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Demand for EV Battery Supplies Strengthens the Lithium Market
FinancialBuzz.com News Commentary
NEW YORK, March 16, 2018 /PRNewswire/ — According to data provided by Technavio, the global lithium-ion battery market expecting to reach USD 81.65 billion by 2021. That’s at a CAGR of over 11%. So the increased usage of lithium is due to rising demand for batteries. Demand to power everyday portable consumer electronics and electric vehicles (EVs). That’s why earlier this week Bloomberg reported that Volkswagen AG, the world’s largest carmaker, secured 20 billion euros ($25 billion) in lithium-ion battery supplies. All to reinforce its strong investment in lithium-ion EVs. Therefore the move is expected to put more pressure on Tesla Inc. Especially as it copes with production issues for their mainstream Model 3. According to the report, Volkswagen plans to equip 16 factories to produce electric vehicles by the end of 2022. Similarly and compared to three factories. Additionally, Volkswagen expects to manufacture 3 million electric cars a year by 2025. Now we know that’s an ambitious goal. One that is backstopped by deals with battery suppliers such as Samsung, LG Chem Ltd. and Contemporary Amperex Technology Ltd.
A recent report published by Industrial Minerals is showing that the increasing popularity of EV’s has translated into a record demand for lithium-ion. Chinese battery-grade lithium carbonate prices have risen since the lunar New Year to almost record highs. The spot price for battery-grade lithium carbonate (min 99.5% Li2CO3) increased to 150,000-160,000 yuan ($23,676-$25,254) per ton. China’s appetite for lithium is clear as more acquisitions of lithium producers continue to take place. Recently TSX.v listed Canadian company Lithium X Energy Corp. A company completed a plan of arrangement with Nextview New Energy Lion Hong Kong Limited. All according to which NextView. NextView has agreed to acquire all the issued and outstanding common shares and warrants of Lithium X for $2.61.
So Millennial Lithium Corp. (OTCQB: MLNLF) is also listed on the TSX Venture Exchange. Plus and is developing a world-class lithium project in Argentina. Earlier this week the company announced that it has closed its previously announced bought deal financing of 6,900,000 units at a price of C$3.50 per Unit for total gross proceeds to Millennial of C$24,150,000. The Offering was conducted by a syndicate of underwriters co-led by Canaccord Genuity Corp. and Cantor Fitzgerald Canada Corporation as joint bookrunners, and including Cormark Securities Inc. and Sprott Private Wealth LP (collectively, the “Underwriters”). The Offering included 900,000 Units sold by the full exercise of the Underwriters’ over-allotment option.
The Company has concurrently closed its private placement of 2,206,671 units at a price of $3.50 per Private Placement Unit for proceeds of about C$7.7 million. Stand Virtue Limited (“Stand Virtue”), a subsidiary of GCL-Poly Energy Holdings Limited (“GCL”), a Hong Kong Stock Exchange listed company, purchased a total of 1,822,514 Private Placement Units and Lamtex Securities Limited, a subsidiary of Lamtex Holdings Ltd. (collectively, “Lamtex”), a Hong Kong Stock Exchange listed company, purchased a total of 134,157 Private Placement Units. Each of these subscribers associated with Million Surge Holdings Limited (“Million Surge”), a major shareholder of the Company.
In addition and upon completion of the Private Placement and the Bought Deal Offering, Million Surge. One to Stand Virtue and Lamtex hold collectively 13,956,671 common shares in the Company. That which makes up about 17% of Millennial’s issued share capital. Plus and more noteworthy 978,335 Warrants.
Albemarle Corporation (NYSE: ALB) is a leader in producing lithium and lithium derivatives. Recently, the company has received approval from Chile’s Economic Development Agency(CORFO). Approval for an increase in the company’s lithium quota. One to sustainably increase Albemarle’s lithium production in Chile to as much as 145,000 metric tons of lithium carbonate equivalent (LCE) annually through 2043. As previously announced, this quota increase enabling by the company’s deployment of creative technology. Technology to extract more lithium without the need for more brine pumping at the Salar de Atacama.
Thereby Sociedad Química y Minera de Chile S.A. (NYSE: SQM) committing to the development and sustainability of the lithium industry. On February 28, 2018, the company reported earnings for the twelve months ended December 31, 2017 of US$427.7 million (US$1.63 per ADR), an increase from US$278.3 million (US$1.06 per ADR). In January 2018, the company announced that it is agreeing with CORFO. An agreement to finish the arbitration processes that started in May 2014. The agreement included a one-time payment of about US$20 million that reflecting in the fourth quarter 2017 results.
So as part of the agreement, SQM allowed to produce and sell up to 2.2 million MT of lithium carbonate equivalent (LCE) through 2030, albeit at higher lease payments to CORFO and other associated cost. The new payment structure will become effective, as of the moment the agreement approved by regulatory authorities in Chile, which we expect to occur during March 2018.
Lithium Americas Corp. (NYSE: LAC), together with SQM, is developing Cauchari-Olaroz, in the Province of Jujuy, Argentina, through its 50% interest in Minera Exar. In addition, Lithium Americas owns 100% of Lithium Nevada. On January 18, 2018, the company provided Cauchari-Olaroz Development and Lithium Nevada Development update. Cauchari-Olaroz continues to progress detailed engineering which, excluding the plant design, is 50% complete. Also scheduling to be completed this quarter. That’s followed by final plant design to be completed in the second quarter of 2018. So Construction activities associated with earthworks, roads and well platforms are well underway. Lithium Americas continues to advance Lithium Nevada. They are a clay-based lithium resource in the McDermitt Caldera. The 2017 exploration drill program completed on time and budget with assay results expected in the coming months. Planning for a further 2018 exploration drill program is underway and focused on mapping the the deposit. Progress on the geology, mine plan, process engineering and permitting stay on track. On track to complete a PFS on Lithium Nevada as planned.
Tesla Inc. (NASDAQ: TSLA) offers a full suite of energy products that incorporates solar, storage, and grid services, with the opening of the Gigafactory and acquiring SolarCity. Yet Tesla’s mission is to accelerate the world’s transition to sustainable energy through increasingly affordable electric vehicles and renewable energy generation and storage. Tesla has seen enormous demand for our energy products and electric vehicles. With accelerating Tesla’s vehicle build plan to 500k cars by 2019. Plus the Gigafactory timeline is also accelerated to prepare cells and packs ahead of vehicle production. By 2019, the company will to produce 35 GWh of lithium-ion battery cells annually. That’s nearly as much as the rest of the entire world’s battery production combined. The company will cut the cost of lithium-ion batteries through economies of scale and innovative manufacturing, reduction of logistics inefficiency, optimization of co-located processes and reduced overhead.