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Guy Bourassa of Nemaska on the very, very big shortage of Lithium

Guy Bourassa of Nemaska on the very, very big shortage of Lithium

THE BUZ ON LITHIUM

  • Buz Investors very big shortage of Lithium The real driver for the intense global demand and price increase on lithium In a special InvestorIntel interview
  • Publisher Tracy Weslosky speaks with Guy Bourassa, President, CEO and Director for Nemaska Lithium Inc. (TSXV:NMX | OTCQX:NMKEF) on the overall global lithium market and how the real source for the increasing demand for lithium is energy storage.
  • While commenting on the distinct benefits of the electric vehicle market interest, Guy addresses the global supply shortage and how this may translate to the marketplace.

very big shortage of Lithium

Buz Investors very big shortage of Lithium The real driver for the intense global demand and price increase on lithium In a special InvestorIntel interview Publisher Tracy Weslosky speaks with Guy Bourassa, President, CEO and Director for Nemaska Lithium Inc.

very big shortage of Lithium Tracy Weslosky: I’m delighted to have this opportunity to talk to you about the overall lithium market. Jack Lifton is telling me that we have a bull lithium market. In fact all my editors are, John Petersen, Christopher Ecclestone, they’re all saying we’ve got another 5 years of intense demand and rising prices for lithium. Do you agree with this?

Guy Bourassa: Absolutely, I do agree with this. As a matter of fact, I’m sure that they also noted that the only commodity in the mining sector in the past 4-5 years that I’ve been seeing an increase in demand and an increase in sales price is lithium and the different lithium compounds. What I hear from the Chinese market and the producers around the world and the market analysts is that effectively there’s a very, very big shortage actually that is reflected by the spot price that we see in China that we’ve seen for the past 3-4 months. Some people are talking about even $15,000.00 U.S. for lithium carbonate on the spot price. Of course, the spot price does not represent the real contracts, long-term contracts, but it definitely shows that somebody is looking desperately for lithium carbonate at this time and that there is none.

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very big shortage of Lithium 

Tracy Weslosky: Obviously that is a lot of exciting news for us at InvestorIntel and our audience. Of course, Jack Lifton is telling me the real driver for the battery market is actually China. Of course, Nemaska Lithium has made a one of a kind deal with Johnson Matthey. And as an expert in understanding the demand for batteries, can you talk to us a little about what that demand really is or help enlighten us a little bit more on what the status is at this time?

Guy Bourassa: I don’t quite agree with Jack about the fact that the market is in China. Production increases in China, but their batteries and cathode material is going outside in other markets so they’re producing these batteries, but the end-users are not, absolutely not presently in China. That’s maybe going to be growing there, but it’s already growing in Europe. It’s already growing in the United States, the electric vehicle. What’s even more interesting, because people don’t believe of the rapid growth and the adoption of the electric vehicles, they have to take into consideration that on a tonnage-wise energy storage is much more important than the electric vehicle adoption. You’re going to see at least two times the number of tons of lithium compounds required for the energy storage sector. It’s less sexy I suppose than the electric vehicles

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Could a lithium shortage de-rail the electric car boom?

Could a lithium shortage de-rail the electric car boom?

Could a lithium shortage de-rail the electric car boom?

  • electric car boom We’ve gone electric, and there’s no going back at this point. Lithium is our new fuel, but like fossil fuels, the reserves we’re currently tapping into are finite—and that’s what investors can take to the bank.
  • You may think lithium got too popular too fast. You may suspect electric vehicles are too much buzz and not enough real future. You may, in short, be a lithium skeptic, one of many. And yet, despite this skepticism, lithium demand is rising steadily and sharply, and indications that a shortage may be looming are very real.
  • It won’t be a shortage in terms of ‘peak lithium’; rather, it will be a game of catch-up with the electric car boom, with miners hustling to explore and tap into new reserves

electric car boom How to Play Lithium

Could a lithium shortage de-rail the electric car boom?

electric car boom Consider the number of battery gigafactories that are being built around the world. We have all heard about Tesla’s (NYSE: TSLA) Nevada facility that will at full capacity produce enough batteriesto power 500,000 electric cars per year by 2020.

This, as the carmaker proudly notes, is more than the global total lithium ion battery production for 2013. That’s a pretty impressive rate of demand growth over just three years—but this growth also represents the culmination of a sea change in the way we think.

Indeed, says Nevada Energy Metals (TSX-V:BFF) executive Malcolm Bell, “It may be time to start worrying about a shortage, but it’s not a question of whether we have enough lithium—it’s a question of tapping into new reserves. Those who don’t see the supply wall looming, will hit with a resounding thud. Those who start tapping into new reserves will be extremely well-positioned for the future.”

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In 2017, thanks to so much new production capacity the metal’s fundamentals will near an equilibrium, which will last for about a year before deficit rears its head once again—but this time the deficit will stick. Despite new efforts to ramp up supply, it will take a while before supply corresponds to the demand.

The future is pretty clear: We’re looking at a period of shortage, and shortage is where the savvy investors make real money. The lithium feeding frenzy has only just begun. Consumer electronics keeps it safe and steady, as always; the electric vehicle boom skews the demand picture dramatically, and the future’s energy storage and powerwall evolutions take it over the edge.

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