Sunday 1 November 2015

Christopher Ecclestone: Lithium – Lifting the Spirits.

Christopher Ecclestone

  Christopher was writing about TNR Gold even before International Lithium IPO with Ganfeng Lithium as strategic partner. Sweet memories, TNR Gold was trading at 3 c in January of 2009 and by August was riding the Lithium Hype at 30 c. Hype has come and gone, only serious players are left in the market. Now there are just few of them and Christopher provides the great chart with all serious players and projects in this market. How serious are they - here Joe Lowry will be you best guide and you can find a lot of information on the links below. I will add that now Mitsubishi has taken out 100% off take with General Mining last week, so this project is already gone from the dating sites. International Lithium has made the major transaction with Ganfeng Lithium and cleared the last hurdles to rapidly advance our J/V projects with $1.7 Billion market cap giant from China: Avalonia in Ireland and Mariana in Argentina.

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 the 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 GanfengThe 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." Read more.

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.”


You don’t get to hear a specialty metal mentioned often in a Woody Allen movie, but Lithium has managed to score a mention more than a few times. Of course it’s not that the gnomic director has suddenly been converted to a new variety of battery but rather that so many of his characters (and maybe his audience) need a pick-me up of some Lithium to cure (or ameliorate) what ails them. Then again until 20 years ago the only mention the public ever heard of Lithium was in reference to its medical properties, even though its ceramic applications were massively more important volume-wise. Indeed Lithium was the word on everyone’s lips pre-1950 when it was a standard ingredient in 7-Up (the “up” being literal) and farther back it went into Lithia Coke (give me that over Cherry Coke any day!).
Indeed, it has been speculated (and even tried in some places) that putting Lithium into water supplies might lift people’s mood and reduce suicides. In 1990, a study in 27 counties in Texas found lower rates of not only suicide but also homicide and rape in those where the drinking water contained lithium. In 2009, research in Japan found lower suicide rates in areas with lithium in the water.
If mood enhancement is a side effect then I humbly suggest that they run some through the Toronto water supply just a little bit ahead of the next PDAC. It may not improve stock prices but fewer would care!
The Cartel
Lithium has long been ruled by a Cartel, though the members would ferociously deny it. There is nothing as broken as a cartel once it comes unglued. They can go dysfunctional and yet survive (e.g. OPEC, Potash). However, once production outside the cartel exceeds that within discipline starts to break down.
Cartels require that:
  • All big players must be within
  • If there is a major player outside then the cartel breaks down
  • Price discovery is the enemy of cartels
  • Lithium being quoted (e.g. LME) would start cartel erosion
Therefore there is a prospect that stealth erosion may occur with spodumene players converting into lithium producers. There may also be increased price discovery (LME et al.) while vertical integration will evolve with trade buyers securing exclusive offtake.
The takeover of Talison by Tianqi looked like a break-up of the Cartel then, lo and behold, Rockwood bought half of the asset. A very unsubtle and rather desperate showing of their hand by the Cartel.
However, there could very well be a sweet spot for lithium pricing where everyone can be happy. The cartel thus far has maintained prices that reward themselves handsomely. They may yet sabotage (or have been sabotaging) prices to deter new entrants. If a “right price” is established then demand may expand faster and alternative technologies may be permanently thwarted (or delayed for a long time). Recycling has not taken off massively but would do if prices were kept too high for too long.
Below can be seen the Lithium Carbonate price trend.
Vertical Integration
As per our long-held thesis, we expect (smart) end-users in most metal-consuming industries to seek out secured supply i.e. vertical integration.
A key truism behind this vertical integration theory is that the Japanese and Koreans do not want to have control of mining projects elsewhere (in absolute contrast to the Chinese attitude). Thus JVs, sizeable percentage offtake agreements and large minority stakes (as well as funding agreements) are going to be the norm. However, neither Japan nor Korea have done much to secure their supplies while the Chinese groups have eagerly positioned themselves in the Australian lithium scene by taking over Talison and taking a sizable stake in Neometal’s (ASX:NMT) Mt Marion. End-users tying up new mines should erode the cartel, removing some of its best clients.
The Lithium Lifecycle
The lithosphere is divided into two parts, the salares operators and the Hard Rockers. The former are almost all in South America, but with a few isolated examples in the USA. The latter are scattered all over the globe, and mainly are spodumene deposits. In the past the interesting combo of tin/tantalum/lithium was widely exploited but went into retreat with the rise of brine. Now though there is a resurgence in this type of deposit with the two places richly gifted in this being Spain and the mountains on the Czech/German border region.
Below can be seen our update on the Lithosphere and its timeline to production. Interestingly on the most advanced side we have two mines that have been stopped dead in their tracks with the other operating mines being those in the “Cartel” (remembering that Talison is part-owned by Rockwood). Neometals’ (ASX:NMT) Mount Marion has been edging forward and now has Ganfeng motoring the project along. Rincon was ahead of the pack in 2010 and has been marking time and Orocobre seems to have lost forward momentum as well.
Lithium Australia’s (ASX:LIT) Cinovec project in the Czech republic has its fate tied with the development of the tin assets there (of which the Lithium will be a by-product). In the meantime they are pushing ahead steadily with the pilot plant at Lepidolite Hill in Western Australia. Nemaska Lithium (TSX:NMX) are in the hunt for a partner to fund the build but that is essentially ready to roll. International Lithium have the same partner as Neometals (ASX:NMT) but that only goes to reinforce that Ganfeng will push ahead with Mt Marion which is way more advanced.
We should not be surprised to see Mt Cattlin get back into operation with its new owner, General Mining. The Quebec Lithium asset is currently mired in the Debtor in Possession sale process, which gives us no clear sign of future direction.
The space is no longer as overcrowded as it was. There has been a drastic reduction in the number of serious players caused partly by financing but also by promoters running off in search of shinier objects.
The overarching trends to look for would be:
  • Expect Australian (spodumene) players to become mine-to-market, probably in next two years
  • Hopefully a transparent spot market for Lithium will evolve (though hopefully not in China)
  • Expect that recycling (probably driven by German interest) will evolve faster when a large enough pool of used lithium products is available (but only if prices are high)
In a monolithically grim mining scene the lithium space stands out not just for a healthier price for the mineral in question, a secular upward trend in demand and a number of projects attracting big buck investments. Talison’s sale to a Chinese group (and then part resale to Rockwood) set the bar high. Followed by Neometals (ASX:NMT) success in attracting Ganfeng, the lithosphere is one of the most happening places in the minerals space.
An advantage that has come from the intervening years since the high-point of the lithium boom in 2010 is that the numbers of players have been winnowed down to a more manageable number and the projects have been coming to market in a more orderly fashion. This is more by accident than design but it is certainly a contrast to what has happened (or rather not happened) in the Rare Earth space.
The lithosphere is starting to look like one of the healthier parts of the mining space, with a good distribution of producing mines, through realistic mines in development and finally doable projects at the more formative end of the spectrum. This should create a virtuous circle that leads to the best projects getting financed and those in the space being able to, hopefully, distance themselves from the travails of the wider mining sector."

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