Led by auto manufacturer Tesla, the race for lithium powered battery supremacy is on and South Korea appears to be ready to take the lead.
Of course the race is adding to the demand for lithium supplies which are now forecasting a shortfall as early as next year.
Lithium companies are already benefiting from the effects of this global competition including NRG Metals Inc. (TSXV: NGZ) (OTC: NRGMF), Critical Elements (TSX: CRE), Neo Lithium Corporation (TSX: NLC) (OTCQX: NTTHF), and Galaxy Resources (OTC: GALXF).
The push to wean the planet of its dependence on environment damaging fossil fuels is truly in full gear. Winning this race will be heavily dependent on the advancement of battery technology, and the big boys of renewable energy seem to have taken note.
Besides building what is today the biggest battery factory in the world, Tesla is on course to achieve an incredible feat that promises to change the way the world consumes energy.
One contributor that may be a likely source for lithium is newcomer NRG Metals Inc. (TSX: NGZ) (OTCMKTS: NRGMF), that is developing potentially huge lithium brine project in South America’s well known “lithium triangle”.
Other major lithium miners working at a furious pace to bring on greater supplies of the “new petroleum” include Critical Elements (TSX: CRE), Neo Lithium Corporation (TSX: NLC) (OTCQX: NTTHF), and Galaxy Resources (OTC: GALXF). All of these lithium producers are seeing heightened activity.
MOVE OVER TESLA
Tesla recently completed the world’s largest lithium ion battery in South Australia, which is expected to solve the region’s power outages. South Australia has had biting power shortages for a long time due to its lack of energy resources like coal and gas.
The whole project was finished in less than three months, with Elon Musk having famously tweeted a money-back guarantee if he failed to deliver within 100 days of signing the contract.
As enormous a feat as it is, the South Australia project could soon be overshadowed by a South Korean initiative, which could be as much as 50% larger. This project, which is proceeding on course, involves building a 150-megawatt li-ion battery to power the city of Ulsan by February 2018.
The project is being constructed by Hyundai Electric & Energy Systems Co., a subsidiary of Hyundai Heavy Industries.
These two projects have largely been enabled by dropping battery prices, enabled by increase in supplies. According to Bloomberg, battery prices drop by 19 percent every time supply doubles.
With his daring feat, Elon Musk has opened up a new frontier of competition in the same way that he did with electric vehicles.
Already, a host of companies, buoyed by lower battery manufacturing prices and the intense demand for renewable energy have started working on similar large-scale projects across the globe.
Bloomberg New Energy Finance estimates that in 2017, developers will install 1650 megawatts per hour, of new battery power which is four times the total amount for 2016. Places like South Australia, which have little access to energy resources are increasingly reliant on battery energy, and will be key in driving the market for super-batteries like the one installed by Tesla.
MINERS HAVING A FIELD DAY
This unique climate has created a significant opportunity for all lithium companies. One of the early movers is NRG Metals who operating in Argentina.
The company that has become a stand out among the near term lithium mining companies. It is especially attractive based on its early lead in property and attracting top management.
The COO of NRG, Jose Gustavo de Castro, was country manager for Orocobre in Argentina until 2015. He helped to grow the operation of that company from 10 employees to 800 in construction and about 200 people in operations. He is also credited with the exploration and development of Orocobre’s Oraloz lithium project into commercial production.
Others on the management team come from lithium miners Lithium Americas and Galaxy Resources.
NRG Metals has begun putting its lithium strategy to work in the Puna Region of Argentina, considered one of the most productive of all regions in Argentina.
NRG Metal’s properties include options in Salar Escondido, which is massive at 29,180 hectares (112 square miles) and Hombre Muerto, which consists of 3287 hectares (12.7 square miles).
The Hombre Muerto property alone is a good reason to consider this company, based on the fact that it shares the same salar as a lithium carbonate production facility owned by giant lithium producer FMC.
However, Salar Escondido is what could propel this company to “great heights”. NRG's management team has high expectations for the salar, and drilling is in progress now to prove its value.
While it is one of the relatively new entries to South American lithium development, NRG Metals has rapidly advanced two significant projects, making it one of the best bets in the region for near-term production.
SUPERSIZED BATTERIES FUEL THE FIRE
Supersized batteries solve a problem that has bedecked the alternative energy industry for a long time. Due to the intermittent nature of sunshine and wind, power production tends to be inconsistent and unpredictable. Batteries enable for smoothing out of these dips in power production, making it more reliable.
With more battery resources needed in the coming years to enable such projects, as well as the booming electric vehicle and consumer electronics markets, there is one element that the world cannot get enough of; lithium.
Lithium is a critical material in the construction of lithium-ion batteries. Because of its light weight and electrochemical potential, it produces batteries with a very high energy density.
As such the prices of lithium have been on a bullish upward trend over the past few years, and as manufacturers get closer to full utilization of existing mining capacity, the trend will definitely continue into the foreseeable future.
What lies ahead for lithium over the next year will almost certainly feel the effects of the battle for battery supremacy. The ultimate winner in either scenario will be the consumer.
POTENTIAL COMPARABLES
Critical Elements (TSX: CRE)
Critical Elements Corporation, a junior mining company, acquires, explores, and develops mining properties in Canada. It primarily explores for copper, zinc, gold, silver, nickel, lead, lithium, niobium, tantalum, and platinum group elements. Its flagship project is the Rose lithium-tantalum property that consists of 500 claims covering a total area of 260.90 square kilometers, located in the Eastmain greenstone belt. The company was formerly known as First Gold Exploration Inc. and changed its name to Critical Elements Corporation in February 2011. Critical Elements Corporation is headquartered in Montreal, Canada.
Neo Lithium Corporation (TSX: NLC) (OTCQX: NTTHF)
Neo Lithium Corp. engages in the exploration and development of resource properties. The company explores for lithium deposits. It holds interests in the 3Q Project comprising 10 mining claims covering approximately 35,000 hectares located in Tinogasta area, Catamarca province, Argentina. The company has filed a Technical Report with Positive PEA Results on its 3Q Project Showing a Capital Cost reduction of US$98.5M. The company was incorporated in 2016 and is based in Toronto, Canada.
Galaxy Resources (OTC: GALXF)
Galaxy Resources Limited is a lithium-focused resources company, with assets spanning Australia, Canada and Argentina. Galaxy is currently advancing plans to develop the Sal de Vida Lithium and Potash Brine Project (“Sal de Vida”) in Argentina, which is situated in the Lithium Triangle, a region where Chile, Argentina and Bolivia meet. Sal de Vida is a proven high quality resource has excellent promise as a future low cost production facility. Galaxy also owns the Mt Cattlin Spodumene Mine near Ravensthorpe in Western Australia and the James Bay Lithium Pegmatite Project in Quebec, Canada.