Its going to get crowded, ORE better hurry up.....
June 5, 2010, 10:20 a.m. EDT Korea Resources joins Argentina lithium rush
By Shane Romig
In the latest bid by Asian companies to secure reliable lithium supplies for electric car batteries, Korea Resources Corp. is moving toward developing a mine in the far north of Argentina with Canada's Lithium One Inc. /quotes/comstock/11i!lithf (LITHF 1.35, -0.01, -0.52%) .
South Korean government-owned Korea Resources Corp., or Kores, said on Saturday that it is in a consortium with GS Caltex and LG International Corp. to invest $15 million in a exploration and a feasibility study at the Sal de Vida lithium brine deposit for a 30% stake in a joint venture with Lithium One. Kores said the Korean consortium will decide on whether to participate in the development of the deposit after the exploration study.
If developed, Kores said that the Korean consortium will be able to secure up to half of the annual production of 12,000 tons of lithium carbonate from the site over the course of more than 50 years. Kores also will have the right to buy up to half of the mine's output and the exclusive right to sell the lithium in China, Japan and Korea.
Lithium One will keep the rights to sell the potash and boron produced as a byproduct of lithium extraction, the Canadian company said in a press release Friday.
Kores's move to lock in a reliable lithium supply adds to a wave of Asian companies developing projects in the lithium-rich salt lakes in the north of Argentina. The companies are banking on a surge in demand for lithium as fleets of electric cars swell worldwide.
In January, Australia's Orocobre Ltd. (ORE.AU) signed a supply deal with Toyota Tsusho Corp. (8015.TO), which is 21.8% owned by Toyota Motor Corp. (TM, 7203.TO). Toyota Tsusho will pay for the completion of a feasibility study this year on a lithium project operated in northern Argentina by Orocobre and will take a 25% stake in the project thereafter. The investment is valued at $100 million to $120 million, according to people with knowledge of the matter.
And Mitsubishi Corp. (MSHBY, 8058.TO) is a strategic investor in Canada's Lithium Americas Corp. , which plans to form a joint venture to develop the Cauchari-Olaroz lithium reserves in Argentina. In May, Lithium Americas went public with a listing in Toronto, raising almost $50 million.
Already, over half the world's lithium output comes from mines in Chile and Argentina. The metal is a key component for the lithium-ion batteries expected to power a growing fleet of electric cars around the world.
If just 5% to 10% of all cars produced were electric, lithium consumption could double over the next 10 years, according to a representative with the U.S. Geological Survey. With a number of low-cost producers ready to meet that demand, less-efficient operations are going to be challenged to compete.
In addition, the Bolivian government is planning on investing about $350 million to build a number of lithium processing plants that it expects to be operational in 2013. Bolivia has the world's largest lithium brine reserves at its high-altitude Uyuni salt flats.
ORE Price at posting:
$2.19 Sentiment: Hold Disclosure: Held
