1. Uses of Lithium

Lithium metal is an extremely soft, highly reactive, and flammable element. It is most frequently found in deposits such as spodumene and pegmatite minerals,^[1] with larger resources in the Democratic Republic of Congo, U.S., Canada, Australia, China, Zimbabwe, and Russia. Lithium possesses a unique chemical profile making it the lightest metal in the periodic table and the least dense solid element. Its atomic number is 3 (right behind helium at 2 and hydrogen at 1), and its density is just 0.53 kg/L.

This alkali metal is probably best known for its wide use in lithium batteries common in all sorts of electronics devices. Other industrial applications include manufacturing heat-resistant glass and ceramics, high-performance alloys used in aircraft, and lubricating greases.^[2] Lithium deuteride is used in staged thermonuclear weapons as a fusion fuel. Compounds of lithium are also used as mood stabilizing drugs in psychiatry. The breakdown of the global end-use lithium markets is estimated as follows: ceramics and glass, 31%; batteries, 23%; lubricating greases, 9%; air treatment, 6%; primary aluminum production, 6%; continuous casting, 4%; rubber and thermoplastics, 4%; pharmaceuticals, 2%; and other uses, 15%.^[3]

2. Global Resources and Production

Global Lithium Hard Rock Resources By Company. Major car manufacturers and lithium battery chemical converters are securing long-term agreements for lithium supply, a key raw material in the production of electric vehicle (EV) battery cells. https://handwiki.org/wiki/index.php?curid=1409219

The global production of lithium is set to grow five times from 80,000 tons in 2020 to 400,000 tons by 2030. Volkswagen described hard-rock lithium mining as the “future-proof solution, both commercially and in terms of sustainability.” Mining lithium metal is not expensive, especially at high mountain plateaus, where lithium is collected from brine ponds evaporated by the sun. The environmental and social impact has been a contentious issue in northern Chile for a decade from farmers and indigenous groups in certain locations where natural water is scarce in the arid deserts, where these highly lucrative mining exists, prompting a recent study completed by the Chilean government regulator Corfo, which will be released early in 2021.^[4] There is a shift towards a preference for spodumene hard rock partly due to the inputs (Lithium Hydroxide chemical) for the production of electric vehicle (EV) battery cells. Favored for newer cathode technologies, specifically higher nickel chemistries to increase battery energy density. In the five years to 2018 the largest increase in world lithium production has come from hard rock mines in Western Australia, with 6 mines now in production.^[5]

Identified lithium resources total approximately 80 million tons, lithium has been added to the critical minerals list^[6] in 2020. Identified lithium resources for Bolivia and Chile are 9 million tons and in excess of 7.5 million tons, respectively. Identified lithium resources for Democratic Republic of Congo (Manono), Argentina, China, United States and Australia are 6.6 million tons, 6.5 million tons, 5.4 million tons, 5.5 million tons and 1.7 million tons, respectively. Canada, Russia, and Serbia have resources of approximately 1 million tons each. Identified lithium resources for Brazil total 180,000 tons.^[7]

The world's top 3 lithium-producing countries from 2016, as reported by the US Geological Survey.^[8]

2.1. Democratic Republic of Congo

A new entrant into the lithium market as a developing producer.

Since 2018 the Democratic Republic of Congo (DRC) is known to have the largest lithium spodumene hard rock deposit in the world.^[9] The total resource of the deposit located in Manono, central DRC, has the potential to be in the magnitude of 1.5 billion tons of lithium spodumene hard-rock. The two largest pegmatites (known as the Carriere de l'Este Pegmatite and the Roche Dure Pegmatite) are each of similar size or larger than the famous Greenbushes Pegmatite in Western Australia. In 2023, the Democratic Republic of Congo is expected to be a significant supplier of lithium to the world with its high grade and low impurities.

As of 2021, the Australia n company AVZ Minerals^[10] is developing the Manono Lithium and Tin project in Manono, DRC and has a resource size of 400 million tonnes of high grade low impurities at 1.65% lithium oxide (Li₂O)^[11] spodumene hard-rock (this figure is expected to more than triple with further drilling), based on studies and drilling of Roche Dure, one of several pegmatites in the deposit. There is a push globally by the European Union (EU) and major car manufacturers (OEM) for the lithium battery supply chain to produce and source materials sustainably along the entire chain and incumbents practicing Environmental, social and corporate governance (ESG) initiatives and aiming for zero to low carbon footprint.^[12] The AVZ Minerals Manono project has completed a GHG greenhouse study in Jan 2021 into its future carbon footprint,^[13] showing the project to likely have one of the lowest carbon footprint of all the spodumene hard rock producers by 30% to 40% and some brine producers throughout the world. AVZ Minerals recently signed a long-term offtake partnership with major Ganfeng Lithium, China's largest lithium compounds producer. Importantly, the partnership makes provisions for both parties to focus on environmental, social and governance (ESG) development.

Planned production of battery-grade high-purity primary lithium sulfate (PLS) containing over 80% Lithium,^[14] a lithium chemical new to the electric Lithium-ion battery materials supply chain market, PLS is used in the production of lithium hydroxide (a precursor to electric vehicle battery compound production), production is expected to be in the order of 45,600 tonnes per annum, with plans to significantly increase production to satisfy the soaring electric vehicle battery demand from Europe, China, Asia, USA and other new global entrants. AVZ Minerals have a study currently underway to determine the viability of an initial 25Kt/a Hydroxide plant in Europe, increasing this to ≃100Kt/a capacity, including ongoing discussions with key battery industry participants to enter joint ventures with AVZ to build the plants in Europe and elsewhere.

2.2. Europe

Europe has no hard rock / spodumene production as of March 2021. Europe has no LiOH (Lithium Hydroxide) and Li2CO3 (Lithium Carbonate) production as of March 2021.

2.3. Australia

In 2016, Australian companies delivered 14,300 tons of metal, an increase of 1,300 tons from 2014. The country develops the Greenbushes lithium project, which is owned and operated by Talison Lithium. Greenbushes is the world's largest known single lithium reserve and has been operational for over 25 years. The location also provides easy access for Asian electronics companies, which are the global top lithium consumers. All Australian production to date has been in the form of spodumene concentrate containing approximately 6% LCE, all of which was shipped to China for refining. In 2017-18 Australian production had increased to 2.1 million tonnes of spodumene concentrate worth $1.6 billion. Three separate refineries are under construction which will produce lithium hydroxide and lithium carbonate. ^[15]

2.4. Chile

In 2016, Chilean mines delivered 12,000 tons of lithium, providing the second-highest amount of lithium. Overall, Chile possesses the largest confirmed lithium reserves in the world, with over 7.5 million tons of the element. By that estimate, the country hosts roughly five times more lithium than Australia, which features the second-largest reserves. In particular, the Atacama salt flat is the most significant source of country's massive lithium production, and it has been reported that one project alone encompasses approximately 20% of the world's total lithium. While Australia extracts lithium from traditional hard-rock mines, Chile's lithium is found in brines below the surface of salt flats. These brines are collected and treated in order to separate the element from wastewater.

2.5. Argentina

In 2016, for the first time, Argentina overtook China to become the third largest producer of lithium. Argentina has lithium reserves of 9,000,000 tons and the Salar del Hombre Muerto district is a part of the so-called lithium triangle which is believed to be home to half of the world's land based lithium reserves. Due to increased demand worldwide, lithium mining in the country shows no signs of slowing down with output set to triple by 2019.

2.6. Canada

Canada is a new entrant into lithium market as a potential supplier.

3. The Lithium Triangle

The intersection of Chile , Bolivia, and Northwest Argentina make up the region known as the Lithium Triangle. The Lithium Triangle is known for its high quality salt flats including Bolivia's Salar de Uyuni, Chile's Salar de Atacama, and Argentina's Salar de Arizaro. The Lithium Triangle is believed to contain over 75% of existing known lithium reserves.^[16]

4. Investment Vehicles

Currently, there are a number of options available in the marketplace to invest in the metal. While buying physical stock of lithium is hardly possible, investors can buy shares of companies engaged in lithium mining and producing.^[17] Also, investors can purchase a dedicated lithium ETF offering exposure to a group of commodity producers. As of October 2020, there lithium hydroxide and carbonate futures are not yet traded, but historical reference prices are being established with a view to doing so.^[18]

4.1. Lithium Index

The performance of the global lithium industry is covered by Solactive Global Lithium Index. The index is composed of companies that are primarily engaged in some aspect of the lithium industry such as lithium mining production and lithium-ion battery production.

4.2. Mining companies

There are many companies relying on lithium for a substantial portion of their revenues. Examples include:

• AVZ Minerals Limited is an Australian ASX-listed mineral development company focused on financing & constructing the Manono Lithium & Tin Project, one of the world's largest lithium-rich LCT (lithium, caesium, tantalum) pegmatite deposits.
• Ganfeng Lithium is a Chinese lithium refiner, primarily of spodumene from Mt Marion in WA.
• Advantage Lithium, a Canadian-based lithium explorer with a large-scale development asset located in the Cauchari basin in Argentina, which now is part of Orocobre
• Sociedad Química y Minera, a Chilean producer of specialty plant nutrients and chemicals that runs large-scale lithium production operations. The main production facilities are located in the Atacama Desert.
• Livent Corporation, Formally FMC Lithium Division was spun-off into a dedicated lithium company in Oct 2018
• Albemarle Corporation, an industrial company producing lithium chemicals
• Bearing Resources, a Canadian miner developing a lithium brine project in Chile and the highest-grade undeveloped project
• Bacanora Minerals, a Canadian miner developing a lithium mine in Mexico, Sonora, first to enter in a conditional supply agreement with Tesla
• Lake Resources, an Australia company which holds tenements in Chile and one of the largest lithium tenement packages in Argentina
• Westwater Resources, Inc. has projects in uranium, graphite, lithium, and vanadium. They have two lithium projects in the early stages of development - one in Utah and the other in Nevada.^[19]
• Lithium Americas Corp, a Canadian/Argentinian miner, producer and supplier of lithium, with large-scale assets located Argentina and the U.S. state of Nevada
• RB Energy, a Canadian company developing The Quebec Lithium Project, filed for creditor protection in 2014, according to the Financial Post^[20]
• MGX Minerals, a diversified Canadian mining company engaged in petrolithium projects in western Canada and the United States^[21]
• Kodal Minerals, a small-cap mining and exploration company that currently focuses on its large lithium project in Mali.
• E3 Metals Corp, a lithium developer based in Alberta
• MétAmpère Limited, developing a hard rock lithium mine and processing plant in Cornwall, UK
• Standard Lithium, a Canadian technology company, has developed their own DLE process and is progressing with a lithium extraction project utilizing lithium-bearing brines in Arkansas. They also have a land package in California for expected future development. They recently report progress at the Arkansas site including a USD$100 million investment by Koch Industries.

4.3. Exchange Traded Funds

• Global X Lithium ETF (NYSE: LIT), an ETF trading since 2010 and holding the above listed lithium producers as its top holdings. LIT is a passive ETF seeking to replicate Solactive Global Lithium Index.

4.4. Direct Investment

• HWS AG's German Lithium Participation Program offers the first direct investment opportunity in lithium carbonate. The lithium carbonate is stored in special lithium investment units in secured German warehouses.^[22]