Lithium Economics

Lithium: An Increasingly Precious Metal?

Jan 15, 2016

A recent report on lithium published by The Economist gives additional support for my contention about the arrival of a new way of doing things in the world with lithium as its main element. But this development may have found Chile and Bolivia not ready to meet the market requirements which explains the present price climb and comparable projections for the near term.

Not too many agreed with me eight years ago when I first announced in a previous blog here the advent of a new techno-economic paradigm in the world with lithium as its key factor.

As I have commented on the digital version of the report just published by The Economist under the suggestive title “An Increasingly Precious Metal”, pressure now coming from the demand side has found Chile and Bolivia, the two countries with the most lithium on earth, not ready to meet the market requirements in the near term. This may explain the current price hike and similar prospects for the coming years.

Even though there's a sea of difference between Chile and Bolivia insofar as lithium is concerned since the former was in 2014 the world's second largest lithium producer and the latter is in the present day still experimenting with its huge untapped lithium deposits, they have both been extremely slow in reacting to market signals that are now more apparent and visible.

Time will tell whether Chile can catch up with Australia no recover its leadership and Bolivia finally manages to enter on time a bullish market in the years ahead.

In the meantime, a latest news indicates that the Cooper Commission of Chile (CODELCO, in Spanish) that holds important concessions of lithium in different salt lakes of the trans-Andean nation has recently decided to solicit bids for lithium exploration at Salar de Maricunga where it owns 18% and at Pedernales where it holds 100% of resources.

This comes as no surprise at a time of lowest prices for cooper, Chile’s most important export. But it’s yet a tepid measure in absence of a long-waited national policy for lithium as envisaged in the final report of the National Commission of Lithium delivered by a group of lithium experts to President Bachelet about a year ago.

Likewise, a visit these days to Bolivia by Germany’s Vice Minister of Transport, who has publicly expressed his country’s interest in lithium investment and cooperation, seems at first glance to open a new set of opportunities. It does also appear to be a follow-up of the contract signed last August between German firm K-UTEC and the Government of Bolivia to work on the design of the industrial plant capable of producing 30,000 metric tons of lithium carbonate by 2025, according to an official planning document.

But considering the meager results at the seven-year-old pilot phase, chances are K-UTEC may indeed be forced to start from scratch to come up with the appropriate process to be scaled up for the industrial phase of the project. While the German involvement provides some new hopes for lithium development in Bolivia, it’s far from paving the way for the Andean country to become the next energy center of the world.

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