China controls Rare Earth Elements market, Japan will control Lithium market after dozen of deals like this: our "investments bottlenecks" in action: total market of Top Five Canadian Lithium Exploration and Developments plays one month ago was only 190 million CAD.
SAN FRANCISCO (MarketWatch) -- Shares of Toyota Tsusho Corp. /quotes/comstock/!8015 (JP:8015 1,405, -12.00, -0.85%) rose as high as 11% early Wednesday, amid reports that the trading company, in which Toyota Motor Corp. /quotes/comstock/!7203 (JP:7203 4,140, -50.00, -1.19%) /quotes/comstock/13*!tm/quotes/nls/tm (TM 91.76, -0.02, -0.02%) /quotes/comstock/11i!toyof (TOYOF 44.75, +0.50, +1.13%) owns a large stake, has secured a long-term source of lithium, used in hybrid and electric-car batteries. The lithium project, sited in Argentina, could begin commercial production by 2012, according to reports. Shares of Toyota Tsusho later eased back, though were still up 8%, while those of Toyota Motor rose nearly 1%, roughly in line with gains enjoyed by other car makers"
By ANN DAVIS And DAISUKE WAKABAYASHI
A key supplier of Toyota Motor Corp. moved to secure a long-term source of lithium in Argentina, in one of the first global natural-resource plays of the electric-car age.
Edging out Chinese buyers, Toyota Tsusho Corp., which is 21.8% owned by Toyota Motor, secured low-cost loans from the Japanese government to take a stake in a lithium project that could begin commercial production by 2012.
The move signals how the search for high-quality lithium used in hybrid and electric-car batteries is prompting jockeying for the earth's commodities.
A supplier to Toyota, which makes the Prius hybrid, has tied up a potential source of lithium for batteries.
With demand projected to grow rapidly for car batteries over the next decade, "we think we should start preparing to supply the market," Naoto Yamagishi, general manager of the metal-and-mineral resources department at Toyota Tsusho, said in an interview.
The investment would give Toyota—the largest seller of hybrid vehicles—as well as Japanese battery makers a secure supply of lithium rather than leave them at the mercy of a few producers if, as some fear, supplies tighten in coming years.
Japanese electronics makers already control a majority of the lithium-ion battery market for electronic devices such as laptop computers. In the new deal, a state-owned Japanese entity, the Japan Oils, Gas and Metals National Corp., is giving Toyota Tsusho inexpensive financing to secure relatively low-cost lithium for Toyota and other companies that are competing with South Korean and Chinese rivals in the car-battery market.
The investment is valued at $100 million to $120 million, said people with knowledge of the matter. Toyota Tsusho will pay for the completion of a feasibility study this year on a lithium project operated in northern Argentina by Australian-listed Orocobre Ltd. and will take a 25% stake in the project thereafter.
Although lithium is found in rock formations on many continents, in only a few spots does it exist below the surface of natural salt flats where weather and geography make it the most economical to extract. Developers with access to underground salt brines pump the liquid out and concentrate the lithium into a white powder through steps that include outdoor evaporation.
Mr. Yamagishi said Toyota Tsusho approached Orocobre, citing the potential quality of its supply, located not far from rich deposits in Chile, known as the Saudi Arabia of lithium. He said he doesn't expect supply concerns to be a problem in the next five years, but "if you look at it over 10 years, then we think the supply is going to get extremely tight."
At current prices, lithium represents only about 5% of the cost of either a laptop battery or a large-format car battery. But margins in the electronics industry tend to grow thin over time.
The global market for lithium-ion batteries used in automobiles is forecast to grow 90-fold to 2.25 trillion yen ($24.8 billion) in 2014 from 25 billion yen last year, according to market research firm Fuji-Keizai.
Only 27% of lithium currently goes into batteries, according to the annual report of Sociedad Quimica y Minera de Chile SA, which claims a 30% market share of the alkaline metal. Lithium is also used to make ceramic glass and coatings, to cast steel and as a component in lubricating greases.
The metal is extremely lightweight, heat resistant and has other properties that also make it ideal for rechargeable batteries.
James D. Calaway, the Houston-based chairman of Orocobre, said in an interview that mining companies active in the Chilean salt flats can increase production, but as with oil fields, lithium reservoirs can be damaged by too-rapid extraction, curtailing future productivity.
Mr. Calaway added that his company had considered investment proposals from one of China's largest lithium-chemistry companies, as well as other companies in the lithium supply chain. "The Asian lithium-ion battery and auto sector is taking a very proactive approach" to securing supplies, he said.
Japanese electronics makers, facing losses on TVs and other consumer electronics, are making a big push to supply lithium-ion batteries for the hybrid and electric vehicles of the future.
Toshiba Corp., Hitachi Co., and NEC Corp. have all made investments in the lithium-ion battery business for automotive use, while Panasonic Corp. bought a majority stake in Sanyo Electric Co., the world's top supplier of lithium-ion batteries, to carve out a stronger footing.
Toyota and Panasonic are partners in the development and production of lithium-ion battery packs for electric cars. Sony Corp. has also said it is considering entering the car battery business.
To secure supplies for those companies, Japan's trading companies, such as Mitsubishi Corp. and Sumitomo Corp., have been active in searching out opportunities in Latin America especially in the lithium-rich countries like Bolivia and Chile."
Orocobre, Toyota Partner to Develop Lithium Project
By Nichola Saminather
Jan. 20 (Bloomberg) -- Orocobre Ltd., an Australian mineral exploration company, will partner with a Toyota Group company to develop a lithium and potash mine in Argentina.
Orocobre will establish a joint venture with Toyota Tsusho Corp., the trading affiliate of Toyota Motor Corp., to develop its Salar de Olaroz lithium potash project in Argentina’s northwest Jujuy province, the company said in a statement to the Australian Stock Exchange.
Toyota Tsusho will acquire a 25 percent stake in the project, based on the cost achieved from a feasibility study to be completed in the third quarter of 2010, Orocobre said. The Nagoya-based company will also provide $4.5 million for the study, and will obtain a low-cost Japanese government loan to fund at least 60 percent of the project’s development.
The partnership means Orocobre won’t need additional funding for the project’s development, Orocobre Managing Director Richard Seville said in the statement.
“Toyota Tsusho becoming our strategic partner allows Olaroz direct access to Toyota Motor Corp. and its partners such as Panasonic and Sanyo,” Seville said. “These companies have significant expertise and understanding of supply requirements in large format lithium-ion batteries for the automotive industry and consumer sector and that will add greatly to our understanding of end-user requirements and demand.”
Orocobre shares surged as much as 64 Australian cents, or 46 percent, to A$2.04 as of 11:24 a.m. in Sydney.
Orocobre will own the remaining 75 percent of the project after construction is completed, and will operate the joint venture, the company said.
Construction is expected to be completed by early 2011, and the mine will be operational by the end of that year, Orocobre spokesman Paul Ryan said in a telephone interview.
Toyota established a joint venture in 2007 with Panasonic Corp., then Matsushita Electric Industrial Co., to ensure supplies of lithium-ion batteries for the automaker’s planned plug-in hybrid cars.
Toyota Tsusho is seeking reliable, low-cost lithium supplies to meet rising global demand for lithium batteries for automobiles, the company said in the statement.
“The size and quality of the deposit is world-class and we believe will produce high-purity, battery-grade materials required for the global battery industry at a cost that is competitive with existing lithium brine producers in South America,” Toyota Tsusho said."