Strategic efforts being made on behalf of the Chinese government on recharging, lithium-ion battery design, and fuel consumption, are likely to boost lithium stocks as new lithium supply is required to meet increasing demand.
The push to revolutionize the roads in Chinese cities with millions of electric vehicles (EVs) has the potential to pour down massive gains upon lithium companies large and small, including Albemarle (NYSE: ALB), FMC Corp. (NYSE: FMC), Galaxy Resources Limited (OTC: GALXF), Sociedad Quimica y Minera de Chile (NYSE: SQM) and NRG Metals Inc. (OTC: NRGMF) (TSX.V: NGZ).
Already, major automakers are lining up to service the massive Chinese vehicle market. Luxury automaker Rolls-Royce has hinted that even they are looking to move into the EV market. China is one of Rolls-Royce's largest markets, and the clampdown on emissions is going to hit the luxury car makers if they don't adjust to meet demands.
"At the end of the day, we are also thinking that Rolls-Royce may be electrified because there is demand from local markets, especially in China," Stefan Juraschek, BMW Group's head of electric powertrain, told Automotive News. "Looking around China, if you want to be in the market, you have to think on electrifying different brands."
Coming off its own emissions related scandal, Volkswagen is also getting into the fray, announcing a $25 billion investment in battery supplies to bolster its own EV agenda.
However, as witnessed by Tesla Motors, securing enough lithium to operate and meet their production goals is a very real issue that can hamper even the most innovative companies.
Therefore, deals will have to be made by buyers with producers such as Albemarle
(NYSE: ALB), FMC Corp. (NYSE: FMC), Galaxy Resources Limited (OTC: GALXF),
Sociedad Quimica y Minera de Chile (NYSE: SQM) and NRG Metals Inc. (OTC: NRGMF) (TSX.V: NGZ) if this EV revolution is to actually take place in accordance with the market's wishes.
CHINA'S EV AND LITHIUM IMPACTS
How big is China's impact on the NEV market? More than half of the world's ownership is in China which reached 1.8 million. In 2017 China manufactured 794,000 NEV units and sold 777,000—Both the world's highest figures, and representing an increase of more than 50% on the year.
Therefore as demand for electric cars increases, the corresponding need for lithium is also expected to surge—and China is holding most of the cards.
Lithium expert Joe Lowry, predicts that lithium giants SQM, and Albemarle, as well as Chinese lithium magnates Ganfeng, and Tianqi will control over 60% of lithium supplies in 2025, after years of predicted growth. Lowry believes faster-thanexpected progress involving "e-transportation" will be one of the factors driving demand higher.
Therefore, Chinese regulators and their efforts for standardization is expected to support the creation of safe and cost-efficient recycling facilities. The reality is, in 2018 China will have to deal with an estimated 170,000 tonnes of spent EV batteries.
But more likely, Chinese interests will be drawn to more partnerships and acquisitions of producing and high-potential properties. However, it hasn't always been smooth sailing for the Chinese firms that have tried to do that.
For example, the newly-elected government in Chile seems to be deflecting away a major investment by Tianqi Lithium to acquire a 32% stake in SQM. The Chinese bidder isn't going away quietly, as they have moved to meet with Chile's top antitrust prosecutor and see what their options are.
A more successful arrangement for a Chinese firm came on the other side of the "Lithium Triangle" inside the Argentinean border, involving junior lithium company NRG Metals Inc. (OTC: NRGMF) (TSX.V: NGZ).
NRG METALS WORKING WITH CHINESE PARTNERS IN ARGENTINA
Last November, NRG Metals Inc. (OTC: NRGMF) (TSX.V: NGZ) finalized a major deal with Chinese high-purity lithium manufacturers Chengdu Chemphys Chemical Industry Co., Ltd ("Chemphys"). The newly-formed strategic alliance went on in January 2018 to announce representation from Chemphys on the NRG Board of Directors.
Company President Adrian F.C. Hobkirk said in the announcement: "We are very pleased to have obtained the support of our shareholders in regards to our business plan for the exploration and development of lithium projects in Argentina. We welcome Ms. Dai to the board of the Company, and look forward to working closely with Chemphys to quickly advance the development of the Company." By striking a deal with Chemphys, NRG proved that even juniors in the exploration phase could lure a major Chinese partner into the fold.
Chemphys was drawn to the partnership by the prospects of advancing exploration and development on NRG's flagship Hombre Muerto North Lithium Project ("HMN Project").
So far the relationship is panning out nicely, with the HMN Project already securing a contract for initial drilling, and drilling expected to commence in April 2018.
Sampling on the HMN Project has already yielded very high lithium values, with several sites returning values over 1000 mg/l Li.
Samples of similarly high concentrations were also reported on the company's other Argentinean asset, the Salar Escondido Lithium Project.
Phase II drilling just recently began on the massive 29,000-hectare property.
With Chemphys supporting the process, and a push from the surging demands of the lithium market, NRG Metals Inc. appears to be in a position to be a major benefactor from the Chinese EV revolution, and the remainder of demand increase in the lithium sector for years to come.
POTENTIAL COMPARABLES
Albemarle (NYSE: ALB)
Albemarle Corporation globally develops, manufactures, and markets engineered specialty chemicals. The company offers lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and lithium specialties and reagents for applications in lithium batteries, high performance greases, thermoplastic elastomers for car tires, rubber soles and plastic bottles, catalysts for chemical reactions, organic synthesis processes, life science, pharmaceutical, and other markets; cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications. Albemarle Corporation was founded in 1994 and is based in Charlotte, North Carolina.
FMC Corp. (NYSE: FMC)
FMC Lithium is a subsidiary of the FMC Corporation, which is a diversified chemical company, that provides solutions, applications, and products for the global agricultural, consumer, and industrial markets. FMC Lithium offers lithium for use in batteries, polymers, pharmaceuticals, greases and lubricants, glass and ceramics, and other industrial uses. FMC Corporation was founded in 1884 and is headquartered in Philadelphia, Pennsylvania.
Galaxy Resources Limited (OTC: GALXF)
Galaxy Resources is a lithium-focused resource company that explores and produces lithium carbonate mineral properties. The company holds interests in the Sal de Vida brine project in Argentina; the Mt Cattlin spodumene mine in Western Australia; and the James Bay spodumene project in Quebec, Canada. Galaxy Resources Limited is based in Applecross, Australia.
Sociedad Quimica y Minera de Chile (NYSE: SQM)
Sociedad Quimica y Minera de Chile S.A., is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.
For a more in-depth look into NRG Metals you can view the in-depth report at USA News Group: http://usanewsgroup.com/2018/03/12/analysts-predict-lithium-sector-is-growing-faster-than-any-other-sector-in-the-past-decade/
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