Even beloved stocks like Tesla Motors Inc (NASDAQ:TSLA) aren’t infallible. Call me a glutton, but I like reminding investors of that. Doing so invariably stirs up some outrage, but if it gets people to think about the risks, so be it. And Tesla stock is anything but a sure thing.
This is what electric cars are doing to the lithium market $DGO.ca $SX.ca $PFN.ca $BFF.ca, $FMR.ca
The electric car market is still small, but manufacturers are ramping up production, and fast; Tesla wants to go from building an estimated 80,000 cars in 2016 to 500,000 by 2018, and are building massive battery “Gigafactories” to make that happen. Some markets have targeted huge rises in ownership, most notably China, which predicts (paywall) there will be five million cars with lithium-based batteries on its roads by 2020.
Lithium, a light, reactive metal found in salt deposits in South America, Australia, and China, is central to the production of lithium-ion batteries. The technology makes smartphones rechargeable and is central to the much larger batteries which power electric cars.
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AGORACOM Welcomes Back Pacific North West Capital (PFN: TSX-V) A Leader in Both PGM and Lithium Exploration $PFN.ca
PACIFIC NORTH WEST CAPITAL CORP.
Two Divisions: PGM and Lithium
- PGM Division: focus on Development of the 100% owned River Valley PGM Project. Canada’s Largest Undeveloped Primary PGM Resource, with 2.5 Moz PGM, in Measured plus Indicated mineral resources. New Discovery in 2015. Summer Surface Exploration ongoing and a Fall 2016 drill program to follow-up.
- Lithium Canada: formed April 2016, with a focus on Exploration of Hard Rock Lithium, in Manitoba, Canada and Lithium Brine in Nevada. The company uses the Prospector Generator Model.
Lithium Supply and Demand $DGO.ca $PFN.ca $BFF.ca $FMR.ca $SX.ca
Lithium Supply
- Global lithium supply is concentrated in relatively few locations; it is dominated by Australian hard-rock production (Greenbushes), and South American brine deposits in Argentina and Chile.
- The market is currently dominated by a small number of companies which control around 50% of supply; Albemarle (ALB US), which owns Rockwood Lithium, SQM (SQM US), FMC (FMC US) and Chengdu Tianqi listed on the Shenzhen Exchange.
- South American brine supply has risks of disruption, both geo-political and climatic. Supply in 2015 was disrupted by increased rainfall. Most recently, SQM’s Atacama core operations lease has been under threat from an arbitration case, where the lessor is seeking early termination of the lease.
- New supply ramp-up has also experienced challenges and delays, such as at Orocobre’s operations in Argentina.
- It is estimated that there is 200ktpa of advanced stage development capacity that could be brought online by 20207. This is far short of the predicted demand growth, which is likely to be favourable for future lithium prices.
- Hard rock deposits generally have 12 month construction periods; examples of new hard rock deposits coming on stream include Neometals’ Mt Marion project in Western Australia, expected to commence production in 2016.
- Lithium production from other sources, such as clay deposits in Mexico, carry greater developmental risk, but if successful would bring about a welcome addition to supply.
- Future supply diversification to bring new projects on stream in safe jurisdictions around the world is critical to the ongoing “green revolution”.
Lithium Demand
Factors Driving Demand – Key Points
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Tesla Motors Inc – How Much Worse Could It Get? $BFF.ca $FMR.ca $PFN.ca $DGO.ca
Not Enough Affordable Lithium
- Lithium, the key component found in battery packs, is necessary to propel an electric vehicle. It’s the lifeblood of the vehicle, so to speak.
- Problem, however, is that lithium miners are having a hard time meeting the demand. And what is available is becoming stunning expensive.
- Since the middle of 2015, lithium prices have jumped about 200%, reaching $20,000 per metric ton. And as lucrative as it’s become (and it will likely remain at those prices), it’s not as if the industry can easily ramp up output. Indeed, CEO Elon Musk has already commented “we would basically need to absorb the entire world’s lithium-ion production.”
Elon Musk is about to face his toughest battle yet as CEO
Durango Samples 79 Outcrops at Nemaska, Quebec $DGO.ca
- Pegmatites were discovered and mapped and some samples sent for assay from its group of lithium claims located near Nemaska, Quebec
- On the West block of claims, a few outcrops were located close to the southern boundary of Nemaska Lithium boundary and were made up of granite.
Vancouver, BC / September 13, 2016 – Durango Resources Inc. (TSX.V-DGO), (the “Company” or “Durango”) reports that further to its news release of September 8, 2016, pegmatites were discovered and mapped and some samples sent for assay from its group of lithium claims located near Nemaska, Quebec.
The pegmatites were discovered on the North, South and Eastern blocks of Durango’s claims in the recently completed program. On the West block of claims, a few outcrops were located close to the southern boundary of Nemaska Lithium boundary and were made up of granite.
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