Industry Secures Lithium and Rare Earth Supply
Source: Lithium Investing News, Dave Brown (7/20/11)
"Companies have been actively engaged lately in obtaining partners to source critical reserves."
Lithium exploration and development companies have been actively engaged lately in obtaining partners from battery manufacturers, consumer electronics companies and industrial conglomerates to source critical reserves. These commercial endeavors can involve off-take arrangements providing capital financing. Upon successful cost effective production this should secure customer demand for the new lithium producers. Within the current context of a resource constrained global economy, the competition for relatively low cost supplies will continue to be increasingly important.
Consumer goods manufacturers and industrial companies appear to be showing interest in securing strategic partnerships directly with rare earth metals and lithium exploration and development companies. In a shift from the traditional industrial production modes of specialization, several joint ventures and emerging trends in backward integration have appeared to be gaining some interest.
With China dominating 97% of the world's rare earth production and imposing export quotas in recent months, a global rush to find alternative sources for the elements is generating a widespread concern. An economic interdependence of nations and companies across classification sectors is also of special importance and has been creating interesting opportunities which may be worth noting and observing for all resource investors.
Historically, companies and industries have made strongest returns by focusing organizational development efforts and capital in increasingly narrow arenas. Lately this thesis is being challenged by some joint ventures that involve technology and automotive manufacturing companies pairing with resource developers and producers.
Sources of rare earth elements and lithium are critical for the continued supply chain in the manufacturing of essential components for clean energy technologies, electric vehicles and consumer electronics. They are indispensable to many environmental friendly technologies including hybrid motors, wind turbines and photovoltaic panels. The development of new commercial ventures underscores the demand and outlook for this dynamic and rapidly emerging segment of the global economy.