Sunday 25 June 2017

International Energy Agency: In Order To Limit Temperature Increase Below 2º C The Number Of Electric Cars Needs To Reach 600 Million By 2040.

International Energy Agency: In Order To Limit Temperature Increase Below 2º C The Number Of Electric Cars Needs To Reach 600 Million By 2040.

Kirill Klip, Executive Chairman of International Lithium Corp.

International Energy Agency has presented "Global EV Outlook 2017". Numerous statistics are painting the picture of exponential growth in sales of electric cars. The number of electric cars on the roads rose to 2 million in 2016. It took us all human history to get to 1 million of electric cars in 2015 and just over 1 year to double this amount and exceed 2 million EVs by now. 

In 2016 40% of all electric cars were sold in China. China sells more electric cars than the US and Europe. And China is also the global leader in the electrification of other forms of transport. There are more than 70 models of electric cars on sale in China now. There are 2 million electric bikes, 4 million small low-speed EVs and 350,000 electric buses in China as well. BYD backed by Warren Buffet is not only the largest electric buses maker but has become the largest electric vehicles manufacturer in the world. And now Tesla is coming to China as well ...

In Norway nearly a third of all cars sold in 2016 were electric. We are at the tipping point for the mass market in electric cars. 95% of EV sales were concentrated in just 10 countries. Electric Cars still represent only 0.2% of all cars in the world. Worldwide sales of electric cars have reached 1.1% of total auto sales in 2016. In order to limit temperature increase below 2º C the number of electric cars needs to reach 600 million by 2040.

The cost of lithium batteries is going down very fast and I believe that fully electric cars will rule the world very soon. Tesla Model 3 with 65 kWh lithium battery provides over 200 miles of range and will become the standard in the industry with its mass volume production from this July. There is around 60 kg of LCE (Lithium Carbonate Equivalent) in one Tesla Model 3 battery. We will need 36 Million Tonnes of LCE to be produced by 2040 to put this IEA plan into life.

To put it into perspective, the total lithium production last year was around 200,000 T of LCE. Now you can better understand why there is the real cut throat competition for the security of lithium supply which is still hidden from the most of the people by the clouds of toxic cancer hazard fumes emitted by all DIEsel cars on our roads. ICE (Internal Combustion Engines) are on the way out, all cars will be electric very soon and we are facing the total disconnect between the coming demand for lithium and the available supply.

Lithium supply chains will be tested this year by Tesla Gigafactory starting lithium batteries mass production for Model 3 and by a few lithium batteries Megafactories which are coming online in China. Lithium giants from China like Ganfeng Lithium are building vertically integrated businesses to supply critical material to this Energy rEVolution. Ganfeng Lithium has finally closed its deal with Lithium Americas and now Argentina will become the real Powerhouse of Energy rEVolution. Lithium is the magic metal at the very heart of this Energy rEVolution and International Lithium is a Lithium Strategic Investments and Royalty Company which is plugged-in to the most dynamic EV and Energy Storage markets in China, with partners like Ganfeng Lithium, a giant from China.

International Lithium: Royalty And Strategic Investments Company Presentation.

International Lithium And Ganfeng Mariana Lithium JV Exploration Target And Indicated Resource Of 1.25 M T of LCE.

"Kirill Klip, Executive Chairman of ILC stated, "We are very pleased with the results of the maiden resource estimation at the Mariana lithium potash brine project, together with our strategic partner Ganfeng Lithium. This project is now moving from an early exploration stage to an advanced exploration stage where it will be more easily compared to other lithium brine projects in Argentina. We are looking forward to follow up with Ganfeng Lithium on the recommendations of this report in order to ensure the rapid advancement of the project towards the pilot stage and to conduct further feasibility studies that will investigate the economic viability of the Mariana project."

The Switch And Lithium Race: Tesla Has Reached An Accord With Shanghai To Explore Production In China.

It is happening! Tesla comes to China, now the security of lithium supply will be in the headlines for the rest of the summer. We are at the tipping point for the lithium industry, the supply is not there to accommodate the exponential growth in EVs and Energy Storage space. Read more.

Awakening: Tesla Model 3 And The Hot Summer 2017 For The Lithium Supply Chain.

"Very slowly Lithium Industry is starting to get some attention from the investment crowd, but the real awakening is still ahead of us. This summer will be very hot for the lithium supply chain, and the first real test is coming. Tesla Gigafactory will start mass production of Tesla Model 3 batteries in July and 4 Lithium Megafactories are coming online in China.

Ganfeng Lithium has made a very interesting public disclosure in China about SQM "stopping a supply of Lithium Brine to Ganfeng in June". It is very difficult to judge the scope of this interruption in the lithium supply chain for Ganfeng at this moment, its reasons and when the situation will normalize, but the message is clear - the security of lithium supply is the critical issue for all the major players in this exponentially growing market. And the real test is still ahead of us, the auto industry is still talking about 5% - 10% - 15% of electric cars in total auto sales, but what will happen when all cars will be electric after 2025?


It looks like the change is affecting SQM's supply of concentrated brine to Ganfeng as raw material and changes in import and export policies in Chile demand to produce high value added products in the country. These products will cut the margins for converters - producers of lithium chemicals from raw materials like lithium brine. Argentina is coming to the front line of lithium brine projects developments now.

I expect this trend to be continued, lithium is taking its geopolitical place now and countries hosting these deposits will move up the value chain producing lithium chemicals, batteries and EVs finally. The recent visit of Tesla's officials to Argentina is showing the dramatic change in the attitude to the lithium supply. EVs and ESS producers will have to migrate to the countries with resources to feed Energy rEVolution. International Lithium's JV operations with Ganfeng attract a lot of interest as an entry point in the building of vertically integrated lithium business with one of the world's top lithium producers and we are examining these strategic opportunities. Read more."

Tesla Officials Visit Argentina’s Governor Of Salta For Solar And Storage Projects And Sourcing Lithium.

ElectTrek reports that "salt on the salad'": this is how Elon Musk has described lithium before - must be very important for Tesla's digestive system after all. I am writing here extensively about the coming control of the Lithium supply by Chinese companies who are very aggressively buying all the best lithium projects worldwide. It is very difficult to pretend anymore that any lithium will be coming from any signed by Tesla agreements with some junior miners in the nearest future. Lithium cathode is still produced by Panasonic for Tesla Gigafactory. 

Another part of this story is the rising price of lithium in China again. Last year we have seen only 14% rise in lithium supply and prices have increased by 74%. In December, Benchmark Minerals has reported that LCE (Lithium Carbonate Equivalent) was priced below $15k/T and Lithium Hydroxide (the particular lithium based chemical which is used in Tesla batteries) was around $18k/T. Last week I have received reports that in Shanghai LCE was priced at $18k/T and Lithium Hydroxide was at $22k/T. Today there are reports that LCE is already pushing $19k/T. It is all happening just before 4 major Lithium batteries Megafactories will be coming online in China this year and Tesla will move into the mass market stage with the production launch of Tesla Model 3 in July.

As you know, I have been preaching for years that security of lithium supply will be the most important factor determining the competitive advantage among different producers of critical raw materials for the Energy rEVolution. This Lithium Race will have the very far-reaching geopolitical implications. Now it looks like that Tesla is realizing that there is no secure supply of lithium for its massive expansion of operations from the underneath of Gigafactory floor in Nevada. Even if Panasonic is producing cathode for lithium cells which are made at Tesla Gigafactory in Nevada the supply chain is going all over the globe and back to China.

The real test to the market and supply chains for Energy rEVolution will come with the coming tide of Electric Cars and the following tsunami of Energy Storage. Bloomberg has recently reported that there will be more than 120 models of electric cars by 2020 and you should not be surprised as we have discussed here before that there are more than 70 models of electric cars on sale in China already. The next few years will determine who will have the keys to the new Energy rEVolution and control the supply chains. Hungry Dragons are flying high already and mostly in China, the question remains who and how will feed them without fear of being burnt in the process. 

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