Lithium Market at Chile

History
Chile is the worlds biggest lithium producer, generating 30 percent of
the worlds profits on the sale of raw lithium and sitting on an estimated
by 2013 in 57,7 percent of global lithium reservessecond only to
China.
In 1973 lithium was declared a strategic resource and thus not up for
concession according to the Mining Code. The dictatorship of Augusto
Pinochet (1973-1990) thus placed a ban on all lithium concessions,
essentially claiming government ownership of lithium reserves.
Chile has embraced extractive industries as a tool for sustained
economic growth, but this relationship does not come without
controversy. The latest controversy began on September 24, 2012 when
a 20-year Contrato Especial de Operacin de Litio (Special Lithium
Operation ContractCEOL) was awarded to Chilean company Sociedad
Qumica y Minera de Chile S.A. (SQM). SQM was one of three
companies (Samsung C&T and Li Energy Spa were the other) whose
bids to explore Chiles lithium potential had been accepted by the
government. The contract was revoked a week later, however, after rival
bidder Li Energy Spa revealed that SQM had not met the tender's
requirements since the company is currently being sued by the
state.
Current Lithium Global Market
SQM currently produces 28 percent of the world's lithium and is only one
of two lithium producers operating in Chile. The other company is the
USA Company Albemarle who recently bought Rockwood Lithium which
has operations in Chile since 1986.
A study done by TRU Group Inc. estimated that global demand for
lithium would double by 2020. The countries most heavily investing in
developing hybrid and electric cars (i.e., Japan, Germany and Finland) do
not have their own lithium reserves.

Today lithium is produced from spodumene and brine. Chile and Australia
are among largest lithium producers across the globe. Together they also
own major part of global product resources. Smaller producers include
China, Argentina, Zimbabwe, and USA. Share of other countries is minor.
Nowadays lithium is used in ceramics and glass, batteries, lubricating
grease these uses account for nearly 70% of global demand; other
applications include continuous casting, air treatment, polymers,
pharmaceuticals, etc. Today the output volume is determined by demand
from Li-ion electric vehicles and Li-ion consumer electronics producers;
thus, the future of lithium market will depend on these sectors.

Studies Suggest a Change in the Law so that the ore can be

Concessioned
The setback suffered by the Government more than a year with the
bidding process for concessions for the exploitation of lithium led the
Ministry of Mining to commission two studies to define a clear position of
the Executive against the future of this resource.
On January 2014, an Analysis by Cochilco and SERNAGEOMIN threw as
main conclusion that should be subject of mineral concession and there
is no technical support to enable cataloging lithium as a strategic
resource for the country.
To support this thesis, the Cochilcos study deliver several documents.
On the one hand, argues that in the coming years this overcapacity
nonmetallic mineral in the world, despite the increase in demand will be
generated. It also indicates that the volume that moves this business
globally reaches U.S. $ 2,200 million, representing only 2% of the copper
market, in which Chile is the worlds largest producer.
The report also refutes the argument that lithium cannot be grantable,
due to its importance in future electricity generation through nuclear
fusion. The latter, because there is no clarity on the development of this
technology and the estimates say that this issue will not be resolved
until the second half of this century.
Were not in the logic of 30 years with the Cold War, in which nuclear
energy could be a sensitive issue. Therefore, we must move towards a
new national policy to exploit the resource, says deputy mining,
Francisco Orrego.According he poses, studies warn that if the law is not changed, Chile
will continue to lose market presence. Already in 2012 it ceded
productive leadership to Australia.
This change is related to mentioned that the lithium industry use a
similar copper mining model, which coexist in the same market both
private companies and state ones.
To that, he adds, the system should be modified in line, dismissing as an
administrative route was bidding on contracts. The granting of lithium
not hinder the position of the State in this business through their
companies. Of the 18 salt lakes studied, the state already holds 52% of
the total area of these (through Codelco,Enami and CORFO not exploit
those areas), and this would not be grantable. If we open the lithium

market, we would not be affecting the participation of the state, he

says.
He explains further that to protect the interests of Chile, a clause could
be introduced in the concessions given by the State the first option if
lithium be considered as a strategic mineral. This would be a similar
model that applies to uranium and thorium.
Market Projection
TRU Group Inc, Tucson AZ, USA Toronto ON release November 3,
2014 - Lithium engineering consultants TRU says that lithium prices in
2014 have performed close to our prediction of five years ago. TRU
president Edward Anderson says Latest Chile monthly export data
shows lithium carbonate prices lower by 2.3% for the year at US$4,600
per t. This level is the new long term norm. (See TRU lithium price
forecast chart 2009-2015 right). Prices are kept in check by new supply
from pipeline projects and plant expansions by the big-three low-cost
lithium producers SQM, FMC and Rockwood Lithium. Albemarle
Corporation (who recently acquired Rockwood) could add further to
supply as it is now in a good strategic position to extract lithium as a
byproduct of its established brine-based bromine operation in Arkansas,
USA.
Over the years few newcomers to the lithium space accepted the above
inevitable price scenario and now we are seeing the results says
Anderson. In Canada take the example of RB Energy Inc* who
commissioned a new lithium carbonate plant in Quebec late 2013 only to
suspend operations October 2014 with TSE trading halted. And in the
United States, American Lithium Minerals seemingly just vanished the
Nevada lithium junior that was to be the savior of American supply.
Probably more than a billion dollars have been lost by investors on
waning listed lithium-juniors. Some of this was due to the hype stirred-up
largely by promoters. It is noteworthy, therefore, that another casualty in
the lithium space was high-profile lithium investment advocates Byron
Capital Markets Ltd of Toronto that earlier this year ceased operations,
effective immediately". The unrealistic lithium hype continues today
over the Tesla Motors Inc plan to build a lithium battery plant in Nevada,
USA.