Europes Quarter-billion Dollar Lithium Battery Carrot to Benefit Lithium Suppliers Further Boost Demand

26 Jan 2018
Demand for lithium is set to rise yet again, with the recent announcement of the European Commission's latest increase of funding efforts to "kick start concrete projects," in order to scale-up lithium battery manufacturing on the continent.
As Europe scales up its lithium demands, along with further pressures from Asian and North American manufacturers, the benefactors who will be responsible for supplying those extra demands will be the world's lithium companies, including QMC Quantum Minerals Corp. (TSX-V: QMC) (OTC: QMCQF), Albemarle (NYSE: ALB), FMC Lithium (NYSE: FMC), Orocobre Limited (TSX: ORL) (OTC: OROCF), and Pure Energy Minerals (TSX-V: PE) (OTC: PEMIF).
An additional €200 million (US$235.53 million) was allocated by the European Commission as part of its Horizon 2020 program, designed to incentivize further innovation and research in targeted areas. This injection is on top of the already €150 million the commission had devoted to battery research and innovation.
As much of the world's lithium demands are coming from the consumer electronics market, the coinciding surge in grid storage and infrastructure upgrade demands is often overlooked. While analysts point to Electric Vehicles (EVs) and portable devices as the driver for lithium's boom, renewable and grid storage applications of lithium-ion battery technology are expected to surpass the USD $12 billion mark by 2024.
To meet those rising demands, most of the world's current lithium production comes from a small handful of large companies, while fresh ideas and exploration are coming from forward-looking junior companies that are working hard to bring on the world's next new lithium supplies.
One new lithium player making its mark as a result of this wave of new lithium demand is QMC Quantum Minerals Corp. (TSX-V: QMC) (OTC: QMCQF), which is seeking to put Canada's hard-rock lithium reserves firmly on the map. Through developing a large historical resource in Manitoba, QMC is banking on capturing the advantages of operating in one of the most mining friendly jurisdictions in the world.
Meanwhile, the majors aren't holding back their efforts to also expand their lithium reserves, and developing their assets to bolster development and race to meet rising demand. These companies include Albemarle (NYSE: ALB), FMC Lithium (NYSE: FMC), Orocobre Limited (TSX: ORL) (OTC: OROCF), and Pure Energy Minerals (TSX-V: PE) (OTC: PEMIF).
Under the "strategic work programme" Horizon 2020, funds from the Europe an Commission will be directed towards innovation and research in a variety of areas. The funding will work in congruence with the coordinated efforts of academics and industry, which too have been endowed with approximately €30 billion in total funding from the European Union.
The primary push from the latest cash injection has been targeted towards more lithium-ion battery research and development particularly regarding the electrification of transport, and the commission's goals outlined in its "Delivering on low emission mobility" paper. "From an industrial perspective, the growth in demand will require major investments in the battery value chain between now and 2025, including a
massive upscale of battery cell manufacturing," the European Commission stated in the paper.
"We are therefore presented with a clear opportunity for Europe to attract investments along the value chain to the EU. Europe therefore needs to urgently take decisive steps towards establishing a complete value-chain for the development and manufacturing of advanced batteries in the EU."
Much of the draw on battery demands will also come from the dawn of a renewable energy revolution on the continent. Germany alone saw its annual electricity demand from renewable energy sources grow to 30% of the country's total output in 2015.
And the European Commission wasn't done with its impact just with the Horizon 2020 funding. The EU's regulatory arm also recently proposed a 30% reduction in CO2 from cars by 2030, forcing yet another shock to lithium demands, and sparking car manufacturers from around the world to ramp up their EV production for consumers scrambling to get away from the catalytic converter.
Soon-to-be Ex-EU member state, the UK, is also throwing its hat into the battery business, having set up the "Faraday Challenge" over the next two years-an investment totaling £246 million (US$320 million).
First announced in the spring of this year, the UK's promised funding is set to be feathered out over a four year span as part of the government's current industrial strategy of holding competitions.
"The work that we do through the Faraday Challenge will - quite literally - power the automotive and energy revolution where, already, the UK is leading the world," said British Business Secretary and Minister Greg Clark earlier this year.
So far the push in the UK is working, as registrations of Ultra Low Emissions Vehicles (ULEVs) have increased 1,864% since 2011. And it's no wonder British drivers are making the switch, as there is a looming ban on sales of all petroleum
powered vehicles by 2040.
With all signs pointing towards an ongoing rise in demand coming from Europe and other continents in the world for lithium-based battery technology, the time is right for newcomers in the lithium production space to emerge-Canadian junior mining company QMC Quantum Minerals presents a strong case for being next in line.
By focusing its development in the extremely mining friendly jurisdiction of Manitoba, Canada, QMC has positioned itself in the second best mining district on the planet, according to a global survey.
Manitoba has everything a miner could ask for, including very competitive tax regimes, smooth and efficient permitting procedures, with consistent and fair environmental regulations and land-claim handling.
These advantages factored heavily into QMC's decision to pursue their current lithium development project. Now known as the Cat Lake Lithium Property, QMC acquired what was formerly known as the Irgon Mine back in 2016.
Since then, the company has actively pursued the potential that their team knows to be there.
The Cat Lake property is only 20km away from the world-class Tanco Mine, which was once North America's largest and sole producer of spodumene (Lithium).
Historical drilling spanning 1953-54 on the Cat Lake discovery yielded a massive resource estimate of 1.2 million tonnes, grading 1.51% Li20 over a 365-meter strike length, and to a depth of 213 meters. Should those historical estimates hold up today, QMC is sitting on a very significant amount of lithium that in today's market would be a no-brainer to bring to production, either through an off-take agreement with a buyer, or through conventional means.
The geological brain trust inside QMC stands firm that there's no reason to doubt the estimates of yesteryear, and are already actively drilling and stripping their way towards bringing the resource estimate into modern day compliance.
The belief is that with more development work, the team can not only prove up the lithium resource, but also extend the known strike length, and increase that tonnage in play.
With an onslaught of new lithium-ion battery developers, and a sea change towards drivers parking EVs in every garage by 2040, there's reason to believe there's a potential off-take buyer (either already established or soon-to-be formed from the EC and UK's R&D injections) that will come and finance the rest of the way toward QMC's eventual production in the coming years.
But as Europe is set to push demand up, it'll have to compete with Chinese buyers first, as China's lithium prices just hit a record high last month. With lithium prices not looking to slump any time soon, there will be pressure on the market for quick-to-turnaround lithium sources like QMC Quantum Mineral's Cat Lake Project in the crosshairs of the next round of buyers.
Albemarle (NYSE: ALB)
Albemarle Corporation globally develops, manufactures, and markets engineered specialty chemicals. The company offers lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and lithium specialties and reagents for applications in lithium batteries, high performance greases, thermoplastic elastomers for car tires, rubber soles and plastic bottles, catalysts for chemical reactions, organic synthesis processes, life science, pharmaceutical, and other markets; cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications. Albemarle Corporation was founded in 1994 and is based in Charlotte, North Carolina.
FMC Lithium (NYSE: FMC)
FMC Lithium is a subsidiary of the FMC Corporation, which is a diversified chemical company, that provides solutions, applications, and products for the global agricultural, consumer, and industrial markets. FMC Lithium offers lithium for use in batteries, polymers, pharmaceuticals, greases and lubricants, glass and ceramics, and other industrial uses. FMC Corporation was founded in 1884 and is headquartered in Philadelphia, Pennsylvania.
Orocobre Limited (TSX: ORL) (OTC: OROCF)
Orocobre Limited explores for and develops lithium and potash deposits in Argentina. Its flagship project is the Salar de Olaroz lithium project located in north-west province of Jujuy. The company also produces boron minerals and refined chemicals. Orocobre Limited is based in Milton, Australia.
Pure Energy Minerals Limited (TSX-V: PE) (OTCQX: PEMIF)
Pure Energy Minerals Limited is a lithium exploration and development company that engages in the acquisition, exploration, and development of mineral properties. Its primary project includes the Clayton Valley South Lithium Brine Project located in Clayton Valley, Esmeralda County, Nevada. The company was formerly known as Harmony Gold Corp. and changed its name to Pure Energy Minerals Limited in October 2012. Pure Energy Minerals Limited was incorporated in 2007 and is headquartered in Vancouver, Canada.
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