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Lithium at Two-Year Low Halts U.S. Bid to Lose China

Lithium prices are at its lowest in over two years. It is hampering a handful of miners that want to challenge China’s dominance in the market.

Leaving American automobile makers vulnerable to supply disruptions if trade tensions escalate, China rules most of the preparation that makes the mineral usable in rechargeable batteries. Automakers from Tesla Inc. to General Motors Co. aims to manufacture more electric cars at home. Besides, small companies are seeking to build the first U.S. lithium mines in decades.

However, after a rush of Australian supply dragged down prices by a third from a record in mid-2018, financing mines proves to be a challenge. Firms also face stricter environmental rules and regulatory hurdles in the U.S. This currently accounts for just 1.2% of world lithium production.

Piedmont Lithium Ltd.’s chief executive says it is a challenging environment. They go through the permitting process to build a lithium operation in North Carolina. Also, he added that those seeking to raise capital now might be able to do it, but the rules won’t be as good as they are at some point.

Moreover, according to BMI estimates, lithium use will significantly jump by 2023, and the market could move into deficit around that year. All the stock from the globe’s major lithium miners’ companies that mine mainly in Australia, Chile, and China won’t be enough to meet demand.

Also, Lithium mines take from three to five years to build. This means that investments need to flow into new projects within the next 12 to 18 months to fill the supply gap in the future.

Furthermore, the U.S accounts for just 186,300 metric tons of global lithium reserves, compared with 42.6million tons in Chile and Australia’s 14.4million.

 

Lithium Electric Demand

Lithium resources in the U.S will add value to produce high-quality, battery-grade material to build a supply chain. Standard Lithium Ltd’s CEO says automakers are going all-in on electric.

Also, Canada’s Standard Lithium is testing new technology to produce high-quality material. They are deciding to start commercial production by mid-2020. Western Australian-based Piedmont Lithium, Pert says it could begin producing chemicals in the U.S. in 2023.

The company’s technology allows for a 90% lithium recovery rate, according to Mintak. The firm hasn’t been tested commercially before. Companies in South America crop the metal at the globe’s lowest cost. They pump saline mud from underneath Andean salt flats and letting it evaporate. Companies have much lower restoration rates and use as much water as a standard copper operation.

Moreover, there’s going to be a judgment day on where the materials for renewable energy storage and electric vehicles are coming. In addition, they would not only need to produce high-purity material, but they also need to address environmental issues.

On Tuesday, Standard firm’s shares in Canada were a bit changed, after falling 5.1% in the previous session. Piedmont firm’s stock surged 1.1%.

Miners need to show they can supply a constant amount of high-quality products. If they do so, they are approved to sell lithium to battery-making companies.

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