U.S. and China. These two countries alone will provide mass markets for electric cars and home energy storage units increasing the demand for lithium batteries."

Joe Lowry:

Lithium Hydroxide-not just for Astronauts Anymore

Most people remember Tom Hank’s famous line from Apollo 13: “Houston we've got a problem”.  Actually my favorite part of the movie is when they started talking about the lithium hydroxide canisters:
Below is the list of equipment required to solve the carbon dioxide problem:
Just as the Apollo 13 crew needed lithium hydroxide to help them make it safely back to earth, Tesla needs an extremely large quantity of lithium hydroxide to breathe life into their Nevada Gigafactory.
Unfortunately the script Tesla appears to be writing for the lithium supply is a lot harder to believe than the fact the two lithium hydroxide canisters, duct tape, a couple of hoses, bags, and socks plus a bungee cord helped bring the Apollo 13 safely back to earth in 1970.
The recently announced "supply agreement" Tesla has with an unproven company, developing an unproven resource using an unproven extraction technology seems, well, unbelievable. 
Perhaps the list of equipment the new Tesla supplier needs to succeed includes duct tape, hoses and a bungee cord in addition to lots of clay. Little is known about the project.
Meanwhile, back on earth, the current proven "Big 3" lithium hydroxide suppliers with actual resources seem not to believe enough in the future of the Gigafactory to expand.
FMC is "considering" expansion while Albemarle's expansion plan focuses on the end of the decade. ALB seems more focused on pushing price up in the near term and waiting to see if a higher demand scenario actually unfolds before they invest. The only companies expanding are the ones in China with the highest cost structure. The global average price of lithium hydroxide in 2015 is about $7.50/kg but the battery quality average price is approaching $9.00/kg in Q3.
Because the Chinese suppliers are the only ones with excess capacity and the only ones who continue to expand as the market grows - China will gain share relative to the "Big 3".  In addition to having higher production costs, exports from China must bear a 17% VAT tax that the producers can't recover through a drawback program. The only likely movement for hydroxide price is up over the next few years. Both FMC and ALB/Rockwood are discussing double digit price increases for 2016 with their customers. The Chinese suppliers will focus on share gain but ultimately move price up with the market.
This is what Tom Hanks looked liked in Apollo 13 when he wasn't sure he had enough lithium hydroxide supply. 
Perhaps we will be seeing an expression like that soon in Sparks, Nevada.
"Fremont we've got a problem......."

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