Battery Metals

An American lithium company’s inking of three big deals with Chinese battery manufacturers shows the strength of Chinese demand for the battery ingredient.

Demand for lithium batteries in China is heating up and one US company seems poised to benefit. 

James Dilger, the CEO of Nova Mining (OTCBB:NVMN), recently returned from the People’s Republic, where the Texas-based company met with major battery manufacturers keen on securing supply agreements with lithium miners.

Nova Mining signed three agreements in one week with major Chinese battery companies. These include deals with Shirui Battery Company, Asia Power International, and Quiangquiang Battery Company, a manufacturer of lithium-ion batteries for smartphones, cameras, electric vehicles, and computing tablets. Quiangquiang is based in Shenzhen.

Nova Mining has secured three licences for mining lithium in Mongolia and also has mining concessions in Guyana and the Canadian province of Saskatchewan.

Dilger described efforts by Chinese companies to seek lithium supplies as “very aggressive” and noted the “active seller’s market” for lithium in China.

Demand for lithium, used to make lithium batteries, seems destined to rise in China as the country moves forward on plans to accelerate developments in energy storage.

China has just 4 percent of the world’s installed advanced energy storage capacity, but is making great strides to catch up. Lithium is a key factor in this endeavor.

In January of this year, Hong Kong-listed BYD Company (HKEX:1211) installed one of the world’s largest battery storage systems in Hebei, a province in Northeast China. The 36-megawatt-hour lithium-ion battery system, known as the Zhangbei project, marks China’s first big move into the energy storage market, reported greentechgrid.

A report by GTM Research titled China Grid-Scale Energy Storage: Technologies & Markets 2012-16, notes that in 2012, China’s electrical grid “will become the largest in the world in terms of both installed generation capacity and electricity produced,” with the energy storage market focusing on “renewable energy integration, load-shifting and peak shaving. “

Hydro energy storage is expected to triple by 2016 while other storage technologies, including lithium batteries, will rise from currently insignificant levels to over 700MW by 2016:

“The Chinese energy storage market will grow at a 92 percent compound annual growth rate from 2012 to 2016, with annual sales reaching $482 million in 2016. In 2016, the total installed capacity will exceed 750 megawatts. Lithium-ion and lead acid will take the largest share of the market,” the report states.

Last month, SQM (NYSE:SQM), a major lithium producer based in Chile, said demand for lithium continues to be driven by demand for lithium batteries. The company projects that battery demand will increase by over 20 percent this year and that sales volumes for lithium and its derivatives will rise by over 10 percent.

SQM also affirmed the findings of the GTM report, with its CEO, Patricio Contesse Gonzalez, saying  in June that “[l]ithium has been very strong in China.”


Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.



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