The Lithium Chase

Source: New York Times, Clifford Krauss  (3/10/10)

"There is a sea change underway."


For many years, few metals drew bigger yawns from mining executives than lithium, a lightweight element long associated mostly with mood-stabilizing drugs.

"There is a sea change underway," James D. Calaway, the chairman of Orocobre, said. "We are at the front end potentially of a very significant increase in the demand for lithium for the emerging electric transportation sector."

Calaway added, however, that the timing of any increase in lithium supply and demand was difficult to predict in large part because electric cars had yet to take off in any big way.

About 60 mining companies have begun feasibility studies in Argentina, Serbia and Nevada that could lead to more than $1 billion in new lithium projects in the next several years, while dozens of smaller projects are being proposed in China, Finland, Mexico and Canada.

"It's moving so fast," said Edward R. Anderson, president of TRU Group, a consultancy firm that specializes in the lithium industry. "There are a lot of people throwing money into this, and a lot of people are going to lose their money."

In the meantime the four biggest current producers, which mine and otherwise gather lithium in Chile, Argentina and Australia, say they are planning to expand long-running projects as future demand warrants.

While most experts are skeptical that meaningful amounts of lithium can be produced domestically, they maintain that adequate supplies will be available from sources outside of Bolivia for many years to come and note that the biggest producer, Chile, is a dependable American ally.

Most of the lithium market serves a variety of industrial applications. About a quarter of all lithium produced is used for energy storage, in everything from cell phones to laptops to digital cameras.

That proportion stands to increase sharply if battery-powered cars take off.