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What is Lithium Worth?

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The following content is sponsored by Benchmark Mineral Intelligence.

What is Lithium Worth?

What is Lithium Worth?

Different generations find different uses for raw materials, changing the value of these inputs over time.

Lithium is not a new discovery, but its applications are. Scientists first discovered lithium as an element in 1817, but it was not until the 1970s that studies into lithium-ion batteries began.

It was a British chemist working for Exxon that first proposed the idea of lithium-ion battery. However, after some initial testing, Exxon abandoned the project.

Nonetheless, lithium-ion battery technology has evolved into regular use through cell phones and electric vehicles. It offers an alternative to fossil fuels that global industry can run on.

Just as the world currently watches the prices of oil to determine the trade winds, lithium could become just as important for the worldwide movement to clean energy.

Pricing the New Oil

Traditionally, buyers and sellers have priced lithium through long-term contracts. However, in recent times, there has been a push from major end-users, especially automotive OEMs, to have more price transparency and to use third-party independent contract references in negotiations.

Benchmark Mineral Intelligence has created a standard for pricing the special lithium chemistry for the battery supply chain that the industry can rely on.

Supply & Demand: Miners, Manufacturers and End Users

Lithium is a hot commodity in the mining, manufacturing, energy storage, and automobile industries today. The current size of the market is small, but the potential is huge.

In 2016, the world’s leading lithium battery companies produced 29GWh of batteries. This production is forecast to grow to 1049GWh by 2028, an increase of 3516%.

Data Collection and Price Reporting

There are three cornerstone factors Benchmark uses to set the lithium industry’s reference price.

  1. Quality and grade of lithium
  2. Shipping costs and volumes
  3. Quality and reliability of information

Let’s look in deeper at each one:

1. Quality and Grade of Lithium

Most of the world’s lithium comes from two sources: mined from hard rock deposits of pegmatites, or pumped from lithium brine salars.

Grade and impurity of extracted lithium have unique profiles which will affect its price. Lithium is converted into different compounds: spodumene concentrate, lithium carbonate, and lithium hydroxide.

These different varieties suit manufacturers’ exact specifications with different cost profiles.

2. Shipping Costs and Volumes

The origin and destination of lithium is an important choke point for pricing information. At these locations, “incoterms” are set rules that represent the destination and origin of the material, which in turn affects the cost of lithium.

3. Quality and Reliability of Information

In order to generate a lithium price, Benchmark embarks on the industry’s most rigorous price data collection process that relies on constant contact through email, phone calls, and in-person meetings.

Benchmark analysts evaluate the information received against volumes traded, the position of a company in the market, and reliability of the source of information.

The Results

Independent and accurate prices will be key as the lithium market grows, providing a solid foundation for contract negotiations and a level of transparency that will help attract capital to the market.

The varying nature of lithium chemicals makes it difficult to manage risk, but Benchmark Mineral Intelligence is building a standard for pricing lithium to help manage this, and set us off on a new era of energy.

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Gold in the Abitibi: The Chimo Mine Project

Cartier Resources (TSX-V: ECR) is advancing the Chimo Mine Gold Project in the Abitibi region of Quebec, showing its potential with past producing mines.

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The following content is sponsored by Cartier Resources.

Gold in the Abitibi: Cartier Resource's Chimo Mine Project

Gold in the Abitibi: Cartier Resources Chimo Mine Project

Cartier Resources (TSX-V: ECR) is deploying the right strategy in the right region, with the right backers to find gold faster at a lower cost.

Proven Endowment: The Abitibi Greenstone Belt

There are many prolific past-producing gold districts in Canada, but the Abitibi is one of the largest and best understood gold-bearing regions with readily available exploration infrastructure.

This region extends from Wawa in Northwestern Ontario to the east near Val-d’Or Quebec – a landscape that hosts some of the most productive gold mines in Canada.

The company’s Chimo gold mine project located in the historic Abitibi Greenstone belt of Quebec builds on a legacy of gold production with a project ready for investors.

Exploration Strategy

The best place to find gold is where companies discovered and mined it in the past. Between 1964 and 1997, three companies produced 379,012 ounces of gold at the Chimo Mine property.

This type of strategy is known as brownfield exploration. Brownfield exploration looks for gold in areas known to host gold mineralization. It offers investors less risk, reducing the amount of uncertainties a company faces.

Ounces in the Ground: 2019 Resource Estimate

The company delivered within three years its first-ever resource estimate and proved the value its Chimo Mine Project. In November 2019, Cartier published its first mineral resource estimate of the central gold corridor on the Chimo mine property:

Measured Resources: 481,280 ounces of gold
Inferred Resources: 417,250 ounces of gold

Cartier has proven a resource in one third of the Chimo property, and there is the north and south gold corridor which it is currently drilling.

Why Chimo?

Cartier Resources has built on the foundations of a proven past producer with a new resource estimate, to put the Chimo Mine project back on the Abitibi gold map.

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The 26-Year History of ETFs, in One Infographic

This graphic timeline highlights how the exchange-traded fund (ETF) came into existence, as well as the 26-year history of ETFs as an investment vehicle.

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The 26-Year History of ETFs, in One Infographic

In recent decades, there have been many breakthrough technologies that have re-shaped the nature of entire industries.

In finance, perhaps the most notable disruption has come from the rise of the exchange-traded fund (ETF) — an investment vehicle that has quadrupled in size over the last decade alone. But how did the ETF originate, and how has its use evolved through to today?

Today’s infographic comes to us from iShares by BlackRock, and it shows how the ETF has gone from an obscure index tracking tool to becoming a mainstream investing vehicle that encompasses trillions of dollars of assets around the world.

The Origin and History of ETFs

ETFs emerged out of the index investing phenomenon in the late 1980s and early 1990s, and there are two early examples that can be referenced as a starting point:

  • Index Participation Shares – 1989
    This initial attempt to create an ETF was set to track the S&P 500, and garnered significant investor interest. However, it was ruled to work like a futures contract according to a federal court in Chicago, so it never made it to the exchange.
  • Toronto 35 Index Participation Units – 1990
    These were a warehouse, receipt-based instrument that tracked Canada’s major index, the TSE-35. They allowed investors to participate in the performance in the index, without owning individual shares of stocks in the index.

Since these pioneering ETF endeavors, the investment vehicle has caught on in popularity — and it is now clear that ETFs provide a range of important benefits to investors, such as: low costs, liquidity, diversification, tax efficiency, flexibility, accessibility, and transparency.

Key Milestones in U.S. ETF History:

  • 1993 – The First ETF launches in the U.S., tracking the S&P 500
  • 1998 – Sector ETFs debut, tracking individual S&P 500 sectors
  • 2004 – The first U.S.-listed commodity ETF is formed, offering exposure to gold bullion
  • 2008 – Actively-managed ETFs get the green light from the SEC
  • 2010 – Term-maturity ETFs debut, holding bonds that all mature in same year
  • 2015 – First factor-based bond ETFs are launched
  • 2019 – U.S.-listed ETFs hit $4 trillion in AUM, and global bond ETF AUM crosses $1 trillion

How ETFs are Used Today

Today, the U.S. ETF industry has $4.04 trillion of assets under management (AUM), covering a wide spectrum of assets including equities, bonds, alternatives, and money markets.

ETFs are now the go-to index vehicle for 78% of institutional investors, according to a study by Greenwich Associates. Here are the 10 most popular applications for ETFs based on the same data:

ETF ApplicationUsageDescription
Tactical adjustments72%Over- or underweight certain styles, regions, or countries on the basis of short term views.
Core allocation68%Build a long-term strategic holding in a portfolio.
Rebalancing60%Manage portfolio risk in between rebalancing cycles.
Portfolio completion57%Fill in gaps in a strategic asset allocation.
International diversification56%Gain efficient access to foreign markets.
Liquidity management54%Maintain exposure in a liquid investment vehicle to meet cash flow needs.
Transition management44%Facilitate manager transitions with ETFs.
Risk management42%Mitigate undesired portfolio risk and hedge asset allocation decisions.
Interim beta37%Maintain market exposure while refining a long-term view.
Cash equitization37%Put long-term cash positions to work with ETFs to minimize cash drag.

In the 26 years since the introduction of ETFs, they have grown and evolved to cover almost every aspect of the market. The next stage of growth for the ETF will be driven by investors finding even more uses for these versatile tools.

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