Friday 30 October 2015

Joe Lowry: The Lithium Market - What's Next?

Global Lithium.

  Joe Lowry shares with us today another brilliant article about the state of Lithium Supply and Demand in the days when, finally ALL Auto-makers know that they cannot meet standards limiting toxic cancer hazard emissions. The ICE based technology just has reached its thermodynamic limits. Auto-makers not only know it, but they have admitted it in Europe this week in the most disgusting fashion by lobbying their dirty friends among politicians to DOUBLE toxic cancer hazard emissions from Diesel Cars and to delay their implementation.
  Electric Cars have reached The Point Of No Return. How many people will we save before The Silicon Valley economics will make all cars electric is up to all of us now. We need cheaper and better electric cars, we need mass market for EVs. We need volume. Where the lithium will be coming from to make it possible? Joe Lowry has his insider knowledge about it. We are just making it happen at International Lithium with our strategic partner Ganfeng Lithium $1.7 Billion market cap giant from China. 
  The future is electric and if you would like to know more this weekend, you can find links below and Joe will be your guide in his  "Opaque Kingdom of Lithium".  Joe Lowry estimates 88% increase in lithium demand in 5 years and "The industry is approaching a full blown shortage situation" - according to him.  Stay tuned as I will cut out a few tracks this weekend and maybe even some serious staff will be on our AC/DC digital waves soon.

"The Chinese Power Players – Tianqi and Ganfeng: The Chinese market is the largest in the lithium world and these two companies are the leaders in the Middle Kingdom which make them defacto “majors”. Tianqi owns 51% of Talison which solidifies their position as a major factor in the global upstream market. Ganfeng is the world’s largest lithium metal producer, a major supplier in the Asia downstream lithium market and increasingly important as a global upstream player. Joe Lowry."

Joe Lowry: Citi's Recent Lithium Report - Read It With Caution.

  "Joe Lowry from Global Lithium is giving his take on latest CITI research on Lithium Industry. Lithium is finally making its way on the Wall Street and into Institutional Portfolios. Those who makes it right now will be able to enjoy The Electric Future later. Joe Lowry is the must follow for his sober insider's outlook into the realities of our Lithium Industry. Read more."

Joe Lowry: The 2015 Lithium Awards.

  Joe Lowry has produced another brilliant illustration on the state of the Lithium market just before the major technological shift in a few Trillion dollar industries which is happening all at once now: Communication, Transportation and Energy. You can find more about the real news from the Lithium Industry on his Twitter feed and LinkedIn page and on the links below. The whole world is going Electric and Lithium Is The Magic Metal at the very heart of this rEVolution.
  Ganfeng Lithium is strategic partner of International Lithium, holds 17.5% in our company and finances now two J/V projects with ILC in Ireland and Argentina. Stay tuned for our new developments.

Joe Lowry: China - The New Center of the Lithium Universe?


  "I am back from all the latest disruptions. Somebody on Twitter wrongly got my slogan: Join Disruption Or Be Disrupted and they started Censoring me on DieselGate and Volkswagen scandals. Now it is on the Capitol Hill and I loved one representative asking Volkswagen U.S. CEO during his testimony: "What are you going to read in jail". Lets courts do their job. Prosecutors have already raided Volkswagen in Germany today. For us the one thing is very important now: all cost accounted, including medical bills and damage to the planet, Electric Cars are already better and cheaper than the ones with Internal Combustion Engines (ICE). 
  Now I can get back to business and would like to share with you Joe Lowry's article on Lithium and my thoughts on China's military plan how to build Electric Cars as Strategic Industry for Post Carbon Economy and Next Industrial rEVolution. Read more."

International Lithium and Ganfeng: Argentina's Mine Industry Doubles Down on Lithium

International Lithium Corp. - A Green-Energy Metals Company.

  "I have written extensively about International Lithium and our strategic partner Ganfeng Lithium. Our J/Vs in Argentina and Ireland are financed by this giant from China and we have very important access to the technology. Basically we are building the secure supply chain for Ganfeng Lithium using their expertise in raw materials needed for production of battery grade lithium from the very beginning. Our brine bulk sample from Mariana is being tested at Ganfeng state-of-the-art R&D facilities in China and in Ireland we have identified 22 exploration targets. Now, according to our latest NR, we are waiting for the approval of the budgets for both projects to be rapidly advanced after very encouraging results were received from the last exploration stage this year.

   Today I would like to show you another side of International Lithium. We have the very strong technical team headed by our CEO Gary Schellenberg. Anthony Kovac - our COO and John Harrop - our VP of Exploration are among very few top level exploration managers and geologists in lithium sector. This Team depth has allowed International lithium to attract Ganfeng and strike two major J/V deals in all our industry. These days we are getting the first fruits of this very hard work. Coming volume shows that market is waking up and we are receiving at least some recognition of the value we have been building all these years. 
  I am talking a lot about the security of lithium supply and Tesla Lithium Hydroxide Supply Deal is another proof and was noticed by market overnight. Now venture capital is knocking on all doors chasing the upstream supply chain for electric cars and Energy rEVolution. 
  We have another great project at International Lithium: Mavis Lake Lithium And Tantalum Project which is located in mining friendly Canada in the area with excellent infrastructure and very encouraging initial exploration results with high grade Lithium and Tantalum. It will be our next strategic advance for the company. With J/Vs moving forward we are looking for the strong Strategic Partner to develop this project for the potential supply of this strategic commodity for the ongoing Next Industrial rEVolution. West will wake up one day to the fact that China has managed to control now not only over 90% of REE production, but 75% of Battery Grade Lithium Hydroxide as well. 
  Security of Supply means exactly this - Security. When the price is taking the second consideration and availability of critical materials is taking the central stage. My personal mission is to make this Security happen for the Western world for real as well, even if this part of the World still lives by HFT rules and Q by Q performance reflecting the coming bonuses. Our Asian friends are beating us all here with the state-level plans looking for The Next Fifty Years and building new strategic industries like Electric Cars in China.
  We have Elon Musk, we need more like him, but it is a very good start. Our strategic partner for Mavis Lake is waiting somewhere in between of latest Q performance reviews. If you know the one - you know whom to call. Now I do not have really to explain any more What Is Lithium For - Elon Musk has made the great job and every single Tesla Model S is the best moving ad of the things to come. All cars will be electric and it will be very soon. And by the way any new hard rock mine for Lithium will take 5-7 years to build Lithium brine operations will take 4-5 years at best. 
  Why International Lithium? You can check presentation above. Read more."

Ganfeng Increases Stake In Avalonia Lithium Project, Ireland And Finalizes Exploration Loan Agreement With International Lithium For Mariana Lithium Project, Argentina.

 "Mr. Kirill Klip, President, International Lithium Corp. comments, “The restructuring of our loan facilities with strategic partner Ganfeng Lithium provides ILC with financial relief and access to capital through the long term Exploration loan. In Argentina, all political candidates running in the upcoming elections are echoing the importance of mining and foreign investment to that country, something I view as very positive for our Mariana project. In Europe there is a growing concern that emissions standards are not being met with the clean diesel scandal paving the way for electric cars powered by lithium batteries. This gives our Avalonia project in Ireland strategic importance. Together with Ganfeng Lithium we continue to work towards supplying lithium as a raw material for clean power technologies in Europe and around the world.”

Joe Lowry:

The Lithium Market - What's Next?

"I have spent the majority of my career in the lithium business. Twenty years ago if someone asked me what business I was in and I said “lithium” – it usually generated a quizzical look and a shrug or a question about bi-polar disorder. In 1995, lithium certainly wasn’t mainstream. Today it is easy for people to relate to lithium since it powers IPhones, tablets, and Tesla. Although the average person in 2015 is familiar with lithium, 99.999% of the people on the planet can’t name a lithium company nor do they care where the lightest metal comes from.
On the other hand, the .001% of the population who knows or cares about lithium, generally speaking, has limited access to meaningful information about the main players or their competitive positions and future prospects.
Consumers of lithium chemicals have long complained about the “secret club” they imagine controls lithium supply from proverbial “smoke filled rooms”. The major lithium suppliers which until recently were called the “Big 3” clearly did not work together effectively to control price for most of the past fifteen years. In my opinion their arrogance and short sightedness often caused them to sub optimize their obvious market power.
The predictions of a green energy driven “lithium boom” almost a decade ago led to dozens of projects that resulted in well over 1 billion (US) dollars of investment in completely failed or minimally productive assets around the world. The failed lithium projects (think: Canada Lithium, Qinghai, Tibet Zabuye, Galaxy,etc) as well as projects that lingered but never got adequate financing to produce (think: Nemaska, Western Lithium, LAC, Simbol, etc) in addition to botched expansions of existing resources like FMC’s left the industry in a situation where there is currently insufficient capacity to support the now nascent lithium boom. The obvious result - price is moving up.
Since the “lithium boom” did not occur when predicted and is now only in its infancy , the failed capacity additions are just beginning to be felt in the market. The industry is approaching a full blown shortage situation - especially since lithium is not necessarily a fungible commodity like gold or sweet crude oil. All lithium is not created equal even if it meets a similar chemical spec. If you don’t believe me, ask a cathode producer who looks at morphology and stability of impurity profiles not just assay. In total supply seems to stay in balance with demand to 2020 but mix issues will cause short term pain and higher prices. You are likely to see some major lithium consumers on future episodes of "Hoarders". Check your local listings...
So where do we go from here? Some of it you have heard before. Let’s take a quick look:
SQM – is the only member of the former “Big 3” with a clear strategy that is being executed. Despite a plethora of issues with the government and a down cycle for their core ag related businesses, SQM continues to be a major force in the lithium industry. SQM knows who they are and will continue to run a very profitable upstream lithium business while they sort out their long term issues. The run up in carbonate and hydroxide price will go straight to their bottom line.
Albemarle – what I have called the “lithium superpower” seems on the verge of turning their proverbial lithium “sword” into ploughshares. For non-native English speakers this simply means it looks like they are losing their strength by choice (or bad decisions). Yes, it is hard to understand especially after they have bet the future of the company on the Rockwood acquisition. Rockwood will continue to be very profitable short term but not profitable enough long term in my opinion to overcome the high acquisition cost and things like an expansion that will not produce significant volume until 2017 . The flawed hydroxide tolling strategy from high cost suppliers is designed to bridge ALB until their curious plan for a 50,000 MT LCE spodumene based plant is on-line. According to ALB's CEO, the new plant isn't likely to produce until the next decade. Time's wasting.
ALB is in the process of cutting loose most of Rockwood’s key management and technical talent developed over decades. That would be ok if they had a team to replace the departed talent in kind. They don't.
Good luck ALB as you appear to be transitioning from the Lithium Superpower to the “Roman Empire of the Lithium World”. 
The Chinese Power Players – Tianqi and Ganfeng: The Chinese market is the largest in the lithium world and these two companies are the leaders in the Middle Kingdom which make them defacto “majors”. Tianqi owns 51% of Talison which solidifies their position as a major factor in the global upstream market. Ganfeng is the world’s largest lithium metal producer, a major supplier in the Asia downstream lithium market and increasingly important as a global upstream player.
FMC Lithium – The sad story of a great franchise being decimated with each passing year by continual missteps. This is a “Frog Prince” tale with no one on the horizon to break the spell. FMC Lithium is now a stepchild that could potentially flourish with a supportive adoptive parent. FMC's 3rd Quarter earnings call on 10/29 continued to have the standard "happy talk" about the future of lithium while they delivered $1.8 million in earning on $57 million in sales. Results speak louder than words. 
It is hard to function as a "noncore" business in a company whose stock has fallen from the mid-$80s to mid-$30s in the recent past.  FMC should sell but likely wants too much for a  damaged asset.
Orocobre – very late to market, over budget and with higher costs than anticipated yet the lithium world yearns for another brine based major. ORE could be the star of 2016 if they can produce more than 10,000 MT economically. No other lithium company has  had the opportunity ORE currently has - to enter the market at time when the capacity addition will not lower price. ORE - the biggest question mark in the lithium world.
Two of the companies listed above are looking to ORE for "third party" sourcing but why supply your neighbors when you can achieve a higher yield going directly to customers? 
Juniors – Western Lithium and LAC. The merger is still 2+2 = 3 in my opinion. Simbol – is the “better mousetrap” that will likely never be built. Projects in Argentina lack investment due to political chaos. Tesla’s two virtual suppliers (the names that shall not be named) on “contingent contract” are unlikely to produce. Et Tu Elon…..
In any case, Chinese suppliers will keep expanding and despite their high costs, lithium supply will be, for the most part, adequate to bridge the supply gap at much higher prices until lower cost capacity comes on-line early in the coming decade.
There is one project  I believe has excellent prospects to supply by 2018 but that is a story for another day."

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