The Battle for Lithium

https://www.nakedcapitalism.com/2022/09/have-the-lithium-war…
Until now China has been winning that war handily, mainly because it realized the strategic importance of lithium long before the US, or at least took earlier action to secure supplies and build up the different links of the supply chain. The Asian giant is now the number one refiner of processed lithium and the number one maker of lithium batteries.

By 2020, China controlled 76% of global lithium-ion battery production capacity, while the US accounted for just 8%. As Jalife points out, between 2018 and 2021 China spent twice as much money securing lithium mining rights as the four main economies of the Anglosphere (US, UK, Canada and Australia) combined.

Now, the US and its five-eye allies are having to play catch up. Much of their attention will be on Bolivia, Chile and Argentina, the three South American nations whose borders intersect in the salt flats basins known as “the lithium triangle.” This area not only accounts for roughly two-thirds of the world’s known reserves of lithium; its lithium is also much easier to extract than many other deposits. It is here where the main focus of what Jalife calls the “lithium war” will be centered. Asked by a listener whether this will mean more coups d’état in the region, Jalife responded, with a wry, weary smile:

Yes, we need to have them on the radar. And attacks. We are going to see some strange accidents. Yep, same as always. The setting is the same,… it’s the resources that are different. This time they are strategic.

Unlike in the Ukraine the US failed in it’s coup d’etat attempt in Venezuela. The US backed (US government & corporate-controlled media) pretender to the throne Juan Guaidó couldn’t gain traction. Funny how USians ignore such action while eating their panties in a twist over foreign interference in US internal affairs. Oh that’s right. We wear the white hats.

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By 2020, China controlled 76% of global lithium-ion battery production capacity, while the US accounted for just 8%. As Jalife points out, between 2018 and 2021 China spent twice as much money securing lithium mining rights as the four main economies of the Anglosphere (US, UK, Canada and Australia) combined.

I bet China funds the West’s Green Parties to make sure that permits take forever.

The Captain

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They tell us most lithium now is produced in Australia. But the US industry is coming on especially at Salton Sea in California.

We read that Chile is raising royalty costs making it more costly. Bolivia so far has lacked adequate technology. Argentina has political risks.

Piedmont Minerals just announced plans to build a lithium refinery in the Carolinas using crude lithium from Quebec and Ghana. Salton Sea and several others have similar plans.

It makes no sense to ship tons of crude lithium to China for refining when batteries will be made in USA. Savings on shipping costs will be significant.

But China well knows the weakness of our capitalism: focus on short term profits. As with rare earths if they undercut prices of US producers to unprofitable levels, the US producers will shut down.

Once the volumes are there to make US processors profitable they are likely to invest. But in lithium as all commodities staying in usually requires being the low cost producer. For lithium automation makes that possible. But commodities are notoroiously cyclical. This business is not for those without strong, long range commitment.

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By 2020, China controlled 76% of global lithium-ion battery production capacity, while the US accounted for just 8%. As Jalife points out, between 2018 and 2021 China spent twice as much money securing lithium mining rights as the four main economies of the Anglosphere (US, UK, Canada and Australia) combined.

That is why Tesla is operating in China.

But things look quite different than being portrayed…there are 400 Chinese EV companies on the edge of bankruptcy. Making batteries rather cheap on other side of things.

If you like lithium you might want to take a look at the Canadian recycler Li-Cycle Holdings Corp. (LICY) This is not a recommendation, just a heads-up. I have no position in this stock and I have not done any research beyond looking at the chart.

Li-Cycle Holdings Corp. engages in the lithium-ion battery resource recovery and lithium-ion battery recycling business in North America. The company offers a mix of cathode and anode battery materials, including lithium, nickel, and cobalt, as well as graphite, copper, and aluminum; and copper and aluminum metals. It also provides lithium carbonate, cobalt sulphate, nickel sulphate, and manganese carbonate. The company is headquartered in Toronto, Ontario.

https://finance.yahoo.com/quote/LICY/profile

Unlike fossil fuels that go up in smoke some 95% of battery materials can be recycled and in a couple of decades most mining for batteries will be recycling instead of new mining. Recycling could be the next energy industry. It should be a growth industry for a time.

LICY IPOed November 2020 and the IPO euphoria has dissipated

https://bigcharts.marketwatch.com/advchart/frames/frames.asp…

The Captain

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Latest article shows China (and Russia) dominate materials needed for green energy.

https://www.reuters.com/breakingviews/east-west-battleground-will-shift-metals-2022-12-23/?fbclid=IwAR3rSI0BXC01RxIhakJb_03CmOq2Ub2Gh_FLbMWiDr7GjqkHVwfHNT6IcyA

The paradox is that reen energy requires materials but environment groups oppose mining and processing in the US. Hence, they encourage dependence on imports.

How do we resolve this issue?

’ Europe needs to cumulatively spend $5.3 trillion on clean energy projects by 2050. That requires a sixfold increase in the global production of copper, lithium, graphite, nickel and some rare earths by 2040, International Energy Agency estimates show. Yet China dominates the processing, and to a lesser extent the extraction, of many critical industrial ingredients. It refines 58% of lithium produced globally, 65% of cobalt and over one-third of nickel and copper. Ostracised Russia is also big in nickel, palladium and cobalt. Europe, which imports between 75% and 100% of most metals, looks particularly vulnerable."