Wednesday, February 24, 2010

Lithium the Next Big Thing for China Investments TNR.v, CZX.v, LMR.v, RM.v, WLC.v, LI.v, SQM, FMC, ROC, FXI, BYDDY, NSANY, F, DAI, BMW, RNO, HEV, AONE

Chinese oil consumption.

"While U.S. spend billions to protect oil communication lines all over the world, China is moving fast into post oil environment dramatically cutting cost of it manufacturing base. China understands that low wage cost advantage will have to give up with time - they need to keep work force happy, but transition in Energy Space will bring China Energy Security, undermine U.S. military machine focused on Oil routes ocean domination and will bring another economic advantage in the form of much lower transportation cost. Nuclear Power developments in China support our point of view. What will be the response from Obama? We all have counted on the banks Too Big to Fail - they have failed and financial system is still in rubbles, now some are counting on "they will lose more if they sell" - is it another Big If in the making? Who can be sure?"

Chinese oil consumption growth from 1965

"Now we have few deals in place showing that automakers will go to secure their own supply chain of strategic commodities: Lithium and REE.
Canada Lithium - off take option with Mitsui.
Lithium Americas - investment from Magna.
Orocobre - J/V deal with Toyota Tsusho.
Galaxy - off take deal with Mitsubishi.
From the investment point of view, ability to pinpoint new Junior candidate for strategic J/V with one the End Users will be a game changer for Lithium portfolio performance.

So far Chinese companies were very active in Australia and Japanese are leading the pack in South Americas with a number of announced J/V deals in the last couple of months. We can hardly call it an expansion in case of Chinese Tongling investment in Canada Zinc Metals and that company holds a strategic stake in TNR Gold with International Lithium.

TNR Gold is apparently actively seeking strategic partners and in talks with a number of potential players in Lithium sector according to CEO interview. It will be interesting to see whether it will be again Japanese companies or Chinese will use their advance in this case.

Report highlights new opportunities for Lithium sector with Chinese expansion to follow after decision to concentrate on development of Electric Cars in China on a mass industrial scale.

China Briefing:

Feb 24 – China’s long had a relationship with Latin America, and with the South American continent holding 75 percent of the global lithium reserves, global players are piling in to negotiate supplies of the metal.
With China positioned as the global manufacturing hub for computers, and starting to pull away in the technology race to find viable light weight batteries, lithium – used in batteries and in hybrid vehicles – is poised to become the next oil as a commodity. Usage is expected to double by 2020.

from SinoLatin Capital outlines why lithium is important and its future trends and how they relate to Chinese manufacturers and the government’s positioning to source this material for the 21st century."
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