Saturday 29th April 2017

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Posts tagged ‘south korea’

Converging on batteries

April 23rd, 2017

Benchmark sees big investors wakening as three huge sectors chase three vital minerals

by Greg Klein

It’s “a sign of the times that big investors with big money are starting to look at this space in a serious way,” Simon Moores declared. “We’re seeing it with lithium, that’s just starting. And I think we’re going to see it with the other raw materials as well.” To that he attributes the automotive, high-tech and energy sectors for their “convergence of three multi-trillion-dollar industries on batteries.”

Addressing a Vancouver audience on the April 21st inaugural stop of the third annual Benchmark Mineral Intelligence World Tour, he pointed out that cobalt and graphite have yet to match lithium for investors’ attention. But not even lithium has drawn the financing needed to maintain supply over the long term.

Benchmark sees investment lagging as three huge sectors chase three vital minerals

While EVs still lead the battery-powered revolution, energy storage
will become more prominent after 2020, according to Simon Moores.

Back in 2006, batteries accounted for 22% of lithium demand. Ten years later the amount came to 42%. “We believe in 2020, 67% of lithium will be used for batteries.”

What’s now driving the battery market, almost literally, is electric vehicles. Energy storage will play a more prominent role from about 2020 onwards, he maintained.

He sees three cars in particular that should lead the trend: Tesla Model 3, Chevrolet Volt and Nissan Leaf. As consumers turn to pure electric vehicles with battery packs increasing capacity to the 60 to 70 kWh range and beyond, the industry will sell “hundreds of thousands of cars rather than tens of thousands… the era of the semi-mass market for EVs is beginning and it’s beginning now, this year.”

Last year’s lithium-ion market reached 70 GWh, Moores said. Forecasts for 2025 range from Bloomberg’s low of about 300 GWh to Goldman Sachs’ 440 GWh and a “pretty bullish” 530 GWh from Cairn Energy Research Advisors. As for Benchmark, “we’re at the lower end” with a base case of about 407 GWh.

“What does that mean for lithium demand? A lot of raw materials will be needed and the investment in that space is just starting.”

Lithium’s 2016 market came to about 80,000 tonnes. By 2020, demand will call for something like 180,000 to 190,000 tonnes. While battery-grade graphite demand amounted to about 100,000 tonnes last year, “by 2020, that will be just over 200,000 tonnes.” As for battery-grade cobalt, last year’s market came to just under 50,000 tonnes. “By 2020 it’s going to need to get to about 80,000 to 85,000.”

Benchmark sees investment lagging as three huge sectors chase three vital minerals

Simon Moores: “No other mineral
out there has this kind of price profile.”

Investment so far favours lithium but for each of the three commodities, it’s “not enough, not for the long term,” he stressed.

Three years ago only two battery megafactories had been envisioned. Now in operation, under construction or being planned are 15, with the number expected to grow. “That’s going to be needed if we’re ever going to get anywhere near the forecast that everyone’s saying. Not just us, not just Bernstein or Goldman Sachs, everyone is saying significant growth is here but investment is needed.”

But although Tesla gets most of the headlines, “the new lithium-ion industry is a China-centric story.” The vast majority of megafactories are Chinese plants or joint ventures with Chinese entities operating in South Korea or Japan. “The majority of their product goes to China.”

At the end of last month lithium carbonate averaged $12,313 a tonne while lithium hydroxide averaged about $17,000. Spot deals in China, meanwhile, have surpassed $20,000.

That compares with prices between 2005 and 2008 of around $4,000 for lithium carbonate and $4,500 for lithium hydroxide. Only slightly higher were averages for 2010 to 2014. But prices spiked in 2015 and 2016. “Between now and 2020 we believe lithium carbonate will be in and around an average of $13,000 a tonne and lithium hydroxide will be closer to $18,000 a tonne.”

Those long-term averages “are important for people building mines and investing in this space.”

Except for 2010, lithium prices have shown 11 years of increases, corresponding with battery demand. “No other mineral out there has this kind of price profile.”

Moores sees no oversupply or price crash for lithium in the next five years. Spodumene-sourced lithium “will fill the short-term supply deficit and brines will help fill the longer-term supply deficit post-2019 and 2020,” he said. “Both are needed to have a strong, balanced industry in the future.”

Turning to graphite, he noted that batteries had zero effect on the market in 2006. By 2016 they accounted for 16% of demand. By 2020, that number should jump to 35%.

While flake graphite comprises the feedstock for most anode material, “really, the price you should look at is spherical graphite.” That’s fallen lately to about $2,800 a tonne.

Moores foresees better margins for companies producing uncoated spherical graphite. “The people who make the coated will also make good margins, but not as good as in the past. For this reason, and because battery buyers are becoming more powerful and there’s more competition in the space, we believe the coated spherical graphite price will actually fall in the long term average, but will still be between $8,000 and $12,000 a tonne. So there’s very high value and significant demand for this material.”

He also sees natural graphite increasing its anode market share over synthetic graphite. “That’s a cost issue primarily, but there are green issues too.”

Silicon, he added, “will play a part in anodes but it will be an additive, not a replacement.”

Speaking with ResourceClips.com after the event, Moores said Benchmark World Tour attendees differ by city. The Vancouver audience reflected the resource sector, as well as fund managers attracted by BMO Capital Markets’ sponsorship. Tokyo and Seoul events draw battery industry reps. Silicon Valley pulls in high-tech boffins.

This year’s tour currently has 15 cities scheduled with two more under consideration, he noted. That compares with eight locations on the first tour in 2015. Moores attributed the success to Benchmark’s access to pricing and other sensitive info, as well as Benchmark’s site visits. “We go to China and other countries and visit the mines,” he said. “Our travel budget is through the roof. We’re not desktop analysts.”

Visual Capitalist: China leading the charge for lithium-ion megafactories

February 17th, 2017

by Jeff Desjardins | posted with permission of Visual Capitalist | February 17, 2017

China leading the charge for lithium-ion megafactories

The Chart of the Week is a Friday feature from Visual Capitalist.

 

Tesla’s Gigafactory 1 has been a centre of attention for people interested in the growing momentum behind green energy, electric cars and battery production. Therefore, it is no surprise that this facility was in the news again last month, with Tesla starting to mass-produce batteries as it ramps up to its goal of 35 GWh of capacity and beyond.

However, as exciting as this project is, it’s actually just one of multiple large-scale “megafactories” being built—with many of them being in China.

China leading the charge

We talked to Simon Moores, managing director at Benchmark Mineral Intelligence, who explained that Tesla isn’t alone or unique in its ambitions to build lithium-ion batteries at scale:

While the Tesla Gigafactory is vitally important from an EV vertical integration perspective, the majority of new lithium-ion battery capacity is being built in China. Some of these plants are expected to be huge, such as the CATL facility at 50 GWh—there is little doubt that China’s lithium-ion industry has come of age.

Contemporary Amperex Technology Ltd (CATL) has plans to build the largest lithium-ion megafactory of all—but the company is little known in North America. It’s already worth $11.5 billion and could be a dominant force globally in the battery sector if it successfully increases its lithium-ion production capacity six-fold to 50 GWh by the year 2020.

Other Chinese manufacturers are on a similar trajectory. Panasonic, LG Chem and Boston Power are building new megafactory plants in China, while companies such as Samsung and BYD are expanding existing ones. Lithium-ion plants in China currently have a total capacity of 16.4 GWh—but by 2020, they will combine for a total of 107.5 GWh.

Capacity by country

This ramp-up in China means that the country will have 62% of the world’s lithium-ion battery production capacity by 2020.

There are only three other players in the megafactory game: United States, South Korea and Poland.

  2016 capacity (GWh) 2020 capacity (GWh) % of global total (2020)
Total 27.9 173.5 100%
United States 1.0 38.0 22%
China 16.4 107.5 62%
Korea 10.5 23.0 13%
Poland 0.0 5.0 3%

Above estimates on battery capacity courtesy of Benchmark Mineral Intelligence.

Posted with permission of Visual Capitalist.

Nuclear power to nearly double by 2040: U.S. Energy Information Administration

May 16th, 2016

by Greg Klein | May 16, 2016

Projected to grow 2.4% annually, nuclear power will remain one of the most important means of generating electricity, says a new report. With last week’s release of International Energy Outlook 2016, the U.S. Energy Information Administration looked at energy markets from 2012 to 2040. Electricity continues to be “the world’s fastest-growing form of end-use energy consumption.”

Nuclear power to nearly double by 2040

The report foresees world net electricity generation increasing 69% by 2040, from 21.6 trillion kilowatt-hours in 2012 to 25.8 trillion kWh in 2020 and 36.5 trillion kWh in 2040.

Renewables will be the fastest-growing source of electricity, with annual increases averaging 2.9%. Natural gas follows with 2.7% a year, then nuclear with 2.4% a year. That increase would almost double nuclear generation from 2.3 trillion kWh in 2012 to 4.5 trillion kWh in 2040.

The EIA sees most of nuclear’s increase coming from emerging countries outside the Organization for Economic Co-operation and Development. The only OECD nation planning a significant increase is South Korea, with an additional 15 GW. Despite that, reductions in Canada, OECD Europe and Japan would cut total OECD nuclear capacity by six GW.

The trend changes radically with non-OECD countries, especially China, India, other Asian economies and the Middle East. The report sees 9.6% average growth in China, adding 139 GW from 2012 to 2040. India would expand by 7.9% for 36 GW. Other non-OECD Asian economies would average 2.9% to add eight GW. Even the oil-rich Middle East would increase nuclear capacity from less than one GW in 2012 to 22 GW in 2030, according to the report.

Uranium prices, however, seem oblivious to such robust projections. At a shareholders meeting last week, Cameco Corp TSX:CCO president/CEO Tim Gitzel bemoaned “levels not seen since 2005.” Having put Rabbit Lake on care and maintenance the previous month, the miner cut its 2016 guidance from 30 million pounds to 25.7 million pounds U3O8.

But noting that the world has more than 60 reactors under construction, Gitzel predicted demand rising about 3% annually, from 170 million pounds this year to 220 million in 2025. “That equates to about three to four more Cigar Lakes being required over those same 10 years—not an easy task, as we know by experience.”

The EIA concedes its projections “are not statements of what will happen, but what might happen given the specific assumptions and methodologies used for any particular scenario.”

Download International Energy Outlook 2016.

March 17th, 2016

The two worlds of precious metals: East and West GoldSeek
Will the diamond price recovery last? NAI 500
The next level of monetary policy: Helicopters dropping money on consumers Equities.com
PDAC 2016: Juniors try different business models to tempt investors Industrial Minerals
Hedge fund chief Warren Irwin’s uranium call and his best metal and oil plays Streetwise Reports
South Korea’s prominence in lithium demand Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse

March 16th, 2016

Will the diamond price recovery last? NAI 500
The next level of monetary policy: Helicopters dropping money on consumers Equities.com
PDAC 2016: Juniors try different business models to tempt investors Industrial Minerals
Hedge fund chief Warren Irwin’s uranium call and his best metal and oil plays Streetwise Reports
And then there was none: Canada sells its gold GoldSeek
South Korea’s prominence in lithium demand Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse

March 15th, 2016

The next level of monetary policy: Helicopters dropping money on consumers Equities.com
PDAC 2016: Juniors try different business models to tempt investors Industrial Minerals
Hedge fund chief Warren Irwin’s uranium call and his best metal and oil plays Streetwise Reports
And then there was none: Canada sells its gold GoldSeek
Five tests for the commodities bounce NAI 500
South Korea’s prominence in lithium demand Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse

March 11th, 2016

PDAC 2016: Juniors try different business models to tempt investors Industrial Minerals
Hedge fund chief Warren Irwin’s uranium call and his best metal and oil plays Streetwise Reports
And then there was none: Canada sells its gold GoldSeek
PDAC 2016 convention exceeds 22,000 attendees Equities.com
Five tests for the commodities bounce NAI 500
South Korea’s prominence in lithium demand Benchmark Mineral Intelligence
Electric car war sends lithium prices sky high Stockhouse

Major car and phone companies might rely on child labour for cobalt: Amnesty International

January 19th, 2016

by Greg Klein | January 19, 2016

Major car and phone companies might rely on child labour for cobalt: Amnesty International

(Graphic: Amnesty International)

 

Children as young as seven in the Democratic Republic of Congo toil in perilous conditions to produce cobalt for lithium-ion batteries, according to an Amnesty International report released January 19. The study casts a pall on companies like Apple, Samsung and Sony which “are failing to do basic checks to ensure that cobalt mined by child labourers has not been used in their products,” the organization alleged.

Child miners work up to 12 hours daily in dangerous conditions, making between $1 and $2 a day, the report states. “In 2014 approximately 40,000 children worked in mines across southern DRC, many of them mining cobalt, according to UNICEF.” Most of the workers lack protective clothing to guard against lung or skin disease.

“It is a major paradox of the digital era that some of the world’s richest, most innovative companies are able to market incredibly sophisticated devices without being required to show where they source raw materials for their components,” said Emmanuel Umpula, executive director of Africa Resources Watch, which collaborated with Amnesty on the report. “The abuses in mines remain out of sight and out of mind because in today’s global marketplace consumers have no idea about the conditions at the mine, factory and assembly line.”

The global cobalt market is unregulated, Amnesty stated, and unlike the DRC’s gold, tantalum, tin and tungsten, cobalt falls outside American conflict minerals rules.

The report charges that Chinese mineral giant Zhejiang Huayou Cobalt Ltd and its subsidiary Congo Dongfang Mining “buy cobalt from areas where child labour is rife,” process it and sell it to three battery component manufacturers in China and South Korea. “In turn, they sell to battery makers who claim to supply technology and car companies, including Apple, Microsoft, Samsung, Sony, Daimler and Volkswagen.”

Amnesty said it contacted 16 multinationals listed as customers of the battery manufacturers. “One company admitted the connection, while four were unable to say for certain whether they were buying cobalt from the DRC or Huayou Cobalt. Six said they were investigating the claims. Five denied sourcing cobalt from … Huayou Cobalt, though they are listed as customers in the company documents of battery manufacturers. Two multinationals denied sourcing cobalt from DRC. Crucially, none provided enough details to independently verify where the cobalt in their products came from.”

The DRC produces at least half of the world’s cobalt, with about 20% of the country’s output coming from artisanal mines, Amnesty stated. According to numbers reported in October by Chris Berry, “cobalt demand is growing by 6% overall with demand in the battery supply chain growing by some estimates at a cumulative annual growth rate of 10% out to 2020…. This is driven almost exclusively by cobalt’s use in the cathode of the lithium-ion battery.”

In responses to the CBC, Apple and Sony said they were investigating their sources while Samsung denied doing business with CDM or Huayou Cobalt. Daimler replied, “We neither source from the DRC or the mentioned companies directly.” Volkswagen stated “to our best knowledge” the company doesn’t use cobalt from CDM, Huayou Cobalt or the DRC. “Microsoft said it is unable to confirm ‘with absolute assurance’ if its supply chain is involved,” CBC reported. “LG confirmed that Huayou is one of its suppliers of cobalt” providing material from the Katanga region of the DRC.

In The Elements of Power, a book published late last year, author David S. Abraham and MetalMiner publisher Lisa Reisman stated that long, complex supply lines prevent many major companies from knowing the origin of the minerals they use.

Download the Amnesty International report.

Canadian mining groups welcome Trans-Pacific Partnership

October 5th, 2015

by Greg Klein | October 5, 2015

In a deal supported by associations representing the country’s mining and exploration sector, Canada will become a founder of the 12-nation Trans-Pacific Partnership. Ottawa announced the agreement on October 5 as a federal election loomed two weeks in the future.

The Canadian government says the TPP will cut tariffs and other barriers, broadening markets for a range of Canadian industries that include metals and mining. The deal also offers Canadian investors in mining and other areas “transparent and predictable access to TPP markets,” the feds added.

Canada’s mining industry has been a strong advocate for liberalized trade and investment flows for many years…. TPP, representing such a massive trade bloc, including critical emerging markets, is a trading partnership Canada must not risk being left out of.—Pierre Gratton, president/CEO of the Mining Association of Canada

In a declaration of support six days previously, the Mining Association of Canada said the country’s metals and minerals exports to TPP members averaged $158.6 billion per year from 2012 to 2014. The group noted, however, pre-TPP tariffs of up to 5% in Australia, up to 7.9% in Japan, up to 10% in New Zealand, up to 20% in Brunei, up to 40% in Vietnam and up to 50% in Malaysia.

TPP negotiations also addressed “numerous challenges that companies currently face in getting products, people and services across borders on a day-to-day basis,” MAC added. “As one of Canada’s largest outward investing sectors—accounting for 10% ($81.5 billion) of the 2013 total—benefiting from the greater certainty, transparency and foreign investment protection that the TPP will enable is important for the mining industry to remain competitive on the global stage.”

The Prospectors and Developers Association of Canada stated its “8,000 members invest significant financial assets across the Asia-Pacific region to explore for and develop mineral deposits. PDAC is particularly supportive of aspects of the TPP that will facilitate two-way investment, including protection for investors that provides greater clarity, certainty and transparency.”

The world’s largest trading bloc, the TPP partners Canada with Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. Conspicuous for its absence is China, the world’s second-largest economy.

Even so, TPP membership represents nearly 800 million people and a combined GDP of $28.5 trillion, the Canadian government stated. The 12 include some of the world’s fastest-growing economies “and this is expected to continue to be the case” as the bloc’s expected to comprise two-thirds of the world’s middle class by 2030 and half of global GDP by 2050. Some 81% of Canada’s total exports already go to TPP countries.

Canada now has free trade agreements with 51 nations which “will give Canadian businesses preferential access to over 60% of the world’s economy and more than 1.3 billion consumers,” according to Ottawa.

Deloitte group to advise Commerce Resources on strategic partnerships, JVs and offtake

November 3rd, 2014

by Greg Klein | November 3, 2014

A firm with extensive overseas connections and experience will help Commerce Resources TSXV:CCE seek opportunities for its Canadian rare earth elements and tantalum-niobium deposits. On November 3 Commerce announced that Deloitte Global Metals & Mining Advisory Group will be “identifying and evaluating processing partnerships, financing joint ventures and/or offtake opportunities.”

Historically, Deloitte has been successful in connecting companies with joint venture partners from China, Japan and Korea and we are excited to be working with them in this region.—Commerce Resources
president Chris Grove

The Commerce Ashram rare earths deposit in Quebec and Upper Fir tantalum-niobium deposit in British Columbia have both produced positive preliminary economic assessments. Backed by a recently over-subscribed $5-million private placement, Commerce has metallurgical studies progressing for Ashram.

The Deloitte group includes over 3,000 M&A advisory professionals, making it one of the world’s largest M&A practices. “The core service team working with Commerce will be based in Vancouver, Beijing, Seoul, Tokyo and Frankfurt, also drawing on experienced Deloitte professionals in Toronto, Singapore, London and Perth,” Commerce stated.

“Historically, Deloitte has been successful in connecting companies with joint venture partners from China, Japan and Korea and we are excited to be working with them in this region,” added Commerce president Chris Grove.

Read more about Commerce Resources.

Read about rare earths in Canada.

Disclaimer: Commerce Resources Corp is a client of OnPage Media Corp, the publisher of ResourceClips.com. The principals of OnPage Media may hold shares in Commerce Resources.