This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Orocobre, Canada Lithium, Galaxy Resources Trump New Lithium Carbonate Plant's Supply Impact

Bolivia is not only a long way off from being capable of constructing an industrial-scale facility, but the property itself is plagued with inherent problems, including seasonal flooding and high magnesium levels.

Worsening matters is the fact that President Morales' blatantly nationalistic stance on his country's resources and industries is making business in Bolivia an extremely risky venture. Lee believes the Bolivian government will “have a difficult time attracting long-term investors in a jurisdiction that has a lot of political risk.”

Roughly 30-percent increase in mine supply by 2014

Three projects that will have a significant impact on the lithium industry, said Lee, are Galaxy Resources' (ASX:GXY) recommissioning of the Mount Cattlin spodumene project in Western Australia; Canada Lithium's (TSX:CLQ) Quebec project in Quebec, Canada; and Orocobre's (ASX:ORE,TSX:ORL) Olaroz project in Argentina's Puna region.

According to Lee, both Galaxy's Mount Cattlin project and Canada Lithium's Quebec project will lead to a 20-percent increase in lithium mine supply by the end of 2013. Orocobre's Olaroz project, now under construction, is expected to add another potential 10 percent to mine supply in 2014.

Increased supply to stabilize prices while demand remains robust

The substantial addition to global lithium mine supply represented by these three operations will have a stabilizing effect on lithium prices, said Lee. “Pricing has increased roughly 30 to 35 percent over the past two years. Production from marginal cost suppliers like Galaxy Resources and Canada Lithium will to some extent create a natural floor in the price of lithium,” he explained. Byron Capital expects to see lithium prices of $5,800 to $6,000 per ton lithium carbonate.

In terms of demand, Byron Capital remains bullish and expects the double-digit growth in lithium demand to continue into next year on increasing demand from the ceramics and glass sector (29 percent of total end use in 2011, according to the US Geological Survey); the batteries sector (27 percent); and robust demand in the lubricating greases sector (12 percent), where lithium greases are taking over a larger percentage of the market from sodium- and potassium-based greases.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs