Lithium miners hunt for capital as demand for metal climbs

By Rod Nickel
TORONTO, March 7 (Reuters) - Climbing demand for the metal
lithium at a time of broader commodity weakness has Canada's
Nemaska Lithium Inc NMX.V and Western Lithium USA Corp
WLC.TO confident they can soon obtain scarce capital even as
other junior miners struggle.
A scramble to secure lithium has accelerated as prices have
risen, driven by demand for smartphone, laptop and electric car
batteries.
"Everyone can see the writing on the wall as we move toward
2020, and a need for new deposits to get into production," said
Jon Hykawy, president of consultancy Stormcrow Capital. "Problem
is, the capital really isn't there."
But Western, which aims to bring the world's next new
lithium resource into production in 2018 in Argentina, is
optimistic.
"What we're really seeing is the equivalent of another
industrial revolution, the switch to electric power for
automobiles," Chief Executive Officer Tom Hodgson said at the
Prospectors & Developers Association of Canada (PDAC) convention
in Toronto. "Given the fundamental shift in energy demand,
nothing's easy, but (raising capital is) very doable."
Vancouver-based Western's $314 million project would pump
brine to the surface for evaporation.
Western says one of its advantages is a commercial agreement
it is negotiating with South Korean steelmaker Posco
005490.KS , a potential joint venture that would deliver
Western's lithium to the doorstep of South Korean battery
manufacturers LG Electronics Inc 066570.KS and Samsung (KS:005930) SDI
006400.KS .
Nemaska Lithium Inc NMX.V , developing a mine in the
Canadian province of Quebec, expects to raise the C$521 million
($392.14 million) it needs within a year, Chief Executive
Officer Guy Bourassa said, adding it has one of only three
undeveloped projects in the world with full permits.
Since lithium does not trade publicly, many investors,
burned by other faltering commodities, do not realize that
prices have steadily climbed, Bourassa said.
Three large producers, SQM SQMa.SN , Albemarle Corp ALB.N
and FMC Corp (NYSE:FMC) FMC.N , and a new Argentina brine operation owned
by Orocobre Ltd ORE.AX account for just over half of global
production, according to advisory firm Global Lithium LLC.
"End users we're talking with obviously don't like that
situation because they're at the mercy of these four guys,"
Bourassa said. "It's another advantage for us."
Lithium carbonate prices are poised to keep rising in 2016,
and demand will require a new large-scale plant every 18 months
for the next decade, Global Lithium president Joe Lowry said.
Western Lithium's shares have gained about 11 percent this
year, as of Friday, while Nemaska has climbed 9 percent.
($1 = 1.3286 Canadian dollars)