Chile, the best place to be
Access to raw materials at competitive prices has become essential to the functioning of all industrialized economies. As we modernize, developed and developing countries will continue to place extraordinary demands on our ability to access and distribute the planet’s natural resources.
A sustainable, and secure, supply of raw materials is going to become the number one priority for all countries. Increasingly we are going to see countries ensuring their own industries have first rights of access to internally produced commodities and they will look for such privileged access from other countries.
We see this right now in the protectionism of the United States, which has realized after many years of government inaction that it no longer has a local supply of important metals to feed its growing economy. Security of supply also underpins the entire intermodal transportation system - ships, railways and trucks - all carrying containerized goods that rely on “just in time” supply chains. Imagine the grocery industry or auto-parts manufacturers having to wait for shipments before moving on to the next point of distribution. The whole system would fall apart. Most industries cannot function without security of supply.
However the “metallurgical Achilles heel,” of the United States is its dependence on foreign imports of strategic metals. Trump has to be credited for being the first President in decades to recognize this. In December Trump signed an executive order to reduce dependency on 23 minerals deemed critical to national security. “The comprehensive order aims to identify new sources of critical minerals, ensure miners and producers have access to the best data, and streamline the leasing and permitting process to expedite production, reprocessing and recycling of minerals at all levels of the supply chain,” said a statement from the White House.
Included on this list is lithium - the key ingredient in lithium-ion batteries used in electric vehicles as well as cell phones, power tools and many other electronic devices. EV batteries also contain nickel, cobalt, and graphite. The United States currently imports most of the lithium that it consumes – with import reliance today pegged at over 70%. Due to junior lithium explorers having a hard time raising funds in North America, many are heading to Asia to sign agreements with battery-makers.
An example is Japan’s Softbank which invested $100 million into Nemaska Lithium’s mine and electrochemical plant in northern Quebec, Canada. SoftBank owns a 15% stake in Uber and wants to convert its taxis in China and India to electric vehicles.
The increasing trend: almost all the major moves being made to lock up lithium supplies are not in North America, they're in the South American salars (evaporated salt lakes) where three-quarters of the world’s lithium is produced. And with 50% of the world’s lithium resources in Chile, as well as the country being the lowest cost producer, Chile, if you’re a junior resource company in the lithium space, is the place to own lithium projects.
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