toyota powers ahead, page-11

Toyota's lithium mine.
January 22, 2010

Toyota Motor Corp. (NYSE:TM) this week gave an indication of just how important electric cars are to its future, taking the unusual step of investing in a northern Argentina mining project where a key ingredient of next-gen auto batteries will be mined.

Toyota Tsusho, an affiliate of the world's largest automaker, is forming a joint venture with Australian-listed Orocobre Ltd. to develop the Salar de Olaroz lithium mining project. The deal calls for Tsusho to fund a feasibility study for the project and eventually take a 25% stake in it.

In making the investment, Toyota appears more concerned with future prices for lithium than it is with cornering the market or even just guaranteeing supply. Battery technology remains the most vexing and costly aspect of electric cars, and if demand for these vehicles grows at the rate some predict, the world will need new sources of lithium in the years ahead.

Toyota understands the high cost of lithium all too well. Last fall, the automaker surprised many when it said that for now it would stick with nickel metal hydride batteries in its Prius sedans, a move attributed by outsiders to the complexities and expense associated with lithium designs.

But lithium is seemingly in Toyota's future. Lithium batteries offer a better charge and lighter weight, and while there are plenty of companies looking at ways to improve traditional batteries or experimenting with other chemistries, lithium use is projected to ramp up sharply. Consulting firm A.T. Kearney expects the global lithium-ion auto battery market to grow from $31.9 million last year to $21.8 billion in 2015 and $74.1 billion by 2020.

Just how difficult it will be to find lithium for all those batteries is uncertain. Analysts say that there is plenty of the ultra-light metal available on the planet to be mined. But some, including consultant William Tahil of Meridian International Research, have argued that much of that world reserve will be difficult to extract in a cost-effective manner.

Toyota is undoubtedly eager to see lithium supplies bolstered by new sources. On Wednesday, it showed it was willing to put some money where its mouth is.

- Lou Whiteman.
http://www.thedeal.com/corporatedealmaker/2010/01/toyotas_lithium_mine.php