Orocobre’s Lithium Not Dependent on Electric Vehicles
Orocobre Ltd. (ORE), which plans to begin extracting lithium next year from Argentina brine, said rising demand for battery-powered consumer electronics has cut the company’s dependence on electric vehicle adoption.
Orocobre Chairman James D. Calaway, who owns a 7.5 percent stake in the Brisbane, Australia-based company, said he no longer believes battery-powered vehicles are needed to use up rising lithium production. That’s because sales of lithium-ion batteries for consumer electronics such as Apple Inc. (AAPL)’s iPad and power tools have increased more than expected, he said.
“I don’t think our business has any dependency on the automobile sector at all,” Calaway, 55, said in an interview at Bloomberg’s Houston bureau today. “When we first started investing here, I thought you needed it. I don’t think so anymore because the electronic side is so robust.”
Orocobre will begin producing lithium in the second quarter of 2014 at its first project, Salar de Olaroz, atop salt flats in Argentina’s Jujuy province. Minority investors in the $229 million project, with capacity to produce 17,500 tons of lithium carbonate a year, include Toyota Tsusho Corp. (8015), an affiliate of Toyota Motor Corp., Calaway said.
Orocobre rose 1.4 percent to C$1.45 at the close in Toronto. The shares have dropped 14 percent this year.
Lithium extraction will cost Orocobre less than $2,000 a ton, which is $1,500 to $2,000 cheaper than production from competing rock mines, Calaway said. That makes him “highly confident” that any oversupply will cause other projects to lose money and shut, keeping Orocobre profitable.
“In difficult market conditions, we will be making a good margin,” Calaway said. “In good times, we will make a fortune.”
Higher electric vehicle sales would help to tighten supplies and boost margins later in the decade, although that’s not required for Orocobre and others using brine extraction, he said.
“You do not need the auto sector to come on for the low- cost brine producers to have a great business going forward,” Calaway said.
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