Joe Lowry #1 - Loves All His Lithium Children as They Will All be Needed

October 20 2020, 14:51 GMT+01:00

Joe Lowry is the founder of Global Lithium which has clients on five continents providing lithium advisory servicesClients include lithium producers, major lithium users, cathode and battery producers, investors, hedge funds and governments. 

Clearing up a few myths and setting investors straight are 2 phrases which are synonymous with Joe Lowry when he talks about the lithium market. Joe makes time to talk to us about the state of the lithium market and what investors should be thinking about. A straight-talking and controversial character and he has the resume to back it up.  

We Discuss: 

  • 1:43 - Becoming the Lithium Sheriff: Getting into the Industry 
  • 9:44 - Health of the Lithium Market 
  • 13:00 - Tesla's Saltwater; Magic & Reality. Time to Work Alongside Miners? 
  • 23:26 - Supply & Demand; Desperation Leading to Over-promotion? 
  • 31:01 - As an Investor, What Should You Look For? 
  • 34:14 - Problems & Opportunities for Miners in Europe 
  • 44:39 - USA Closing Shop? Privatization & Politics 
  • 49:45 - Tiny Industry, Big Games Played; Why Should Anyone Invest? 
  • 54:04 - Timing the Big Wins 

Background and experience 

Hstarted work for an oil company in Oklahoma City and then Houston and after that worked for a gold mining company in Reno, Nevada. Then he started with FMC where his job was to take the overvalued stock and buy some small assets with it. He then moved into a job at their Lithium business which he found interesting because the genesis of the Lithium industry was to get the trigger for the hydrogen bomb. He started in the finance department, then moved into the commercial side which was just at the right time as the Lithium-ion battery was just coming into the market. He spent 11-years in Asia which is why he knows all the Lithium players and cathode makers. So that was the launching pad to get out of corporate life and do something else because there aren't many people who know much about Lithium says Lowry. He now works in advisory roles for many different companies on the world of Lithium and Lithium strategy. 

Lithium market today 

The Lithium market is currently confused, but battery-quality Lithium is going to be in short supply very soon because the brine and Hard Rock producers haven't cracked the code on how to make all battery quality. This wasn’t an issue for the first 15-years of the battery industry when demand was less than 50% of Lithium output, but all the growth going forward is going to be in battery. Last year was about 60% battery demand and its probably going to 90%-95% by 2025 just on E-mobility and energy storage system growth says Lowry. A lot of Lithium will have to be upgraded and that's going to use capacity, so there will be double the problem on capacity shortage very soon. 

In Korea and Japan, they're still paying around USD$10,000/t for battery quality Lithium carbonate, a little more for hydroxide. And when the shortage comes, because they have contracts and relationships, those prices will migrate north but more slowlyThe reason is that we haven't seen the kind of investment needed and the last time there was a shortage, EV penetration was only 1%. This whole transition isn't about just EVs, it's about e-mobility and if you go to India, it won’t be all Teslasthere will also be a lot of 3-wheelers and 2-wheelers, and they're going to be Lithium in the future. 

Lithium production 

The Lithium world will maintain a relative balance between Brine, Hard Rock and then later on Sedimentary or Clay. The cost-curve shows us that the lowest-cost hydroxide is produced from raw material that comes from the Green Bushes mine, which is the creme de la creme of Hard Rock in Western Australia says Lowry and their cash cost is the lowest cash cost for Lithium hydroxide. The industry needs all the Hard Rock that WA can produce, and the industry needs all the Lithium Brine South America can produce. He People think that Lithium production is simple, acid-based chemistry, but the last 10-years of projects has proven it's not that easy.  

Lowry says that Ganfeng has been able to solve problems that others haven’t and are an investable company. He advises Lithium Americas and says that they also have a very experienced team including CEO John Evans who ran what is now Livent. Investors need to note that many juniors have mining experience, but it really helps to have Lithium experience too. 

The first fundamental is the Lithium asset must be at at worst, mediocre. Ideally, you'd want great asset, but during a 5 to 7-year mining periodthere will be a lot of mediocre assets come into production. Lithium production needs to increase to satisfy demand as Tesla say that they will need 3 Terawatts, and 3 Terawatts is 8 x 2019 global supply, and that is just for Tesla. He also believes that there will be significant competition to Tesla before too long.  

Lithium in Europe

Europe is quite densely populated and there are problems on the ground with the locals, permitting and licensing issues. Although people want green energy and local supply, they don’t want mines in their proximity, and this is a real issue with projects trying to get approved now. Lowry is advising some companies in Europe, and there are different models. Vulcan has the geothermal model, which might happen at some point and as will Direct Lithium Extraction (DLE) 

When Lowry first went to China in 2002, they were producing a very low-quality product. In some cases, they were producing a marginal product that is used in very low end LFP batteries. Otherwise, the Lithium needs to be cleaned to improve the qualityLowry asks whether Europe will invest in Lithium cleaning and if so, there is a place for recycling and thinks that Europe could be a pioneer in urban mining which would make great sense. 

Neometals is involved in urban recycling which is very important. Lowry says that Europe is going to have to be interdependent after the first 5 to 6-years when they'll get some raw material from China, WA or even Quebec, and this might be the tipping point to get one of those mines actually operating.  

The US now is closing shop with regards to Lithium as the politics are very polarised at the moment but the supply concern is the problem. The top-4 Lithium companies have 75% of the market, roughly, and they have to perform better than they've ever performed to even get supply to the 700,000t range, which Lowry doesn’t think is possible.  

Ganfeng is ambitious, they started off making metal and butyl Lithium and now want to be number one in Lithium. They have a broad portfolio and have Avalonia in Ireland, Marianas in Salta Province, Argentina. They are also really good at processing Lithium and Lowry states that this is because they have bought poor quality Lithium for years and made good-quality battery grade chemicals out of it which is how to learn. 

Lithium predictions 

Lowry thinks that Lithium producers will start to get financed in Spring 2021. Due to Covid there will be redeployments of capital as people are trying to transition their assets. He also adds that if you make predictions about this industry, they can be wrong but that you just hope they're close to reality. 

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