Best Plays for Global Lithium Emerging
USA News Group News Commentary
LOS ANGELES, October 12, 2017 /PRNewswire/ --
While demand surges for lithium thanks to new applications like the insatiable electric vehicle market, three global plays are emerging as the best spots for lithium companies.
Leading lithium companies are focused on these regions including Albemarle Corporation (NYSE: ALB), FMC Corporation (NYSE: FMC), Nemaska Lithium Inc. (TSX: NMX) (OTC: NMKEF) and QMC Quantum Minerals (TSX-V: QMC) (OTC: QMCQF).
Known as the "new gasoline" for its ability to power EVs and other energy hungry devices, lithium demand has been rising rapidly and is now raising questions about producers' ability to keep up with the staggering growth.
It is already looking like a significant shortfall will take place by 2020, but the bright spot is we know where most of the lithium is and how to get to it.
Lithium resources are found in highest concentrations in South America, Australia, China and Canada.
Of these, Canada's most easterly Prairie Province of Manitoba has just ranked up to second in the world for favorable mining jurisdictions, displacing even Australia, according to the Fraser Institute.
One company already on the ground seeking to develop Canadian lithium is QMC Quantum Minerals (TSX-V: QMC.V) - (OTC: QMCQF), which has launched two separate hard rock projects in Manitoba's established lithium areas.
Other producers are seeing their share prices rise with each new wave of demand including Albemarle Corporation (NYSE: ALB), a leader in the space, FMC (NYSE: FMC), the diversified chemical company that counts 30% of its revenue from lithium, as well as Nemaska Lithium Inc. (TSX: NMX) (OTCQX: NMKEF), another Canadian focused lithium company with interests in the James Bay area of Quebec.
DEMAND DRIVING DEVELOPMENT
All the activity in lithium is being driven by a few key events in the market. China's new mandate to ban gas and diesel powered vehicles, coupled with existing plans by Tesla, BMW, Volvo, Volkswagen and others to increase EV production have pushed demand over the top.
Consultants Roskill estimate 785,000 tonnes of lithium carbonate equivalent a year will be needed by 2025, amounting to a 26,000-tonne shortfall from anticipated supply, compared to 217,000 tonnes of demand versus 227,000 tonnes of supply this year.
But the shortage could be much greater.
Global revenue from lithium-ion battery sales is anticipated to post a compound annual growth rate of 43.1% in reaching a projected $36.5 billion by 2020, according to Global X research.
THREE DOMINANT PLAYS
Analysts expect at least one new lithium mine will need to come on line each year through 2025 in order to meet existing demand.
Outside of China, three regions that are rapidly developing their lithium resources in order to meet the overwhelming demand for new lithium will likely dominate.
About two-thirds of proven reserves of lithium are concentrated in a small, high-elevation area of South America called the "Lithium Triangle", located at the intersection of Argentina, Bolivia, Chile. These are the established brine lithium producing areas responsible for about 50% of all lithium carbonate.
Australia comes next with some of the largest and most successful lithium operations. Most are hard-rock mineral spodumene (a.k.a. lithium aluminum silicate).
Recently, Canada has re-emerged as a favorable lithium producer and is coming on fast with entries such as Nemaska Lithium's new project in Quebec.
And though South America and Australia are leading production, it appears that new regions like Canada's mining districts will be sorely needed to meet the coming demand for Li.
QMC: ON TARGET INCANADA
QMC Quantum is a Canadian mining company focused on that country's Manitoba mineral region, now ranked 2nd amongst all global mining districts.
Manitoba earns this high ranking because of its competitive tax regimes, efficient permitting procedures and surrounding environmental regulations / land-claims where miners look to invest.
QMC Quantum Minerals has been assembling mineral interests since 2010, but they've stepped things up to move into lithium with the acquisition of the Cat Lake Lithium Property (formerly known as the Irgon Mine) in 2016.
Between 1953-1954, the Lithium Corporation of Canada Limited drilled 25 holes into the 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.
That represents a substantial lithium find by today's standards with an excellent grade for production.
QMC Quantum is now working to prove up the find through their detailed drill program required to update this historical resource to industry's NI 43-101 standards.
The company's geological team says there's no reason to disagree with the accuracy of the historical drill result. The Cat Lake Property lithium prospect was good enough for the historic developers of the project to put a 500 ton per day mining mill and sink a three compartment shaft into the site.
QMC Quantum Minerals had been developing other properties in Manitoba with gold, silver and copper or zinc mineralization as well, but its Cat Lake (Irgon Dike) Lithium Property is clearly the star.
Interestingly, QMC's Cat Lake property is 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.
While Canada is one of the lesser lithium development areas, companies like QMC Quantum Minerals are in a very favorable mining area. With demand as a driving force, it's not hard to see why they are moving up and putting Canada on the map as one of the best emerging lithium regions for safe opportunities with actual production.
POTENTIAL COMPARABLES
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.
FMC Corporation (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.TO) (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.
Article Source:
USA News Group
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