Toyota Motor Corp made a major news announcement yesterday that it has secured a long-term source for lithium supply out of Argentina. According to the Wall Street Journal, Toyoto Tsusho Corp, a key supplier to Toyota and partly owned by the OEM, received low-cost loans to invest approximately $100-125m in an Australian company, Orocobre to conduct a feasibility study and take a 25% ownership stake in the project. The project could come on-stream in 2012. For any of you in the automotive supply chain, the article contains some good factoids to calculate supply risk. For example, the article states at current prices (Editor’s Note current prices for lithium carbonate are in the $2.30/lb – $2.50/lb range according to Industrial Minerals) lithium represents 5% of the cost of the battery. And though lithium has dropped in price since Q3, 2009, the long-term outlook for lithium remains tight.
As we have written about extensively, lithium, a key metal used in batteries is also used to cast steel, make ceramic glass and other coatings, but has not been without controversy. Last year, MetalMiner had a world-renown expert in lithium, Dr. Keith Evans write three pieces on the supply market for lithium. Here are links to those articles if you missed them the first time around:
- Evidence Points to Few Supply Concerns for Lithium Part 1
- Evidence Points to Few Supply Concerns for Lithium Part
- Evidence Points to Few Supply Concerns for Lithium Part 3
The debate still rages on as to the viability of PHEV (plug-in electric hybrid vehicles). Toyota would undoubtedly use this new lithium supply source for both its HEV line and other new PHEV lines. Personally, I feel this article by John Petersen writing for Seeking Alpha has a lot of credible arguments against PHEVs. Petersen cites the case against PHEV’s as follows:
“Plug-in vehicles don’t significantly change the energy balance, they’re far too resource constrained to make a dent in oil imports, and the fundamental economic premise only works if you are willing to assume that historically moderate trends in retail electricity prices will continue foreverÂ¦.The resource constraint issues go far beyond lithium availability and extend to every component in batteries and battery packs.
Personally, if we just set aside the debate on the viability of long term lithium supplies (and I am personally in the camp that there are likely sufficient long term supplies), I’m stuck on the electricity argument. The notion of “plugging in during “off peak hours, simply falls by the wayside. Once we all start doing that, there won’t be any such thing as “off peak hours.
What do you think?
(Hat Tip: Gareth Hatch, Terra Magnetica)