The Rush for Lithium Is Just Beginning

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"Argentina, Chile and Australia together accounted for about 82% of the total lithium production in 2008."

Dan Gleeson writes in International Mining's September Leader on the growing importance of, and interest in, lithium—and, by association, Bolivia. In his latest newsletter, Tjalling (TJ) de Jong also reports on the different lithium plays. TJ writes, "A small number of countries produce lithium from either brines or concentrates, Chile being the largest producer. Argentina, Chile and Australia together accounted for about 82% of the total lithium production in 2008. Supply of lithium is dominated by production of lithium from brines SQM FMC lithium and Chemetall and the sole mineral producer Talison Minerals of Australia. China has been ramping up production since 2000 but as of 2008 supplies 8% to the lithium market."

The majority of known resources are in the Bolivian Altiplano, which is thought to host around 50% of global lithium resources; yet the country is unwilling to give up this land without ensuring that it profits from it. President Evo Morales has already nationalized the country's oil and natural gas sectors and is being very protective over this valuable lithium resource.

The main uses for lithium have been batteries, ceramics and lubricating greases. Demand is expected to grow significantly as auto makers begin to produce hybrid electric vehicles (HEV) and electric vehicles (EV). TJ says "Lithium Ion Batteries are the preferred method for electrifying these vehicles. World production has come from 13,000t to about 22,800t lithium in 2008." Japan, Korea and China already have national Lithium Ion Battery technology development programs. When David Pescod of Canaccord Capital touched base with TJ, and asked for some stock picks, he said he prefers the plays that are based on brine because of their huge cost advantage.

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