Where is the opportunity in the future of technology?

Lets look behind the stage
Lithium Chile's Vice President Ignacio Blavi on the future of lithium

There are too many things uncertain when it comes to that question. How nano technology will affect computing. Is the future of data encryption in diamonds? What's the latest technology in consumer goods we can invest or take part of today?

​There is a revolution in many industries happening now, due to the rapid change that technology is impacting the world with, but there is something certain in the forth seeing future: everything needs to be powered.

China want to go full electric by 2030, Germany, France and others are summing to that. Companies like Volvo are shifting into full electric models by 2020, and new brands like Tesla are not doing bad for themselves either. Different industries are changing their source of energy to full renewables, and they don't produce at the same pace that they gather their solar, wind or whatever source of energy they choose, so they need to storage it somewhere.

That is why the influx of investment of great business people, like Warren Buffet (known by conservative plays), have been going into electric powered goods, or even straight in battery manufacturers around the world. And there is one main common element to that equation: LITHIUM.​

Elon Musk said he alone will need to buy the entire world production of lithium, with his giga factory. BYD in China said exactly the same thing. Each car needs around 11+ kilos of lithium to power their lithium-ion batteries, imagine how much a power storage facility (huge batteries), of a factory, and huge batteries connected to main grids of countries supplying energy to it, will need.

There are 3 places in the world where you can get that lithium, and according to most studies the majority is found in the so called South American triangle (Chile, Bolivia, and Argentina), the other 2 are in Australia and China.

China is ahead, somehow, as the battery manufacturers there, have taken on the mining of lithium in their country, to supply their needs in-house. And Australia is doing a good job, but their costs of production cant compare to the ones in China or South America, where for example; in Chile it costs 1/3 to mine lithium, compared to an equivalent in Australia.

Then you have the rol that the State should take on the matter, and how can they impulse their production. Can they start creating some subsidies to mine lithium, that will take on account the creation of new jobs, and the increase of foreign investment in the matter? They could, but its not a mid term solution to the problem, so its simply not competitive to produce it in Australia these days.

So, when we set the 3 areas you can find lithium in the world, and we lay them in the board for analysis, we can account for the most relevant variables; geopolitical issues, cost of production, quantity of lithium in the region, estate/country policies to privately own licenses/concessions of exploration and exploitation, economic stability of the estate/country, experience/expertise in mining, climate, among others. We assign points to each variable, to calculate the risk management and likelihood of a good return on investment: and we end up in Chile.

Chile is a country with less corruption than United States (according to some World Economic Forum studies). It concentrates great part of the lithium deposits in the world. The cost of production goes around the USD 1,600 per ton, compared to USD 5,000 in Australia. Its the biggest producer of copper in the world, being the main income of the country, what translate in talent attraction (geologist, engineers, etc), what translates in production of great studies and research on the matter. Is today’s biggest lithium producer. It’s the most stable country in the region: the Singapore of South America, the Silicon Valley or Shenzhen on mining of the world. And its climate is perfect for creating drying ponds of lithium brine, as the precipitations are compared to none.
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In that triangle we also have Bolivia and Argentina, but the left wing communist government in the first one, makes it impossible for companies to exploit it, as their ask is 50% of revenue for the local community where the deposit is, and they have to add all sort of taxes over that: simply not economical.

Then Argentina’s corruption makes the lines of action of the institutions almost invisible. Known for killing the private sector in the past decades, and seeing how they took the whole country to bankruptcy just a few years ago, you realize that its instability kills any serious long term investment play.

​So, how to recognize a good player, how to recognize a good opportunity in Chile? Well, first of all you need to research who is the leading expert in hydrogeology there, and who has the experience and expertise in mining in the country. And both are answered in Lithium Chile.

Lithium Chile accounts with one of the top geologist in the world, expert in hydrogeology, a British national with more than 25 years of mining experience in the country. Terence Walker is his name, and he is an eminence, respected by all the community, his peers and the competition.

​Terence Walker is today the COO of Lithium Chile, and Vice President of Exploration, plus also one of its founders. What gives confidence that the company is pointing in the right direction.

The next step of a leader

The derivate businesses of lithium mining are clearly increasing exponentially by the day. Only the battery manufacturing industry has a projected revenue of 60+ billion USD by 2020. Samsung SDI, Panasonic and LG Chemical are the biggest players in that sector. This market was valued in USD 10 billions in 2011, and the categories of products where very different as its today, where hybrid vehicles and industry have taken the majority of the cake, from a non existent play.

So, this is the moment to get involved and for more information, or the complete report, please email at ignacio@questholdingcompany.com

by
​Jose Ignacio Blavi Aros
Vice President of Business Development
​Lithium Chile

Research methodology 

I, as a researcher and analyst, used a variety of research sources for making this report. Most of the data (information and statistics) for this article was gathered using secondary researches, to exhaust all data available including websites of government agencies, consumer and trade associations, annual reports and accounts of companies, new articles of well know publications and online databases like Factiva, OneSource, Thomson, Hoovers, and equivalents.

All that data gathered was verified and looked for research gaps. Those gaps are filled with primary research done personally by me and my team. Finally all that primary and secondary information gathered is analyzed and systematized.

The forecast and conclusions are done by using statistical forecasting techniques based on historic performance. That is supplemented with qualitative parameters like industry expectation, economic drivers, etc.