Tuesday, January 2, 2018

Lithium: Here Comes the Supply Surge

On December 27th Reuters published "Bolivia seeks investors to power up lagging lithium output".
We have a few hundred posts on lithium and enough of a crude working knowledge of Bolivian Presidente Evo Morales that it makes sense he's had some difficulty attracting investment for Bolivia's enormous resource,

According to the last US Geological Survey numbers (Jan. 2017, new ones this month). Evo is sitting on one of the largest piles o'lithium in the world:

World Resources:
(Data in metric tons of lithium content unless otherwise noted)
...Owing to continuing exploration, lithium resources have increased substantially worldwide. Identified lithium resources in the United States, from continental brines, geothermal brines, hectorite, oilfield brines, and pegmatites, have been revised to 6. 9 million tons.

Identified lithium resources in other countries have been revised to approximately 40 million tons.

Identified lithium resources in Argentina and Bolivia are approximately 9 million tons each and in major producing countries are: Australia, more than 2 million tons; Chile, more than 7.5 million tons; and China, approximately 7 million tons. Canada’s lithium resources are about 2 million tons. Congo (Kinshasa), Russia, and Serbia have resources of approximately 1 million tons each. Lithium resources in Brazil and Mexico are approximately 200,000 tons each and Austria and Zimbabwe have more than 100,000 tons each...
The rest of the world is not having trouble attracting  investment. As noted by the FT's commodity mavens a couple weeks ago in "What to watch in metals market in 2018":
...Battery metals
Cobalt and lithium, key ingredients in the batteries used in electric vehicles, have had stellar years. Electric vehicles sales are expected to top the 1m mark for the first time. The price of lithium carbonate has risen 36 per cent, while cobalt prices have doubled — luring investors and junior miners to what has been dubbed “battery gold”. Yet the increasing supply of both metals remains a risk for prices next year. One of the world’s largest producers, Chile’s SQM, is in talks to resolve a dispute over how much lithium it can produce following the election of billionaire Sebastián Piñera as president. “For Chile, the new round of negotiations could mean the country significantly expanding its lithium output,” analysts at BTG Pactual in Santiago note.

A host of new lithium projects in South America and Australia are likely to end the shortage in the market by 2019, which will be followed by a few years of oversupply, according to Bank of America Merrill Lynch....
...Up until two years ago, the only company extracting lithium on a commercial scale from Argentine brine was U.S.-based FMC Corp., which began operations in the Dead Man salt flat in 1997. Australia’s Orocobre Ltd. became the country’s second producer in 2015.
The SQM-Lithium Americas venture on the Cauchari-Olaroz salt flats about 13,000 feet (4,000 meters) above sea level in Jujuy province plans to start producing lithium carbonate at an annual rate of 25,000 metric tons in 2019. Dozens of other projects are at earlier stages.
Argentina is looking to take market share from neighboring Chile where would-be producers need authorization from the nuclear energy commission in a throwback to a 1979 decision to declare lithium “strategic.”
—Bloomberg's Dec. 22 "Battery Makers’ Great Hope for Cheap Lithium Faces Talent Crunch
—Reuters' Nov. 13 "FEATURE-Argentina seeks to overtake Chile in South America lithium race"
—SMM Metal News' "Argentina Supports FMC on Lithium Output Expansion"

Biggest lithium mine doubles with Greenbushes expansion
The Chinese and American owners of Talison Lithium have green-lit a $320 million expansion of its mine in the South West, the world’s biggest, which will more than double capacity....
—The West Australian, March 2017
And on and on and on.

Don't stay too long at the ball or Cinderella's portfolio is cinder's.
[see what I did there?]