The Battle For Lithium – Reached New Heights


Lithium
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LITHIUM metal is emerging with a very high hope in future, especially its requirement for the battery industry for electrical cars and mobile phones. In China, over the weekend, the battle for lithium reached new heights. On Saturday, an auction that lasted five days and six nights finally came to an end: A majority stake in a lithium mine in Sichuan province sold for $298.58 million) on JD.com’s  auction platform — 596 times the opening price. The mine in question, located in a nominally Tibetan prefecture in Sichuan, China has reserves of around 724,000 tons of lithium.

From May 16 to 21, the auction for the lithium mine attracted 21 bidders who made a total of 3,448 bids, while an online audience of nearly a million people watched proceedings. Based on the successful bid, the purchase price of a single ton of Lithium Carbonate Equivalent (LCE) from the mine, i.e. the first commonly traded lithium intermediate in the value chain, would be about $758. But after adding the transaction commission and debt related to the transaction, the final price of $437.41 million yields a purchase price per ton of lithium of $1,111.This is significantly higher than other recent lithium mine acquisitions in recent days.

The context

With the explosion of the new energy vehicle industry, the phenomenal rise in the price of lithium — the price of LCE jumped from$39,580/ton in January to $69,340 in May — is driven by simple scarcity. The rapid expansion of China’s new energy vehicle industry has made battery companies popular with investors, and these companies — have abundant cash to burn to acquire upstream lithium mines.

In 2020, China was the world’s third-largest producer of lithium at 14,000 metric tons, placing it well behind Australia (40,000 metric tons) and Chile (18,000 metric tons). But China is the world’s largest consumer of lithium, with most of its supply coming from Australia. In the first quarter, however, production at lithium mines in Australia decreased for the second consecutive quarter, and domestic battery manufacturers are scrambling to buy up and develop lithium resources in China, and to develop strong working relationships with lithium mining companies.

Pakistan Case

In Afghanistan its deposit is considered one of the world-class deposits across our Kafristan valley in the Chitral area. Some people successfully worked out its extension into Pakistan.

The takeaway

The price of lithium — like the price of oil in the 20th century — is likely to keep rising relentlessly, and this will be a key factor in the profitability of  battery manufacturers. Lithium (and by implication electric batteries and new energy vehicles) is another key industry, World is scrambling to consolidate its supply. Large battery producers have the resources to spend whatever is needed to secure their supply.

 

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