Saturday, May 23, 2009

Next Big Thing - The lithium boom is coming: The new bubble? TNR.v, SQM, ROC, TTM, BYD, DAI, NSANY, GOOG, AAPL, RIMM, HUI, XAU, WLC.v, CLQ.v, RM.v,

Our Bull has hardly started, but some are already predicting the Bubble. Our followers will be able to find a lot of information outdated in this article, but main feeling is right: it is time to worry about Supply of New Oil - Lithium. Situation is not as desperate as Oil Lobby would like it to see: our Juniors are already busy staking the grounds and acquiring Lithium properties all over the world. Lithium becomes a matter of energy security and with its Non Elastic pricing qualities at the moment surge in price is imminent in order to secure Supply.
Actually, Brines are the main source of economic extraction of Lithium for car batteries at the moment, production from Spodumenes comes with credit of other REE in deposits and those REE like Tantalum are a high value itself in all modern electronics including control system of Electric Cars. With rising Lithium price economics of hard rock mining of Lithium will improve dramatically and those, who are building portfolios now, can enjoy the run similar in nature of Silver Standard SSRI, when stock was under 5 USD and they were buying Silver deposits with Silver below 7 USD/oz: with Silver prices above 15 USD/oz last year Silver Standard was above 30 USD.

This beauty above is a salt lake with Lithium bearing brine.
Story is moving to the front pages of information agencies with billions coming into battery production, space for Lithium production itself is still relatively unoccupied and just handful of Juniors are charging themselves to remind us a hey days of Uranium Rush, but this time with mass consumer at the end of Supply chain we hope to enjoy this generational Bull market of our Next Big Thing for years to come, which reminds John Doerr upcoming of Internet 15 years ago. We and our money politely agree with the Master and hope that this time we are early into this Game.

22 May 2009 17:25:16 GMT 22 May 2009 17:25:16 GMT Source: Reuters

* Auto batteries seen as the driver
* Environmental concerns of mining
* Skeptics doubt supply
By Steve James
NEW YORK, May 22 (Reuters) - New vehicle emission standards will likely be a boon for everything from aluminum to new plastics, but the producers of lithium -- a mineral used in batteries that power new generation vehicles -- could be the big winners.
But while the few public companies that mine lithium will likely see surging revenue, they will also face the pressure that comes with all booms -- making supply meet ever-tightening availability.
Companies that mine lithium should see a long-term boost to their business, analysts said, although there are questions about whether there is enough lithium for all customers.
And some energy experts see the irony in lithium batteries replacing carbon-burning gasoline, since they believe exploiting lithium could be just as destructive to the environment as pollution.
Lithium is generally mined from rock, but it can also be found in deposits in brine ponds. It comes mostly from one region -- the Andes mountains of Chile, Argentina and Bolivia, with some deposits in China. Chile's SQM is the world's largest producer, along with U.S. specialty chemical companies Rockwood Holdings Inc and FMC Corp .
There are enormous possibilities for profit.
"We are ready and able to expand production," said Tim McKenna, a Rockwood spokesman. "In fact, in the last 18 months, we completed capacity expansion of our Chile operations to keep pace with expected demand from the auto industry."
McKenna said the auto industry is not likely to bring lithium-powered cars to the wider market much before 2011, although the Mercedes S-class is expected to be the first lithium/hybrid car on the market late this year.
Rockwood, through its German subsidiary, Chemetall, produces lithium from brine lakes at Santiago Salar de Atacama in Chile and from a mine in Silver Peak, Nevada.
Chemetall has a 50 percent share of the global market for lithium and 30 percent for lithium carbonate, which is used for battery manufacture. It produced 27,000 tonnes of lithium last year and is increasing production to about 33,000 tonnes next year and 40,000 tonnes by 2015. Current global demand is 16,000 tonnes per year, or 84,000 tonnes of lithium carbonate.
This week, the Obama administration announced new vehicle emission standards that come into effect by 2016 and the rules are seen as favoring hybrid and electric vehicles.
Analyst David Begleiter, of Deutsche Bank North America, said lithium for use in all kinds of batteries -- auto, laptop and other consumer products -- accounted for about one-third of Rockwood's $3.4 billion revenue last year
"There is no question (new emission regulations) will be very beneficial for Rockwood, although it depends on what happens with EHV (Electric Hybrid Vehicle) production increases and lithium carbonate pricing. But they all suggest material benefits for Rockwood."
Begleiter said Rockwood and SQM have some of the world's best lithium reserves.
"I don't believe there is a problem with supply," he said, although ramping up production might be slow because it takes up to 18 months for water to evaporate in brine ponds allowing the lithium to form.
Michael Harrison, an analyst at First Analysis Securities, said lithium would be a long-term driver for Rockwood.
"There is no question the long-term trend is toward lithium-based batteries, but it depends on what kind of demand there is," he said. "It is clear to me that regulatory moves on fuel efficiency are going to help make electric cars a reality."
Harrison said current hybrids and electric cars mostly have nickel-based batteries, but he expects to see more cars with lithium batteries by 2011-2012.
Not all analysts were uniformly cheery about the outlook for lithium or its major producers.
Analyst Ben Johnson of Morningstar voiced skepticism about new cars giving lithium producers a boost.
"It's a clear positive on the supply side as a small handful of players control lithium resources," he said.
"Lithium is not abundant by any means and future resources will be more difficult to exploit. On the demand side, key sources of demand like consumer electronics have been very weak recently, but longer-term, cyclical headwinds will fade or normalize.
"I am not jumping into the pool party that lithium is the be-all and end-all of transport fuel for the future. It's too early to say," Johnson added.
William Tahil, research director of Meridian International Research, an independent consultancy specializing in renewable energy, is not convinced lithium is the answer.
"Lithium Ion batteries are rapidly becoming the technology of choice for the next generation of electric vehicles," he noted in a research paper titled "The Trouble with Lithium."
To achieve the required cuts in oil consumption, a significant percentage of the world's automobile fleet of 1 billion vehicles will be electrified in the next decade, he said. Ultimately, all production, currently 60 million vehicles per year, will have to be replaced with electrified vehicles.
"There are insufficient economically recoverable lithium resources available to sustain electrified vehicle manufacture in the volumes required, based solely on LiIon batteries.
"Depletion rates would exceed current oil depletion rates and switch dependency from one diminishing resource to another. Concentration of supply would create new geopolitical tensions, not reduce them," Tahil wrote. (Reporting by Steve James; editing by Patrick Fitzgibbons and Andre Grenon)"
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