In 2016, Chinese carmakers sold 28.03 million cars. If China follows through on its promise to go 100% electric that's a minimum 28.03 million lithium-ion battery packs.
Add in the UK's
2.7 million car sales in 2016
and France's
2 million car sales in 2016.
That's 32.73 million electric vehicles all requiring lithium-ion battery packs, without counting electric buses (a big deal in China, and going to be in India as well) or annual growth rates in auto sales.
One Tesla car battery uses 45 kg or 100lbs of lithium carbonate.
Tesla intends to ramp up its vehicle production to 500,000 cars per year by 2018 and 1,000,000 cars by 2020. A million electric cars produced in North America means 45,454,000kg/100,000,000 pounds or 45,454mt/50,000t of lithium carbonate equivalent (LCE) has to be mined just for Tesla's North American electric vehicle production – and Tesla has promised to source North American Lithium. Elon Musk, Tesla's CEO also has plans to build four more Gigafactory's.
Think about those global 32,730,000 lithium battery packs.
If each used the same amount of lithium
carbonate as Tesla's electric vehicles that's 1.487Bkg/3.273 Billion pounds or
1,487,727mt/1,636,500t
of new lithium carbonate demand.
Current annual production of lithium carbonate equivalent (LCE), for all purposes, stands at 182,000 metric tonnes, there is a very slight excess in 2017 predicted to disappear in early 2018.
The global lithium market is measured in terms of ‘lithium carbonate equivalent (LCE), given that lithium carbonate is the most commonly traded product in the market.
Consider India is going 100% electric and piling on to the existing lithium demand, surely there will be other countries, and companies like Volvo, announcing the phase out of internal combustion engines?
The Massive Impact of EVs on Commodities
"When you look at all the battery plants being built and the plans for EVs, even if only about 25 percent of those are realized, we're still going to be short of lithium. It's a unique once-in-a-generation situation." Simon Moores, managing director of Benchmark Mineral, Electric Car Boom Drives Rush to Mining's $90 Billion Hub
Lithium security of supply key
If we want a lithium-ion battery industry and electric vehicles built in North America we need lithium security of supply. No longer can we rely on the good graces of other countries, we need to develop an energy metals industry in North America – from mine to battery.
Lithium stocks, the producers and the near term producers are expensive, there are few bargains to be found among the more developed plays. Fortunately, for investors and our planet's health, the move towards electrifying the global transportation system is fully underway and appears unstoppable.
And that means, in this author's opinion, the earlier stage lithium focused resource plays are going to receive major investor attention.
But not just any early stage lithium company is worthy of our attention.
Brine vs hardrock lithium mining
Although it's less expensive than hard rock (Granite pegmatite-ore bodies are the hard-rock source of lithium. The lithium minerals that occur in granite pegmatites are spodumene, apatite, lepidolite, tourmaline and amblygonite) lithium mining, salar based lithium sources have a self imposed limit to annual production. You can realistically pump out only as fast as new water comes in and replenishes it. Also, with the brines your grade slowly depletes.
Of course a company should have 100% control over the production rate from their salar. It's possible an aquifer can become diluted - over producing can impact the brine's salt concentrations and chemical compositions - or depleted by too many wells sucking up more brine than should be produced.
If two or more companies have straws (wells) into the same salar legal battles might result over the sharing of the resources.
That's not a sustainable business model and lawsuits are liable to erupt.
Many junior exploration companies chasing lithium projects are not cognizant of the economic and technical challenges – no brine mining projects and even fewer hard rock projects have been put into production for the last two decades and when done so it's been by the major lithium producers – this exposes something in the industry no one talks about – a lack of skilled personnel to get involved with minerology/metallurgy and the engineering side of production.
Hard rock lithium miners have large problems facing them when competing with brine economics – firstly most have large capital (capex) costs for start up and secondly their production cost is roughly twice what it is for the brine exploitation process.
Lithium products derived from brine operations can be used directly in end-markets, but hard-rock lithium concentrates need to be further refined before they can be used in value-added applications like lithium-ion batteries.
Pegmatites are on the small side when it comes to size. A 2012 University of Michigan study, for example found that even the largest pegmatites have estimated resources similar only to that of the average brine, and, on average, brines are an order of magnitude larger in contained lithium than hard rock pegmatites.
Clayton Valley
The decision by electric car innovator, Tesla, to locate a battery manufacturing plant in the state has triggered a rush of claims in Clayton Valley.
Albermarle's Silver Peak lithium mine in Clayton Valley, Nevada is the only producing (50 years) lithium brine operation in the United States. Because Clayton Valley is an endorheic basin - endorheic basins are closed drainage basins that retain water and allow no outflow - precipitation and inflow water from the surrounding mountains only leaves the system by evaporation and seepage.
Albermarle production started at upwards of 600 milligrams per liter of lithium in the brine and even though Clayton is a closed basin now they're mining just over 100 milligrams Li per liter.
Other basins in Nevada are considered open - water travels in and out reducing lithium concentrations. The possibility of finding an economic lithium deposit to compete with Clayton Valley's is much more difficult.
The best of both lithium and hard rock? -- Cypress Development Corp.
This is a heads up to alert my readers to what is a potentially explosive drill program scheduled to start very soon.
One North American lithium focused company I'm extremely high on is Cypress Development Corp. (TSX-V: CYP, OTCBB: CYDVF, Frankfurt: C1Z1).
Cypress is in the unique position of working to establish a resource and economic metallurgical process for what Cypress believes is a large, bulk-tonnage deposit of leachable, non-hectorite ‘claystone.' If, as indicated by early results, the claystone is proven to be a significant lithium source rock, then Cypress will be in a very enviable position of having the best of both worlds - a combination of mining an at-surface leachable deposit, the claystone, that's capable of producing a ‘synthetic lithium brine.'
With a Clayton Valley, Nevada address, money in the treasury, an unusual lithium source, impressive first phase results regarding assay values and deposit size,, low public share float, an immediate drill program and Bill Willoughby (Dr. Willoughby has been a Professional Engineer since 1985 and received his Doctorate in Mining Engineering & Metallurgy from the University of Idaho in 1989) as the CEO this might be, in my opinion, the best early stage lithium play out there.
I'm sure I'll be writing much more in the near future regarding Cypress and it's intriguing Clayton Valley project.
Conclusion
Your author knows the lithium space. I was one of the very first, back in 2009 to be writing about then President Obama's plans for electrification of America's transportation system. I was exposing my readers to the Puna Plateau (Lithium Triangle), a brine mining business model, The Lithium Three and the
Lithium ABC's long before most others were even aware of the once in a generation change starting to take place.
Ahead of the Herd readers enjoyed huge success' such as Salares Lithium (TSX.V:LIT) going from .39 to a buy-out by Talison in 9 months at Cdn$1.29, Rodinia (TSX.V:RM) went from .05 to .85, in 2016 Lithium X went up up and up from a .15 IPO and more recently Far Resource went from pennies to .38.
Tesla Motors Inc. is on record saying it plans to only use raw materials sourced from North American for its $5-billion lithium-ion battery gigafactory.
New York Governor Andrew M. Cuomo recently stated that Imperium3 New York Inc. will build the state's first gigafactory producing lithium-ion batteries, aiming to produce three gigawatts of batteries by Q4 2019 and eventually to 15 gigawatts.
A Lithium Supercycle, North America's lack of supply of said commodity, a large enough resource to prevent fragmented supply chains and supply North America for decades, upcoming drill programs, assays, metallurgical work results and Cypress Development Corp. (TSX-V: CYP, OTCBB: CYDVF, Frankfurt: C1Z1) are all on my radar screen. Are they on yours?
If not, maybe they should be.
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Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
Richard owns shares of Cypress Development Corp. (TSX-V: CYP, OTCBB: CYDVF, Frankfurt: C1Z1) and CYP is an advertiser on his site.
