LOS ANGELES, November 9, 2017 /PRNewswire/ --
While announcements from major automakers and countries planning to increase their electric vehicle (EV) quotas have pushed the demand for lithium, it seems power grid storage is also helping hike demand.
Companies in the mining side of lithium are being positively impacted by the new demand forecasts including QMC Quantum Minerals Corp. (TSX-V: QMC) (OTC: QMCQF), Sociedad Quimica y Minera de Chile (NYSE: SQM), FMC (NYSE: FMC), and Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF).
Demand for lithium is projected to mushroom over 300% within the next eight years.
Growth projections are based mostly on increased consumer uses and the global proliferation of electric vehicles. However, the analysts say these estimates may be greatly understated and could ratchet up much further.
The increase in demand is already projected to result in a shortfall of lithium supply that could begin as early as 2018.
Companies with significant exposure to lithium production have been increasing their stakes and rallying. Smaller companies working to bring on new lithium sources are also following suit.
One relatively new player to the lithium supply race is QMC Quantum Minerals Corp. (TSXV: QMC) (OTC: QMCQF), which is poised to take advantage of Canada's hard-rock lithium sector. The company is on course in a well-known region in Manitoba with very favorable mining logistics.
Major companies moving to deliver new levels of lithium resources include Sociedad Quimica y Minera de Chile (NYSE: SQM), the largest producer of lithium, FMC (NYSE: FMC), the diversified chemical company with massive lithium interest in South America, and Australia's Orocobre Ltd., which just announced expansion of its efforts.
POWERING MORE APPICATIONS THAN EVER
While the EV market is creating unprecedented levels of demand for lithium, it is not the only driver adding to the requirement for the fuel of the future. It appears that multiple states and municipalities, in conjunction with local utilities, are working to revamp their electric grids. Their power storage of choice? High-density Li-ion energy storage solutions used to power homes and make the energy grid more efficient.
Already, utility companies store energy in neighborhood battery junction boxes during off-peak hours for later use during peak demand hours. In this way, utilities avoid purchasing expensive peak demand electricity. Lithium-ion storage is perfectly suited to this task.
In Arizona, the largest home energy storage project in the country is being undertaken by Mandalay Homes, which plans to build 4,000 ultra-energy-efficient homes equipped with eight kilowatt-hour Li-ion battery cells.
Green Mountain Power in the state of Vermont has offered homeowners a Tesla Powerwall for $15 a month. The batteries, which hold about 13.5 kilowatt-hour, engage when the electrical grid is strained to max capacity. This can preserve the grid, saving the utility company significant coin.
Thanks to applications like these now being adopted across the nation, reviewers expect that modernization of the nation's electric grid could add significantly to the demand, driving the need for lithium far beyond current projections.
Macquarie Bank calls lithium "the new wonder resource in the mining sector," and says that demand is expected to systemically outstrip supply in a few years, driven by an estimated 31% CAGR of EVs to 2021.
That estimate ignores the onslaught of power infrastructure and other applications.
It appears that either way, lithium companies that are increasing their production and refining capabilities are in no position to answer the new demands for all of the lithium needed to power these emerging markets.
LITHIUM'S DIRECT PATH
The simplest and most direct path for lithium to come online is for producers and near term producers to step up timetables.
But navigating the path to a new lithium resource is difficult, since about two-thirds of proven reserves of lithium are concentrated in a small area of South America located at the intersection of Argentina, Bolivia, and Chile known as the "Lithium Triangle."
For big miners these are strongholds, but for the juniors, these are politically and financially complex mining jurisdictions to operate under.
The other major lithium supplies are found mostly in Australia, which is a historically strong mining jurisdiction. Lithium companies there are also being buoyed by the new demand.
However, miners realize that domestic North American lithium production could offer some distinct advantages. QMC Quantum Minerals is one of these.
QMC QUANTUM MINERALS: KEEPING IT SIMPLE
In order to get to a lithium producing stage, miners need to take a direct approach to develop known resources. There will be no time to delay for permitting, lengthy approvals or red tape.
QMC Quantum Minerals obviously knew this when they targeted their current project in the Province of Manitoba. The mineral region is now ranked as the 2nd most favorable mining district in the world according to the Fraser Institute, displacing Australia and others. It seems Manitoba has competitive tax regimes and efficient permitting procedures surrounding environmental regulations and land-claims.
QMC made its initial move in 2016 acquiring a known lithium property -the Cat Lake Lithium Property, formerly known as the Irgon Mine.
It's not hard to understand why QMC is in the region; their property is just 20km from the world class Tanco Mine Property, which was previously North America's largest and sole producer of spodumene (Li).
Between 1953 and 1954, a predecessor to QMC drilled 25 holes into the property's Irgon Dike. They reported a historical resource estimate of 1.2 million tonnes grading 1.51% Li20 over a strike length of 365 meters and to a depth of 213 meters. That's a significant amount of lithium by any measure.
According to QMC Quantum's geological team, they have no reason to disagree with the accuracy of those historical drill results. The next step: a drill program to prove up the lithium.
There's an enormous shift underway that is revolutionizing energy utilization. The massive demand for Li-ion batteries is likely to swell as power grids modernize to handle the influx of battery-powered homes, electric vehicles and an escalating number of devices.
To keep pace with the huge demands being placed on lithium, quick-to-turnaround sources like QMC Quantum Mineral's Cat Lake Project could be critical.
Sociedad Quimica y Minera de Chile (NYSE: SQM)
Sociedad Quimica y Minera de Chile S.A., is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.
FMC (NYSE: FMC)
FMC Corp. is a Philadelphia-based chemical company which is swiftly ramping up its lithium production. Last year, FMC said it was planning to triple lithium hydroxide production capacity by 2019. The first phase of the plan has already started. FMC management also said that it was not ruling out the possibility to spin-off FMC's lithium segment as a separate publicly owned company. BofAMerrill Lynch recently upgraded FMC stock to "Buy" from "Underperform," increasing the price target to $103.00 from $66.
Nemaska Lithium Inc. (TSX: NMX) (OTCQX: NMKEF)
Nemaska Lithium intends to become a lithium hydroxide supplier and lithium carbonate supplier to the emerging lithium battery market that is largely driven by electric vehicles, cell phones, tablets and other consumer products. The Corporation is developing in Quebec one of the most important spodumene lithium hard rock deposit in the world, both in volume and grade. The spodumene concentrate produced at Nemaska Lithium's Whabouchi mine will be shipped to the Corporation's lithium compounds processing plant to be built in Shawinigan, Quebec. This plant will transform spodumene concentrate into high purity lithium hydroxide and carbonate using the proprietary methods developed by the Corporation, and for which patent applications have been filed.
For a more in-depth look into QMC you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/11/06/lithium_is_positioned_perfectly-2-2/
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