The lithium Market is growing here is a very interesting commentary from Canaccord Capital
On the next MythBusters: The Lithium Market. One of the knocks against the lithium theme has been that the three
big current producers will meet all incremental end-user requirements obviating the need for new production. Myth!
That myth is shattered as Australia’s Galaxy Resources (GXY) has successfully secured off-take agreements for all
of its lithium carbonate production, with 13 Chinese lithium cathode producers in addition to Japan’s Mitsubishi.
Construction is advancing Galaxy’s Mt. Catlin hard-rock lithium mine, which, commencing 2011, will supply
concentrate to an upgrade plant being constructed in
Jiangsu, China. This also lays to rest the myth that only lithium brine production can be cost-effective in meeting the
demand for lithium carbonate for the lithium-ion battery industry. According to the Xinhua New Agency, China is
establishing a high-tech base for lithium and new energy technology in Yichun City, Jiangxi province. The
economic service zone is being designed to research, manufacture and recycle lithium-ion batteries. Research is
certainly a key component of the lithium theme as Hitachi recently announced the development of a process to
double the life of lithium ion batteries for industrial use to more than 10 years and researchers at MIT announced
progress in technology that would dramatically increase the energy density (decrease the weight) of lithium-ion
batteries using oxygen with carbon as the anode. Although these advancements will not be commercial for many
years, the heavy investments being made in e-cars and the infrastructure supporting their manufacture and operation
will be used for many years – the global industry commitment has been made. That commitment will intensify as
Chinese cities ban internal combustion engine use within city limits and regulators in the rest of the world catch up.
Canaccord Adams Mining Analyst Eric Zaunscherb believes that investors should be exposed to lithium exploration,
development and production in the event that, for example, electric vehicle penetration exceeds expectations or
senior producers have overstated their ability to ramp up production. His top junior lithium picks are: Canadian
Lithium (CLQ), Lithium One (LI) and Western Lithium (WLC).