The Hunt for Lithium Resources Has China Looking in Dumpsters in an Effort to Offset Demand
08 Dec, 2017, 14:00 GMT
LOS ANGELES, December 8, 2017 /PRNewswire/ --
USANews Group News Commentary
Driven by the Electric Vehicle (EV) revolution, the demand for lithium has countries looking high and low for new sources. In China, lithium recycling is already big business, as manufacturers look to fill the gap left by lithium ore scarcity.
Traditional lithium companies are focusing on developing new lithium resources including FMC (NYSE: FMC), Albemarle Corporation (NYSE: ALB), Orocobre Ltd. (TSX: ORL) (OTC: OROCF) and QMC Quantum Minerals (TSX-V: QMC) (OTC: QMCQF).
As the world embraces the electric vehicle revolution, a revolution of sorts is also going on in the metals mining industry. Lithium, one of the most obscure metals, is growing in demand as electric vehicles push the demand for new and better battery technology.
In fact, demand is so great that there's already a predicted shortfall by 2020. This imbalance has countries scouring the globe for sources, while lithium producers and technology innovators are going to have to step up production.
On the producer side, several miners are enjoying rising share prices based off of demand including Albemarle Corporation (NYSE: ALB), a leader in lithium, FMC (NYSE: FMC), the large chemical company mining in South America.
Lithium resources are found in high concentrations in South America, Australia, and China. More recently, several firms have added Canada to the global list of hot lithium producers. In fact, the Province of Manitoba just ranked up to second in the world for favorable mining jurisdictions, displacing even Australia, according to the Fraser Institute.
Canadian lithium miner QMC Quantum Minerals (TSXV: QMC) - (OTC: QMCQF), is on the ground in-country and has launched two separate hard rock projects in Manitoba's established lithium areas.
LITHIUM MOVING UP
For a long time, lithium has remained outside the big leagues of metals, both in terms of allure and utility. As virtually every environmental conscious country rushes to save the planet from climate change, lithium is steadily taking up the role that oil has played for the better part of the last century.
Lithium is a critical component of lithium ion batteries, such as the ones used in mobile phones and now more commonly, electric vehicles.
Lithium has two qualities that make it suitable for use in rechargeable batteries; First, it is the lightest of all metals, which means that it does not increase the weight of batteries like lead does.
Second, it has the greatest electrochemical potential, meaning that various lithium configurations can produce greater voltage than most chemical elements.
These qualities combine to form an extraordinarily high energy density.
In recent years, scientists have been able to correct many of the deficiencies that were characteristic of Lithium Ion (Li-Ion) batteries, making the electronics world increasingly dependent on the metal.
One challenge that has been hard to overcome is the relative rarity of pure lithium ore in the natural world. However, the relatively short life span of electronics and mobile devices means that literally tons of the stuff is currently sitting in dumps across the world.
This has set big consumers of lithium, like China, on a path to recycle.
CHINA LOOKS TO RECYCLING
In China, lithium recycling is already big business, as manufacturers look to fill the gap left by lithium ore scarcity. The Chinese recycling market has been largely shaped by recovery of components from discarded televisions and laptops, but as discarded electric vehicles begin to find their way to the dumps, lithium companies are looking to capitalize.
China is already the world's largest electric vehicle market by a large margin, accounting for 40% of global sales in 2016. To feed this, along with the mobile device market, 6.7 billion batteries were produced in the country last year, which was a 51% percent hike from the previous year.
In 2018, industry experts estimate that China could produce 170,000 tons of lithium battery waste, a figure that is expected to rise even further in coming years.
While battery waste poses potential environmental hazards, it also provides an opportunity for companies in the recycling industry.
By 2023, it is estimated that China's battery recycling market could be worth a staggering $4.68 billion.
QMC QUANTUM'S ANSWER: LITHIUM IN CANADA
In spite of the efforts by China and others to recycle, it is apparent that other new sources of lithium will be needed to meet the soaring demand.
One answer is to look in Canada where historical hard-rock resources are already in place.
Canadian miner QMC Quantum Minerals has been assembling mineral interests since 2010, but made the move into lithium with the acquisition of the Cat Lake Lithium Property (formerly known as the Irgon Mine) in 2016.
Cat Lake is located in Manitoba just 20km from the world class Tanco Mine Property, previously North America's largest and sole producer of spodumene (Li), tantalite (Ta) and pollucite (Cs) rare minerals.
As a mineral region, Manitoba is now ranked 2nd amongst all global mining districts for its competitive tax regimes, efficient permitting procedures and surrounding environmental regulations / land-claims where miners look to invest.
Between 1953-1954 the Lithium Corporation of Canada Limited drilled 25 holes into the Cat Lake property's Irgon Dike and reported a historical resource estimate of 1.2 million tonnes (metric) grading 1.51% Li20 over a strike length of 365 meters and to a depth of 213 meters.
QMC's geological team believes the historical drill result is accurate and considered a substantial lithium with excellent grades for production.
The company is in a detailed drill program that is returning the updated results of the total potential lithium resources at its Cat Lake Property.
BATTERY POWER FORCING ALL SOLUTIONS
China's recycling efforts are certainly paying off.
Companies like Jiangxi Ganfeng Lithium and Gem Co. Ltd are already enjoying the fruits, with the latter for example experiencing a 60% jump in its share price since January. Jiangxi Ganfeng's share price growth has been even more phenomenal, rising over 200% this year alone.
Still, there remains large gaps in recycling and related innovation for new companies to fill. "Urban" mining of lithium remains prohibitively expensive and therefore profit margins are not much better than ore-based mining of the metal. Various solutions and developments such as automation and industry stakeholder cooperation promise to bring down recycling costs, paving the way for a more sustainable approach to lithium recycling.
With the mandate set by leaders like BMW, Volkswagen, Ford and Tesla to create massive electric vehicle fleets, the demand increase for lithium is imminent. The industry will need to look to new avenues, like recycling, and new companies, like QMC Quantum Minerals, to fill the widening gap.
POTENTIAL COMPARABLES
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.
Albemarle Corporation (NYSE: ALB)
Albemarle Corporation is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The Company operates through three segments: Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Lithium and Advanced Materials segment consist of two product categories: Lithium and Performance Catalyst Solutions. The bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Company serves various end markets, including petroleum refining, consumer electronics, energy storage, construction, automotive, lubricants, pharmaceuticals, crop protection, food safety and custom chemistry services. As of December 31, 2016, the Company and its joint ventures operated 31 production and research and development (R&D) facilities, as well as a number of administrative and sales offices, around the world.
Orocobre Ltd. (OTC: OROCF)
Orocobre Limited operates primarily in Argentina in the mining industry. The Company engages in the production ramp up of its Olaroz Lithium Facility and the operation of Borax Argentina S.A. (Borax Argentina). Its segments include Corporate, the Olaroz project, South American Salars and Borax Argentina. Its primary focus is on exploration for and development of lithium, potash and salar mineral deposits. The Company's assets also include boron mines and processing facilities of Borax Argentina and a portfolio of brine exploration projects. Its Olaroz Lithium Facility is located in the Puna region of Jujuy Province in northern Argentina, over 230 kilometers northwest of the capital city of Jujuy.
For a more in-depth look into QMC you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/11/27/junior-lithium-miners-are-seeing-serious-upside-as-lithium-demand-soars-2/
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