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Is this a gamechanger for the lithium industry?

By Charles Kennedy - posted Friday, 3 May 2019


IMG URL: https://d32r1sh890xpii.cloudfront.net/tinymce/2019-04/1556136176-o_1d98f3bvm1lbps0ctsd11cqjgf8.jpg

But by year's end, some of those fears had begun to dissipate. Huge projects that were expected to flood the market began experiencing delays.

You see, salt brine lithium production, which accounts for most of the market, takes a while to get going: salt water is pumped to the surface where it evaporates to form potassium deposits containing lithium.

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Take Orocobre in Brisbane, Australia, and its Salar de Olaroz facility in Argentina, which was meant to supply 42.5k tons. Delays, legal troubles and mounting expenses has brought the project basically to a halt.

Mining lithium through salt brine evaporation can generate big earnings, but only for firms with the capital to see them through: for that reason, the lithium sector is dominated by larger companies such as Albemarle (NYSE:ALB), FMC (NYSE:FMC) and SQM (NYSE:SQM)

These major firms saw their prices tank last year, as the lithium bubble burst in the wake of the Morgan Stanley report and fears of future over-supply.

But that doesn't mean the lithium party is over. In fact, it may have only just started.

Hard-rock lithium miners in hotspots such as Australia, Canada and China are warming up for the next bull run in this crucial commodity.

The legendary Greenbushes mine which is operated by Tianqi (SZSE:002466) and Albemarle (NYSE:ALB) has been in operation for 30 years, and produces a safe and ‘dry' source of lithium gained from ‘spodumene', a mineral that contains high-grade lithium.

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On the other site of the planet in North-East Ontario, and not far from Tesla's battery producing ‘gigafactory' lies the prolific Case Lake property which is 100% claimed by Power Metals (TSXV: PWM; OTC:PWRMF)

The lithium holding spodumene here is found in pegmatite zones of which the metallurgy is currently being tested by SGS Canada.

Hard rock miners do not only have cleaner production methods, they also have one leg up on the competition as they are likely to bring new supply to the marketplace quicker than their brine-mining peers do.

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This article was first published by OilPrice.com.



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About the Author

Charles Kennedy writes for OilPrice.com.

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