The largest Electric Vehicle manufacturers say that they are falling behind on production and attribute recent delays on a lack of available lithium supplies critical to their battery production.
The demand for the shiny white mineral has lithium companies jumping to create greater supplies including LSC Lithium Corp. (TSX: LSC), Pilbara Minerals Ltd (OTC: PILBF), Lithium X Energy Corp. (TSX: LIX.V) (OTC: LIXXF) and NRG Metals Inc. (TSX: NGZ.V) (OTC: NRGMF).
Lithium has been in higher demand than ever over the past few years, and much of the demand can be attributed to electric vehicle producers, who use lithium as a material in their rechargeable batteries. The demand continues to grow, and a shortage is on the brink.
Market watchers predict that the massive increase in demand brought on by automakers, power storage systems and new applications will create a potential significant shortfall by 2020.
It seems that few companies expected that EV manufacturers and power supply companies would reach the now massive demand for lithium this early.
Many lithium companies are seeing their share prices rising significantly with the surge in demand for new resources including LSC Lithium Corp. (TSX: LSC), Pilbara Minerals Ltd (OTC: PILBF), and Lithium X Energy Corp. (TSX: LIX.V) (OTC: LIXXF).
A new junior company in this sector, NRG Metals Inc. (TSX: NGZ.V) (OTCMKTS: NRGMF) is on a fast track development in the best producing region for lithium. NRG Metals is on course with a huge lithium brine project in South America which is well positioned near major producers FMC and SMQ.
EV MAKERS FALLING BEHIND
There is no lack of lithium in the world, but there will be limitations until mining is expanded. Meanwhile, electric vehicle companies are falling behind, they say because of a lack of lithium supplies.
Morgan Stanley says that the production and use of electric vehicles will increase to 2.9% of new vehicles in 2020. By 2025, this number will rise to almost 10%. It’s speculated that these increases in demand will lead to an even higher demand for lithium. When segmented, the auto industry is projected to have a 55+% share in the lithium-ion battery market by 2020.
Electric vehicle manufacturers aren’t the only ones in the lithium market, however. For instance, digital medicine could curb demand for lithium. Digital pills and patches are heralding a new age of novel drug delivery, and lithium could play a pivotal role in this evolution.
Other markets taking a share of this particular market include mobile phones, tablets, and machine tools.
Another critical use for lithium is lithium hydroxide, which is rapidly outpacing lithium carbonate due to its preferred performance in Li-Ion cathode applications.
While we see auto makers falling behind on electric vehicle production, we don’t see the demand dwindling. Instead, the market is bracing for an uptick that includes a price surge and ever-increasing demand for lithium.
JUNIOR MINER NRG METALS ADVANCING
South America and Australia are the two big regions for new or near-term producers of lithium.
For emerging lithium company NRG Metals, the Puna Region of Argentina makes a perfect target. The area is considered to be one of the most productive in a country that produces about 50% of all lithium.
NRG Metal’s is hotly pursuing two lithium projects – The Salar Escondido and the Hombre Muerto North – which could both be perfectly timed to provide lithium resources for new market demands.
At the Hombre Muerto North lithium project in the province of Salta, the company’s prospect is in the same basin as the existing FMC Lithium Fenix Mine that has been producing lithium carbonate during the past 20 years. It is also adjacent to the Galaxy Resources Sal de Vida Project, rated as a best undeveloped lithium project in the region.
The Salar Escondido is a well-developed project that NRG Metals is now drilling to establish what it counts as a large brine type lithium deposit. The company is releasing results continuously showing advances toward production.
NRG also just entered an agreement with Chengdu Chemphys Chemical Industry Co., Ltd. of Chengdu, China, regarding the further exploration and development of the Hombre Muerto North Lithium Project, including a Lithium Offtake Sales Agreement.
The offtake agreement could mean that NRG Metals will sell lithium before it’s even mined and provides a ready market for its asset.
MORE SOURCES THAN EVER BEFORE
Nearly half of the production of lithium came from South America just a few years ago. But that is now transforming into a new world of lithium resources.
Lithium mining will see an evolution that includes mining on six continents. Fortunately, it’s estimated that there are nearly 200 years of lithium reserves in the earth, and mining companies are rapidly adding sites to tap into the metal.
Companies such as NRG Metals are leading the way for lithium mining sites in areas such as Argentina, Bolivia, and Chile. These production operations are necessary to support the lithium market as it continues its uptick into the future.
As technology continues to change and transform, lithium will most assuredly find new applications, and the demand for lithium will continue to grow. It will be up the miners to ensure a steady flow to fuel the insatiable appetite of automakers and manufacturers.
POTENTIAL COMPARABLES
LSC Lithium Corp. (TSX: LSC)
LSC Lithium Corp. is an emerging lithium producer that has amassed a large portfolio of prospective lithium salars in Northern Argentina and is focused on becoming a significant player in the supply of high quality lithium product to global markets. On August 16th, the company announced that it will complete its previously announced private placement of common shares at an offering price of $1.10 or $0.87 U.S. per common share. In the aggregate, the offering is expected to consist of the issuance and sale of up to 18,181,818 common shares for gross proceeds of up to $20-million. The funds raised in the offering will allow LSC to further pursue the promising exploration results to date by the implementation of an accelerated and expanded exploration program for 2017.
Pilbara Minerals Ltd (OTC: PILBF)
Pilbara Minerals is an emerging lithium and tantalum producer focused on the development of its world-class 100% owned Pilgangoora Lithium-Tantalum Project, located approximately 120kms from Port Hedland in the Pilbara region of Western Australia. Pilgangoora has been confirmed as one of the largest spodumene (lithium pyroxene) and tantalite projects in the world and is set to be developed into one of the world’s largest lithium mines, also producing tantalite as a valuable by-product.
Lithium X Energy Corp. (TSX: LIX.V) (OTC: LIXXF)
Lithium X Energy Corp. is a lithium exploration and development company with a goal of becoming a low-cost supplier for the burgeoning lithium battery industry. On July 11th, the company announced that further to its news release of June 29th, 2017, the Company has closed the definitive agreement with Aberdeen International Inc. for the purchase of Aberdeen's remaining 50% interest in Potasio y Litio de Argentina S.A., which controls 100% of the Sal de los Angeles Project. The project consists of 8,154 hectares covering 95% of Salar de Diablillos, and has an NI 43-101 mineral resource estimate of 1.037 million tonnes of lithium carbonate equivalent in the indicated category and 1.007 million tonnes of lithium carbonate equivalent in the inferred category.
For a more in-depth look into NGZ you can view the in-depth report at Lithium News: http://usanewsgroup.com/2017/09/20/electric-car-demand-sparks-lithium-supply-fears/
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