How A Lithium Market Is Discovered

by ofnews on 2010/11/07

in ,Financial Services,economy

All this talk about new electric vehicles, hybrid technology and stimulus packages has us on a roll examining all of the metals going into these new technologies. But in addition to looking at the key metals, we want to understand the headlines behind them. And in some cases, better understand what the stories mean from a global sourcing perspective. Let’s take a look at lithium stocks, as an example.

Lithium, the lightest of the metals, finds itself squarely in the middle of everything battery “ from electric vehicles, to portable electronic devices, to computers and many items in between. With demand growing at 4-5% annually, according to the USGS, and lithium officially not on the critical metals list (see yesterday’s post), all is merry in lithium land right? Well, that depends on what you read.

Just yesterday, Reuters came out with this story suggesting that any spike in demand could be fraught with difficulties. Basically, 50% of the world’s lithium deposits sit in Bolivia, run by Hugo Chavez’ friend Evo Morales. We even wrote a similar piece on this a couple of months ago.

Let’s review the numbers. According to the Reuters article, global lithium carbonate consumption reached 105,000 tons in 2008, while supply was 100,000 tons (lithium carbonate is what is used to make the compounds for batteries). According to the USGS, US reserves of lithium total 760,000 tons.  One kg of lithium equates to 5.3 kgs of lithium carbonate, according to this report from Rodinia Minerals, report NI 43-101 available here.

In another recent article, with a great overview of the lithium market, the author describes a region in Nevada, Clayton Valley as The US Saudi Arabia of Lithium.  According to the author, only a small portion of total production and resources has been accounted for. The article sites 2-22 million tons of lithium was “liberated in the water system of Clayton Valley. Only one US lithium brine miner is in Clayton Valley. Rodinia Minerals seeks to support the lithium battery demand by becoming a second lithium brine miner. But it’s unclear at this juncture how much of that 2-22million tons of lithium is actually viable (that research is on-going) in terms of development as an economical source of supply.

Whether any of this turns into medium term or longer term supply remains to be seen. In the meantime, let’s hope we can continue importing materials from Chile and Argentina and avoid the Bolivia route altogether.

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