Tuesday, July 13, 2010

Investorideas.com - InvestorIdeas – Investing in Lithium – Q&A

InvestorIdeas.com – Investing in Lithium – Q&A with Guillermo Trias, the founder and managing partner of MC CAPITAL

July 13, 2010 (Investorideas.com mining stocks newswire) Investorideas.com and its mining portals present a Q&A interview on the topic of investing in Lithium with Guillermo Trias, the founder and managing partner of MC CAPITAL. MC CAPITAL is a Miami-based venture-stage investment management firm.

Q: Investorideas.com
1. Lithium batteries currently are used in cell phones and PC's and other applications - can you explain to investors the role lithium batteries will play with electric vehicles?

A: Mr. Guillermo Trias
Lithium ion batteries are becoming the best choice for electric vehicles, among other reasons, because lithium-ion stores three times the amount of energy and is much lighter than existing competing technologies.
As of today, almost an insignificant amount of the lithium consumption in the market is used in batteries for cars. That being said, according to a recent study from the Boston Consulting Group, 26% of the new cards sold in 2020 (approx. 14 million cars) will have Lithium ion-batteries. The market for electric car batteries in that year will be worth some 25 billion. This will be about triple the size of today’s entire lithium-ion-battery market used for laptops and cell phones.
How this will impact the overall market?
Competition for that buoyant market is already going on all along the industry value chain. A strong current of alliances and joint ventures is underway too. Innovation is spreading and will continue to spread throughout the value chain. Also, the government will play an important role to ensure that companies employ battery and electric car technology.

Q: Investorideas.com
2. We read recent research data that shows the market for electric vehicles is anticipated to reach 32.7 million autos shipped by 2015, if this data is correct, how do you see the supply/demand chain rolling out?

A: Mr. Guillermo Trias
There is a lot of noise out there on the supply and demand for Lithium, but still there is some confusion. In our opinion, the confusion combined with the growing demand has the potential to open huge opportunities in the market.
On the Supply side, competition for market share will significantly increase among players throughout the value chain, bringing volumes up and prices down. On the demand side, market enthusiasm for these green technologies will translate into a highly-informed consumer - one that is aiming for greener, safer and more economic cars.
The way we see the supply/demand right now is that even if there is an abundance of lithium in the market today, anticipated developments in the marketplace, such as the development of the electric car and clean tech industries will significantly impact the global demand of Lithium.

Q: Investorideas.com
3. What countries and markets are dominant in the lithium market?

A: Mr. Guillermo Trias
Regarding the supply side, South America is at the epicenter of the Lithium’s future. The largest salt-brine lithium reserves (where lithium can most easily be acquired) are found in salt flats in Chile, southwestern Bolivia and northwestern Argentina. Currently, Chile is the world’s largest lithium producer. Argentina is also a major player. This country has attracted a variety of junior miners that are carrying out studies to jumpstart development in new areas. Bolivia has one of the largest lithium deposits in the world and promises to be one of the leading players in securing a lithium supply in the future. Other countries with significant reserves are China, Russia, Serbia, Australia and Canada
On the demand side, the US, Western Europe, China and Japan lead the lists. Regarding technology innovation, it is interesting to highlight that lithium-ion technology patents filed in China, Japan the US and Western Europe in 2008 grew 26% from 2005.

Q: Investorideas.com
4. What should investors be looking for when researching lithium stocks?

A: Mr. Guillermo Trias
Besides the opportunity for high growth returns associated with lithium, or what we like to refer to as “green gold”, they should look at an appropriate balance of exposure as well as protection from the systemic risks associated to these stocks, in the form of political and economic instability, industry fundamentals, both country and region-specific. The way to mitigate those risks is to diversify accordingly – horizontal and vertical diversification within the industry, getting exposure to the product while staying away from the operational risks of local environments by investing through publicly traded securities. A listed product like an ETF representing companies all along the value chain, transparent on the underlying companies, and with indicative net asset value, is the safest way to invest in the lithium movement and get exposure to the entire supply chain.
Q: Investorideas.com
5. What are the potential problems in the lithium battery markets moving forward?

A: Mr. Guillermo Trias
One area of concern is the potential for safety issues - any small problem could turn public opinion against electric mobility and set back industry development for month of years. The time required to charge the lithium-ion batteries used in electric cars also presents a potential obstacle for the development of these markets. On the technical and engineering side of the market, limited driving range of the electric vehicles might change the direction of the market. Finally, the sudden dramatic decrease in oil prices could threaten the demand for lithium ion batteries going forward.

Q: Investorideas.com
6. For investors sitting on the fence in this market - can you hi-lite some of the driving forces (including the Electric Vehicle Deployment Act) in the short term that might motivate them to step in?

A: Mr. Guillermo Trias
The Lithium market will develop rapidly over the next 10 years as a consequence of the critical importance that this metal has to the clean tech, automotive, and tech industries. As it did in the last few decades, Lithium will continue to be a key resource in traditional industrial processes and products, which include aluminum, glass/ceramics, grease, air-conditioning, etc. World demand has almost doubled in the past 10 years as have tonnage prices. While demand has dropped by about 10% due to the worldwide recession, it is now back on a strong growth track.
However, the really exciting role for lithium is its use in the renewable energy market. Starting in the 1990’s, lithium ion was developed as an energy storage material. It is lighter and with more storage capacity by a factor of than any other materials. Lithium will become critical for the development of highly efficient storage systems for clean technologies:
Batteries for electric vehicles and for the computer systems that control the vehicles.
Batteries to store excess energy produced by wind, solar and water systems
Batteries for computer control systems in residential homes to efficiently manage electric usage - the “Smart Grid”, which is now a national priority
Market demand will also be driven by the development of new environmental policies in highly populated countries in Asia. Countries like China or India have the opportunity to establish and implement the regulatory framework to force a massive adoption of the electric vehicle among their citizens, in order to overcome the huge environmental challenges that their polluted cities face.

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Sponsored Lithium Stocks at Investorideas.com
North Arrow Minerals Inc.
North Arrow Minerals Inc. (TSX-V: NAR) manages a diversified portfolio of lithium, gold, base metal, and diamond properties. North Arrow's exploration activities are conducted under the direction of an experienced management team that has a record of successful mineral deposit and mine discovery.
North Arrow's current focuses are its lithium and diamond projects. Lithium projects include the North Carolina (Beaverdam), Nunuvut (Torp) and Northwest Territories (Phoenix) projects. Diamond projects include the Northwest Territories (Lac de Gras) and Nunavut (Hammer) projects.

Rodinia Lithium Inc. - Lithium for a Green Future
Rodinia Lithium Inc. (TSX-V: RM) (OTCQX: RDNAF) is a Canadian mineral exploration company with a primary focus on lithium exploration and development in North and South America. The Company is positioned to capitalize on the expected increase in demand for lithium carbonate that is projected to result from the anticipated paradigm shift to mass adoption and use of key lithium applications like lithium-ion batteries as well as glass ceramics, greases, pharmaceuticals etc.
Rodinia is currently exploring its Clayton Valley project in Nevada, USA, which surrounds the only lithium-brine producer in North America, and its Diablillos project in Salta, Argentina.

Bio for Mr. Guillermo Trias:
Guillermo Trias is the founder and managing partner of MC CAPITAL, a Miami-based venture-stage investment management firm focused on business opportunities in Latin America.
A serial entrepreneur, in 2003 he founded SOLEX PARTNERS, the largest importer and distributor of foods & wines from Spain in the American Midwest headquartered in Chicago. In 2008 he led the merger of the company with an American distributor.
Prior to this, he was an investment banker with DEUTSCHE BANK in London and Madrid where he worked advising large European multinational corporations (Telefonica, Sidenor, etc.) in their acquisitions in Latin America. During his tenure at the bank, Guillermo was involved in Mergers & Acquisitions transactions involving clients in telecommunications, finance, consumer goods and other industries.
Guillermo has also worked with ABN AMRO in private equity investing, analyzing investment opportunities in different industries.
He holds an MBA from the Kellogg School of Management where he majored in Entrepreneurship, Marketing and Non-profit Management. He received a scholarship from CAJAMADRID, which financed 100% of its education in the US.

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