RE: FT today26 Oct 2019 13:24
https://www.ft.com/content/76565a72-f648-11e9-9ef3-eca8fc8f2d65
Bacanora Lithium
Beneath the foothills of the Sierra Madre in the Mexican state of Sonora sits close to 9m tonnes of lithium carbonate equivalent, one of the largest such deposits in the world. It was discovered seven years ago by Aim-listed Bacanora Lithium after three years of exploration.
Until the 1990s, lithium compounds were mainly used in medicine. But the lithium-ion battery, whose inventors won the Nobel Prize for Chemistry this month, has created unprecedented demand for the metal, especially in smartphones and electric cars.
The battery for one Tesla Model S car contains 63kg of lithium. Yet despite very high demand, lithium prices have halved since January 2018 as supply has grown.
Most lithium is produced in Australia and South America, but mining and exploratory work is under way in Portugal, a number of African countries, and even Cornwall.
Peter Secker, Bacanora’s chief, estimated that lithium from Sonora will cost half as much as from Australia, currently the world’s largest producer.
However, the company needs to prove that it can extract lithium from clay at a competitive price. It has built a pilot processing plant in Sonora and under current plans, construction on the full mine will begin in 2020 and production will start in 2022.
It already has agreements in place to ship half its production to Hanwa Corporation, a Japanese trading group, and the other half to China’s Ganfeng Lithium. A recently concluded deal makes Ganfeng the largest investor in Bacanora, with a 30 per cent stake.
Bacanora shares currently trade for 32p on Aim, giving it a market capitalisation of £61m.
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