Good article13 Sep 2018 17:37
Consumers are switching to electric vehicles faster than previously thought, making an expected boom in demand for battery-grade lithium ever more real. Current suppliers including Albemarle Corp. (NYSE: ALB) and Sociedad Quimica y Minera de Chile (NYSE: SQM) will reap the rewards of a major paradigm shift in the car industry. But newcomers to this market, from Nemaska Lithium (TSX: NMX) (OTC: NMKEF) and Standard Lithium (TSXV: SLL) (OTC: STLHF) (STLHF Profile) may also profit as they bring new supplies online. Major buyers of lithium including automaker Tesla Inc. (NASDAQ: TSLA) could create massive new demand for this material.
Electric vehicle (EV) sales will surge to 1.6 million units worldwide this year, from a few hundred thousand in 2014, according to Bloomberg New Energy Finance. The growing popularity of EVs has had an effect across the entire automotive industry: German automaker Audi (NSU.DE) unveiled a new electric supercar at the Pebble Beach Automotive Week this summer, and new manufacturers are expected to enter the market as well.
Home vacuum manufacturer Dyson has revealed intentions to create an electric vehicle, investing £200 million in a test facility in Hullavington, Wiltshire, England. The test facility will be where Dyson develops its first electric vehicle, which the company has invested £2 billion towards so far. Dyson has partnered with lithium-ion battery producer Sakti3, a firm that claims to have developed a solid-state lithium-ion battery that produces over 400 Wh/kg energy density. Tesla’s Panasonic batteries are considered the industry leader at only 240Wh/kg.
If consumers transition to EVs faster than expected, the scene could be set for a lithium supply crunch as manufacturers seek the raw materials needed in lithium-ion batteries used by the automotive industry. A Tesla Model S battery pack utilizes 63 kilograms of lithium, an amount that eclipses the amount of lithium currently used in mobile phones and iPads. That requires building a new supply chain several times larger than the existing one.
Companies that might do well in this paradigm shift are those that are working on new technologies to rapidly increase the global supply of lithium. One such company is Standard Lithium (TSXV: SLL) (OTC: STLHF). Standard Lithium is working on a processing breakthrough to unlock one of the world’s most exciting untapped lithium resources, which happens to be located in the United States.
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Arkansas holds one of the world’s largest lithium opportunities
Arkansas is not renowned for its role in new technologies. The state has a mature oil and gas industry and is one of the world’s largest suppliers of bromine, a chemical used as a flame ******ant. The bromine, extracted from wells deep underground, is rich in lithium.
The Smackover Formation in Arkansas could hold 1 million metric tons of lithium reserves or about a