Friday, 12 May 2017

The Switch And Lithium Race: China, India Plans For Electric Cars Threaten To Cut Gasoline Demand.





Now it is getting interesting. Reuters reports about the coming tide of electric cars and China raises the stakes again. Now China wants "at least" 20% of all auto sales or 7 million of New Energy Vehicles to be sold annually by 2025! And India is talking more and more seriously about only electric cars being sold by 2030.





Tesla Officials Visit Argentina’s Governor Of Salta For Solar And Storage Projects And Sourcing Lithium.





ElectTrek reports that "salt on the salad'": this is how Elon Musk has described lithium before - must be very important for Tesla's digestive system after all. I am writing here extensively about the coming control of the Lithium supply by Chinese companies who are very aggressively buying all the best lithium projects worldwide. It is very difficult to pretend anymore that any lithium will be coming from any signed by Tesla agreements with some junior miners in the nearest future. Lithium cathode is still produced by Panasonic for Tesla Gigafactory. Read more.




Another part of this story is the rising price of lithium in China again. Last year we have seen only 14% rise in lithium supply and prices have increased by 74%. In December, Benchmark Minerals has reported that LCE (Lithium Carbonate Equivalent) was priced below $15k/T and Lithium Hydroxide (the particular lithium based chemical which is used in Tesla batteries) was around $18k/T. Last week I have received reports that in Shanghai LCE was priced at $18k/T and Lithium Hydroxide was at $22k/T. Today there are reports that LCE is already pushing $19k/T. It is all happening just before 4 major Lithium batteries Megafactories will be coming online in China this year and Tesla will move into the mass market stage with the production launch of Tesla Model 3 in July.





As you know, I have been preaching for years that security of lithium supply will be the most important factor determining the competitive advantage among different producers of critical raw materials for the Energy rEVolution. This Lithium Race will have the very far-reaching geopolitical implications. Now it looks like that Tesla is realizing that there is no secure supply of lithium for its massive expansion of operations from the underneath of Gigafactory floor in Nevada. Even if Panasonic is producing cathode for lithium cells which are made at Tesla Gigafactory in Nevada the supply chain is going all over the globe and back to China.





The real test to the market and supply chains for Energy rEVolution will come with the coming tide of Electric Cars and the following tsunami of Energy Storage. Bloomberg has recently reported that there will be more than 120 models of electric cars by 2020 and you should not be surprised as we have discussed here before that there are more than 70 models of electric cars on sale in China already. The next few years will determine who will have the keys to the new Energy rEVolution and control the supply chains. Hungry Dragons are flying high already and mostly in China, the question remains who and how will feed them without fear of being burnt in the process. 






International Lithium And Ganfeng Mariana Lithium JV Exploration Target And Indicated Resource Of 1.25 M T of LCE.






Exploration target at Mariana Lithium, Argentina. 
International Lithium NI 43-101 report.






Kirill Klip, Executive Chairman of ILC stated, "We are very pleased with the results of the maiden resource estimation at the Mariana lithium potash brine project, together with our strategic partner Ganfeng Lithium. This project is now moving from an early exploration stage to an advanced exploration stage where it will be more easily compared to other lithium brine projects in Argentina. We are looking forward to follow up with Ganfeng Lithium on the recommendations of this report in order to ensure the rapid advancement of the project towards the pilot stage and to conduct further feasibility studies that will investigate the economic viability of the Mariana project."



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Reuters:

China, India plans for electric cars threaten to cut gasoline demand

By Seng Li Peng and Florence Tan | SINGAPORE/KUALA LUMPUR
Demand for gasoline in Asia may peak much earlier than expected as millions of people in China and India buy electric vehicles over the next decade, threatening wrenching change for the oil industry, oil and auto company executives warned.
They said refiners should prepare for a future in which gasoline, their biggest source of revenue, will be much less of a cash cow.
Change is being prompted by policy moves in India and China, where governments are trying to rein in rampant pollution, cut oil imports, and compete for a slice of the fast-growing green car market.
In its "road map", released in April, China said it wants alternative fuel vehicles to account for at least one-fifth of the 35 million annual vehicle sales projected by 2025.
India is considering even more radical action, with an influential government think-tank drafting plans in support of electrifying all vehicles in the country by 2032, according to government and industry sources interviewed by Reuters late last week.
"We will see a clear shift to electric cars. It's driven by legislation so electric cars are coming, it's not a niche anymore," Wilco Stark, vice president for strategy and product planning at German car maker Daimler (DAIGn.DE), told Reuters.
Stark and other executives were interviewed during the Asia Oil & Gas Conference in Kuala Lumpur this week.
Daimler sees electric vehicles contributing 15-20 percent of its overall sales by 2025 and at least an additional 10 percent of sales coming from hybrids, he said.
Electric cars currently make up less than 2 percent of the global car fleet, and any faster-than-expected growth in that percentage will materially impact oil demand and the refining business.
"Technology is moving fast. In 10-15 years... our gasoline market might not be the same as it is today," said Dawood Nassif, board director at the state-owned oil company Bahrain Petroleum Company (BAPCO).
With gasoline responsible for up to 45 percent of refinery output, and one of the highest profit-margin fuels, a slowdown or fall in demand will have far reaching implications.
Credit agency Moody's says that the fast pace of technological development makes accurate predictions difficult, but warned that direct financial effects from falling oil demand, including gasoline, "could be material by the 2020s."
The changes are so big that the influential International Energy Agency (IEA) plans to revisit its analysis of electric vehicle trends and oil demand.
"The choices made by China and India are obviously most relevant for the possible future peak in passenger car oil demand," an IEA spokesman told Reuters.
In its current policies scenario, last updated in November 2016, the IEA still expects oil demand from vehicle use to rise until 2040.
It's not just China and India that are changing fast.
Asia's major car makers, Japan and South Korea, already sell significant volumes of hybrid vehicles - which operate off gasoline and electricity - while fuel efficiency gains will continue to cut gasoline consumption for standard vehicles.
There will, though, be some major hurdles before a country like India goes mostly electric. High battery costs would push up car prices and a lack of charging stations and other infrastructure in India means car makers may hesitate to make the necessary investment in the technology.
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Asia has long been the main driver of future oil demand thanks to supercharged growth in sales of autos.
China sells more than 2 million new cars a month aCNDSLSAUT and is challenging the United States as the world's biggest oil consumer. India now is the world's third-biggest oil importer, ahead of Japan.
More than a third of the world's refineries are in Asia, up from just 18 percent in 1990.
For refiners, the growth of vehicles that run on electricity and other alternative fuels is a wake-up call. They can tweak the products they make from crude oil to an extent, but still mostly rely on gasoline consumption for revenue.
"Rising pressure on margins and cash flows will potentially lead to stranded assets," Moody's warned, using a term for assets that no longer provide an economic return because of changes in the market or regulatory environment.
The oil industry is taking note.
Royal Dutch Shell (RDSa.L) said this week that it "is looking into ... the potential to introduce electric vehicle charging points at our retail sites in several countries."
Oil executives say it is still premature to expect overall oil demand to fall soon.
"Our industry will not disappear," said Abdulaziz al Judaimi, senior vice president for downstream at Saudi Aramco, the world's biggest oil export company.
They are envisaging a shift towards producing more petrochemicals like plastics or household chemicals, areas where consumption is soaring.
Saudi Aramco is jointly developing the huge Malaysian RAPID refinery and petrochemical complex with state-owned Petronas, and the two said this week they are exploring an expansion of its petrochemical capacity.
Exxon Mobil (XOM.N) this week said it would buy a petrochemical plant in Singapore.
Refiners also still see strong oil demand from heavy industry.
"Refiners may shift their focus from gasoline to middle distillates," said KY Lin of Taiwan's Formosa Petrochemical (6505.TW), a major Asian refiner. "Gasoil is used widely, including in farming/industrial equipment... and also as a marine fuel."
(Reporting by Seng Li Peng in SINGAPORE, Florence Tan in KUALA LUMPUR and Jane Chung in SEOUL; Writing by Henning Gloystein; Editing by Richard Pullin and Martin Howell)"