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Automakers driving investments in lithium sector

Financial Post reported that the race to control the lithium supply chain is in high gear as auto manufacturers’ ramp up the use of the mineral in their electric and hybrid vehicles.

Toyota Tsusho Corporation was forging a new JV to develop a lithium deposit in Argentina in partnership with Australia's Orocobre Limited. Under the terms of the deal, Toyota Tsusho will take 25% stake in the project with the aim of making Toyota Motor its primary customer, spurred by the high cost of lithium ion batteries used in its electric and hybrid vehicles.

It's not that lithium deposits are scarce. In fact, the mineral is as common as lead or nickel worldwide. But there are few commercially viable sources and even fewer players in the emerging market. Chile's SQM; Chemetall, a division of Rockwood Holdings Inc and FMC Corporation are the biggest producers of the mineral, which is principally mined in Chile, Argentina, Australia and China at this point.

Mr James Calaway chairman of Orocobre said that Partnerships, like the one struck by Toyota are aimed at controlling the supply chain, introducing more players and increasing competition with the goal of lowering the price of lithium for those who expect sizeable demand in the future. The technology is moving so rapidly in the area of lithium ion batteries. The automobile industry is really taking this a lot more seriously than most people might think.

He said that while overall demand for lithium is increasing at an annual rate of 7%, demand for the mineral is increasing 35% annually for use in batteries. This is driven by automakers moving toward electrifying their vehicles to meet the rigid emissions standards set by governments around the globe.

Toyota, for example, plans to launch 8 new hybrid models in the coming years with the goal of this style of engine its primary power train in just a few years. It also plans to launch an all electric and a plug in hybrid vehicle by 2012 all of which will use lithium ion batteries. Toyota is not alone. Major manufacturers around the globe are adapting the technology including General Motors Company which will launch its own electric vehicle, the Volt, this year.

The Toyota deal follows another USD 10.5 million equity investment in December by Magna International Inc and Mitsubishi Corporation in Toronto based Lithium Americas Corporation to help develop another lithium deposit in Argentina.

Mr Ted Robertson chief technical officer of Magna said that the Aurora, Ont, parts maker has been in talks with manufacturers around the globe about the technology. But he acknowledged that at USD 10,000 to USD 20,000 each the price tag of the batteries remains an issue.

He said that Magna wants to be on the leading edge of any new technology, and so we jumped on this technology a few years ago. The high cost is the battery. So, working on the supply chain, getting the price down, and working on new composites for the battery are all things we are working on.

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