Why Now?

According to data collected by Benchmark Mineral Intelligence, the price of lithium carbonate so far in 2016 is 47% higher than last year’s average.

A recent report from Goldman Sachs Group Inc. calls Lithium the” New Gasoline,” while another report by Goldman notes that lithium demand could triple by 2025 to 570,000 tons, driven principally by smartphone and electric-car applications.

Against the backdrop of year-over-year increase in demand for Lithium, principally fueled both by insatiable demand for handheld technology, as well as the growth in electric vehicles, the biggest game-changer in the nation is Tesla Motors massive battery factory in Nevada.

Goldman Sachs estimated that Gigafactory #1 could require the equivalent of 15,000 to 25,000 t of lithium carbonate annually at full capacity, which is ~17% of current lithium output globally. This massive lithium-ion battery-cell factory is projected to cost $5 billion, slated to be fully operational by 2017/2018. Additional lithium demand in Nevada may come from new endeavors such as the proposed electric vehicle startup company Faraday Future (“FF”), which announced a $1 billion investment into phase-1 of its “groundbreaking,” “state-of-the-art automotive production plant” in North Las Vegas. While recent news indicates Faraday’s plans are on hold, the fact remains that there is global potential for future growth in the sector (see graphic below), and America is ideally suited to address a growing national demand with a uniquely domestic resource.

 



Both Tesla and any future global competitor would currently have to import most of their required lithium compounds from Mexican, South American and/or Asian sources, a demand projected to be 15,000-25,000 t of lithium carbonate required annually by Tesla alone, starting next year.

“In August Bacanora, a Canadian firm, said it had signed a conditional agreement to supply Tesla with lithium hydroxide from a mine that it plans to develop in northern Mexico. Bacanora’s shares jumped on the news —though analysts noted that shipping fine white powder across the United States border would need careful handling.” (The Economist)

Several companies are working on the development of alternatives to conventional solar evaporation production processes which may offer improved options to improve production economics as new technologies become available.

Image from Portland General Electric