Tuesday, September 28, 2010

How and where to invest in this "second leg" of the Lithium boom!

“One of my top priorities next year is to have an energy policy that begins to address all facets of our over-reliance on fossil fuels,

Barrack Obama

October 2010:
Goldman Sachs discloses 12.78% ownership of Talison Lithium

Update: Oct 18th:
Our Lithium investments are up 167% in the past 6 weeks!!!

There are four lithium companies currently producing lithium on the world market that can be labelled, essentially, the BIG FOUR.  They are:

 1. SQM de Chile S.A. (NYSE-SQM) 

2. Talison Lithium (TSE-TLH)*

3. Rockwood Holdings (Chemetell) (NYSE-ROC)

4. FMC Corp (NYSE-FMC)

 Currently, these four companies produce 85% of the worlds lithium.

The other 15% is spread among smaller producers and junior miners.

Here is a list of most of those companies, in order, which may or may not be on your radar screen as investors in this sector, but should be.

5.Rodinia Lithium (formerly Rodinia minerals)  (TSX V:RM)
6.Western Lithium (TSX V:WLC)
7.TNR Gold Corp (TSX V:TNR)*
8.Galaxy Resources (ASX:GXY)
9.Orocobre (ASX:ORE)
10. Canada Lithium (TSX V:CLQ)
11. First Lithium (TSX V:MCI)*
12. Reed Resources (ASX:RDR)
13. Linear Metals (TSX:LRM
14. Electric Metal Inc (TSX.EMI)
15. Lomiko Metals Inc. (TSX.LMR)

The above lists contain the largest producers of the "electric metal" and the go getters in the junior mining sector that are charging ahead, full speed, with projects of their own, in lithium rich regions of the world, and plan on either becoming large producers, or getting swallowed in the M and A activity that will (and already has) surrounded the sector in the coming year.

As this second leg of the lithium bull market gets into full swing, it is the electric car market that has all the cache, so to speak, as every auto maker (eg: Toyota, Honda, GM, Ford, Daimler,BYD, Hyundai, VW, Tesla) ramps up to enter the electric vehicle market with it's own version of either an EV, HEV or both.

In that light it is timely to review the other, wide and varied uses for lithium and lithium carbonate Currently, aluminum production usurps the majority of lithium produced today, followed by batteries (every kind of battery from your cell phone and laptop, to your EV), glass and ceramic production, airconditioning, lubrications, and more.

MoneyWeek says:
This soft, silver-white metal is used in the manufacture of pharmaceuticals, lightweight alloys for aircraft, glass, heat-resistant cookware, high-spec lubricants, air conditioners, synthetic rubber and aluminium.
But its most exciting use is in rechargeable batteries. Lithium products already power some 90 per cent of laptop computers and more than 60 per cent of mobile phones, with big future potential in battery-powered vehicles and power tools.
As the EV market heats up, you should not forget the "other" major green markets where lithium will play a major role, if not "the" only role, and that is the energy storage needed for wind and solar projects.
As those projects become more ubiquitous, energy storage will become more and more urgent, and the lithium technologies being developed in labs around the world at this writing, from lithium-ion (the current favorite) to Lithium-air and other technologies using this valuable material, will become more and more in demand.

Supply of any commodity is always a concern.

The U.S. Dept of Energy advises the following:
"The world’s supply of lithium is sufficient to allow for the use of lithium-ion batteries in all appropriate HEVs, PHEVs, and EVs likely to be produced in the next several decades."
Here is their report on lithium supply.

The Obama administration has announced it wants 1 million electric vehicles on the road in the USA by 2015. President Obama has stated publically that he will tackle the energy policy of the USA in early 2011 and is quoted thus:

Quote: "The Gulf Oil spill will change Americas energy policy in the same way that 9-11 changed Americas security policy! --President Obama


  • Dow Chemical (NYSE: DOW) received a $161 million federal grant this month to develop a new generation of high-power lithium batteries
  • GM, Chrysler, and Ford received $400 million to make advanced hybrid, electric vehicles, and batteries
  • Johnson Controls (NYSE: JCI) and A123 Systems got $550 million to establish a manufacturing base for advanced auto batteries
  • Compact Power received $151.4 million to make lithium batteries for the Chevy Volt
  • Saft America was awarded $95.5 million to produce lithium-ion cells and battery packs for industrial and agricultural vehicle
China announced last week it is investing $15B in the electric vehicle industry.

    Investors note: Talison Lithium, Australia
     Talison Lithium is the only one of the BIG FOUR that is currently not listed on the Global X Lithium ETF (and other indices) mainly because it just went public and it will take probably 60 days for those entities to pick up the required shares for listing at or near the top of those indices. 

    Last week, before it went public, I made Talison Lithium my "conviction" stock pick.

    Yesterday Goldman Sach disclosed that it owns over 11 million shares of Talison  Lithium


    Disclosure: (* ) denotes companies we are invested in currently.

    News: Rodinia Lithium hits gusher in Argentina!

    Related articles:

    *TSX listing helps Lithium Giant increase output - Financial Post*
    Rodina Lithium Sept 2010 drill results
    Largest supplier of lithium into China, goes public
    China charges into Electric Vehicle market
    Rodina Lithium to present alongside major auto and battery makers at U.S. conference
    Lithium, gold and REEs in one penny stock
    Lithium demand will increase four fold by 2017

    Lithium and other elements confirmed at Valleyview Alberta 
    Talison lithium goes public on TSX 

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