#Lithium: “While we hesitate to claim ‘this time is different,’ we see several key reasons why this may actually be true for lithium” @GoldmanSachs @FT

Investor concerns about a wave of supply of the electric car battery material from new mines are unfounded

Lithium sell-off is 'overdone' — Goldman Sachs

Developing new mines will be hard but demand will rise, analysts said

July 3, 2018

The sell-off in lithium equities this year is "overdone," according to Goldman Sachs.

Investor concerns about a wave of supply of the electric car battery material from new mines are unfounded, according to the investment bank, one of the biggest commodity traders.

Instead, it will be harder to develop new lithium mines that most people think, Goldman Sachs said. At the same time, demand for lithium is expected to rise fourfold by 2025, due to rising sales of electric cars.

"Coupled with ongoing rising demand expectations as auto OEMs look to electrify their fleets, we expect lithium markets to remain sufficiently tight to handsomely reward incumbent producers," Goldman Sachs said.

The bank recommended investors buy US producers Albemarle and FMC Corp, predicting their shares could rise by a further 34 per cent and 30 per cent respectively.

Shares in the world's largest producers of lithium, a white metallic powder which is used in all electric car batteries, have slumped this year, following double-digit gains in 2017.

Investors have grown increasingly concerned about a wave of new lithium projects that have sprouted up from Australia to Nevada to take advantage of rising prices.

Prices of lithium carbonate, a key lithium ion battery raw material, have increased nearly 40 per cent in the past 12 months on the back of increasing electric car production, according to Benchmark Minerals Intelligence.

But lithium is not like other commodities, according to Goldman Sachs.

The current market is small, with only around 200,000 tonnes of production a year, and has to grow rapidly to meet demand. The only other time commodity production has had to grow so fast was in the early 1900s, when oil and natural gas production almost quadrupled in ten years, Goldman Sachs said.

"While we hesitate to claim 'this time is different,' we see several key reasons why this may actually be true for lithium," Goldman said.

https://www.ft.com/content/75e6760c-7ed1-11e8-8e67-1e1a0846c475?utm_campaign=digest

#Lithium's Top Challenge Is Finding Funds

Despite bullish forecasts - especially with accelerating production of #EV's electric vehicles -- lithium may have a funding problem. 

Banks are wary, citing everything from the industry's poor track record on delivering earlier projects to a lack of insight into a small, opaque market. 

Without more investment, supplies of the commodity could remain tight, sustaining a boom that already has seen prices triple since 2015.

Lithium companies will need to invest about $12 billion to increase output fivefold by 2025 and keep pace with the world's growing appetite for batteries, according to Galaxy Resources Ltd., an Australian producer seeking to build further operations in Argentina and Canada. 

Developers say that, so far, projects aren't getting financed fast enough to achieve that leap.

Lithium's Top Challenge Is Finding Funds, Not the Battery Metal

Mariko Ishikawaupdated an hour ago

Altura Mining's lithium operation on May 2018. Source: Altura Mining."

Battery producers and automakers "have absolutely no clue on how long it takes to be able to put a mining project into operation," said Guy Bourassa, chief executive officer of Nemaska Lithium Inc., which spent about 18 months piecing together a complex C$1.1 billion ($830 million) funding program for a mine and processing plant in Quebec. "There will be a big problem -- it's going to be an impediment" to raising supply, he said.

3% #Nickel, about 2% #Copper and a little bit less than 1% of #Cobalt: #VoiseysBay 'exquisite,

"Most people don't find something as exquisite as this in their lifetime" 

Mineral deposits at Voisey's Bay 'exquisite,' says geology professor

Terry Roberts · CBC News · Posted: Jun 19, 2018 6:00 AM NT | Last Updated: June 19

5-6 minutes

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Questions about the fate of mining operations at Voisey's Bay over the past year have been replaced by unbridled hope and enthusiasm.

A green light for a multibillion-dollar underground expansion, a lifespan extended by many years, a workforce that will nearly double, and an operation poised to capitalize on what many expect will be an explosion in the demand for electric vehicles in the coming years.

Every nickel explorer's dream

You only need to pick up a metallurgical core sample from Voisey's Bay to understand what all the hype is about, and you don't need to be a geologist to know you're holding something unique.

Many times heavier than a similar-sized rock, these samples were drilled to test the ore body, and the first people to cast their eyes on them were likely very impressed.

Red areas indicate the location of confirmed mineral deposits at Voisey's Bay in Labrador. Underground mining operations are being established at Reid Brook and Eastern Deeps. The famous 'Ovoid' surface mine is expected to be exhausted in four or five years. (Wheaton Precious Metals)

"They probably went out and bought a lot of shares," Wilton joked.

The sample is rich in pentlandite and chalcopyrite. In more simple terms, it's every nickel explorer's dream, and a jaw-dropper if you're looking for copper and cobalt.

"Most people don't find something as exquisite as this in their lifetime," Wilton added.

• Al Chislett, co-discoverer of Voisey's Bay, dies at 69

Voisey's Bay was discovered by prospectors Al Chislett and Chris Verbiski in 1993. They were exploring for a company called Diamond Field Resources. 

Three years later, the discovery was sold to Inco, a Canadian mining company, for $4.3 billion. 

The mine opened in 2005, and a year later Inco was swallowed up in a massive $18.2-billion takeover by Vale, a Brazilian company.

A core sample from Voisey's Bay that was drilled to test the ore body of the Labrador discovery is described by Memorial University earth sciences professor Derek Wilton as 'exquisite.' (Terry Roberts/CBC)

Since mining began, some $15 billion in minerals has been hauled out of the famous Ovoid in northern Labrador, at very low cost.

"Usually in the Canadian context with mining operations it takes 10 years, maybe a little bit more, to pay back the amount of money that you put in there to start the mining operation," said Wilton.

"So apparently they paid this back within two or three years, which is just phenomenal. [That will] give you an idea how rich the ore was."

Going underground

But the surface mine will be exhausted in about four years.

So Vale is going underground, where ore bodies about the same size as the Ovoid have been found. And there's significant upside on the exploration front, with the potential for more expansion in the future.