Lithium demand on the rise

The U.S. decision last month to launch a Renewable Energy and Energy Efficiency Export initiative should turn out to be yet another boon for lithium producers, who are or will be trying to sell into a growing lithium ion battery market for technological and electric car uses.

The initiative complements a like-minded Electric Drive Vehicle Battery and Component Manufacturing initiative in 2009. All of this amounts to a fair bit of government-led oomph for politically-correct “green” research and development.

“Expanding U.S. clean technology exports is a critical step to ensuring America’s economic competitiveness in the years ahead,” said  U.S. Energy Secretary Steven Chu, according to Lithium Investing News.

All of this comes at a time when a number of countries are targeting some of the more rarified metals, such as lithium. The South Korean Ministry of Knowledge Economy said it will nearly double its production of lithium and rare earth minerals next year as global demand for the raw materials is expected to increase, according to Lithium Investing News.

These kinds of developments have a definite trickle-down effect on companies operating within the global sector. In November, for example, a Korean government-owned mining company, Korea Resource and Lithium One formalized a joint venture to develop Lithium One’s Sal de Vida lithium brine project in Argentina. The KORES wants to be a top-20 global mining company by 2020 through overseas expansion.

In Canada, Canadian Lithium plans to start full production at its Quebec lithium project in 2013, following the release of a positive feasibility study. U.S.-based Blackrock, the mega-fund manager, recently gave the soon-to-be lithium producer $10 million to pay for mine and plant equipment.

In Australia, Orocobre got the environmental go-ahead from the Argentine government to move forward with its Salar de Olaroz project. Investors have welcomed the news by pushing the company shares up by more than 25% over the last month or so.

All of this plays into the end-user market – the companies that make the lithium ion batteries for electric cars. Interest appears to be growing exponentially, meaning there should be a profitable meeting of minds across the supply-demand chasm. Basically, if you mine it, they will come.

Here are a few recent examples of how the market is developing: Toyota recently said it’s planning to start mass-producing lithium ion batteries for its plug-in hybrid vehicles, the Nikkei business daily reported.

Panasonic will begin mass production of lithium ion batteries for electric vehicles as early as April. It intends to market them to automakers at home and abroad, in addition to supplying the batteries to U.S. partner Tesla Motors, the paper said.

And Hitachi, which already supplies batteries for General Motors hybrids, will start mass producing high-performance lithium ion batteries for plug-in hybrids in 2013, the business daily said.