- Electric vehicle production increasing demand for lithium
- Chinese firms buying lithium companies
- Chinese investment in Canadian lithium set to grow
China is in the market for lithium, according to the China Economic Review (http://dtn.fm/Spf38). Chinese firms, it says, “Have been on a buying spree for lithium… companies over the past year, signing agreements for future supply of the metals. The string of deals come [sic] as auto companies have announced ambitious plans for electric vehicles in the country.” Recently, the Middle Kingdom overtook the U.S. as the country with the largest number of electric vehicles (EVs) on the road. Already with a strong presence in South America, Chinese buyers appear to be looking to the north, snapping up producers in Canada, home to Standard Lithium Ltd. (TSX.V: SLL) (FRA: S5L) (OTCQX: STLHF). This junior exploration company, based in Vancouver, is out to acquire brownfield, lithium-rich properties in the U.S. It is hoping to unlock value from overlooked U.S. lithium assets by applying both conventional and modern processing technologies. With a brownfield flagship property at Bristol Lake in the Mojave Desert, chances are high that some Chinese buyer may stop and shop.
“China has emerged as a leader in both the supply of—and demand for—electric vehicles,” a McKinsey report proclaims (http://dtn.fm/rb4vK). In 2016, Chinese manufacturers produced approximately 375,000 EVs, which accounted for 43 percent of global production. Suppliers of the lithium-ion batteries that power these vehicles are fast catching up. Chinese players now account for about 25 percent of global sales. Earlier in December 2017, Private Capital Journal reported the acquisition of Canadian producer Lithium X Energy Corp. (TSX.V: LIX) (OTCQX: LIXXF) for about $257 million by a Chinese partnership (http://dtn.fm/JDe5d). One of those partners also purchased a 20 percent stake in London-listed Bacanora Minerals.
China, which has the world’s largest auto market, is undoubtedly in pole position in the EV race. The Chinese government, seeking to cap carbon emissions, plans to phase out vehicles using gasoline and diesel by 2030, after which time only EVs will be sold. Climbing production of EVs is driving up demand for lithium. Battery-grade lithium has been trading at $20,000 a ton on the Chinese spot market, according to Fortune (http://dtn.fm/6iOym). With prices that lofty, Standard Lithium is stepping up its efforts to get the metal out of the ground. Its first project in San Bernardino County, California, at the Bristol Dry Lake has already started to show signs of promise. This past May, Standard Lithium signed an option agreement to conduct lithium exploration and project development under long-standing mineral claims and permits on the Bristol Dry Lake playa held by National Chloride Corporation of America. Test results from a new geophysical survey of the 35,000-acre Bristol Lake site indicate that high concentrations of lithium-bearing brines are present throughout the company’s mineral lease agreement claims.
Standard Lithium announced this past October that (http://dtn.fm/v8W8B) it had entered into a Memorandum of Understanding with TETRA Technologies, Inc., (NYSE: TTI) to secure access to operating and permitted land of approximately 12,100 acres in Bristol Dry Lake and up to 11,840 acres in the adjacent Cadiz Dry Lake of California’s Mojave Desert. With the recent signing of the MOU with TETRA and the option agreement with National Chloride, the actual combined project area in California now covers over 45,000 acres of the two playa. As a result of working with existing operators, a lot of the required infrastructure is already in place. The property, situated approximately 200 kilometers from Las Vegas and 330 kilometers east of the port of Los Angeles, has electric power and water and is crossed in the northwest by a major paved road (Route 66). There is also a Burlington Northern Santa Fe railroad adjacent to the site, with a purpose-built siding and loading spur-line.
Standard Lithium is also exploring for lithium in the Smackover Formation, which extends through Texas, Arkansas and Louisiana. The formation has produced billions of barrels of brines over the last 80 years from an extensive and extremely well-characterized aquifer.
With demand for lithium continuing to climb, Standard Lithium may soon be hearing a knock on the door as Chinese brokers come calling.
For more information, visit the company’s website at www.StandardLithium.com
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