PALM BEACH, Florida, March 22, 2018 /PRNewswire/ --
Marketnewsupdates.com News Commentary
Chile is a mining giant. It is the world's top exporter of both copper and lithium, and recent political developments in the country suggest that 2018 could be the biggest year for lithium yet. Newly-elected president Sebastian Pinera is outlining plans to cut mining restrictions and catapult Chile's economy higher. His National Renewal Party has historically been liberal when it comes to mining natural resources, and many companies are seeing this as a lithium mining green-light. Seizing the opportunity, mining firms such as Lundin Mining Corp. (TSX: LUN), Garibaldi Resources Corp. (TSX-V: GGI), Albemarle Corp (NYSE: ALB), FMC Corp. (NYSE: FMC) and Canadian firm Wealth Minerals (TSX-V:WML) are conducting a great deal of environmental research. They have shown that vast lithium reserves lie under Chile's salt beds, and now these firms are rapidly acquiring mining assets in order to capitalize on this.
Wealth Minerals in particular is one of the largest lithium asset owners in Chile, with a number of projects in development including its Five Salars lithium asset consolidation project set to increase this further. Its Atacama project currently covers 46,200 hectares in the northern part of the Atacama salar, an area thought to contain more than 15% of the world's known lithium reserves. Wealth Minerals' recent geophysical survey reports have outlined large, near-surface brine targets which are necessary for lithium mining. The company filed an NI 43-101 technical report -- a requirement for Canadian junior mining companies -- in March last year, which means that as soon as Wealth completes the analysis of their most recent drilling program, rapid development can begin.
Politics at Play: New Chilean President Set to Boost Mining Industry
Since a socialist government under President Michelle Bachelet was elected back in 2014; mining operations in Chile have been toned down in favor of labor unions, social progression and higher taxes. Sluggish economic growth unfortunately followed, leading Chilean citizens to overwhelmingly vote for billionaire businessman Sebastian Pinera to retake the presidential seat on March 11th this year.
So what does Pinera's re-election mean for mining companies in Chile? Well for one thing, large players will see a huge drive in production, but there will also be an influx of junior firms such as Wealth Minerals (TSXV:WML), whose management is already preparing to meet with Chile's new Minister for Mines - Mr. Baldo Prokurica - to discuss the Chilean lithium industry and plans for legislative reform.
In addition, Pinera's re-election will mark a complete turnaround in terms of governmental priorities away from social concerns to economic ones. For example, laws prohibiting lithium production above 80,000 metric tonnes (MT) could be a target under Pinera's National Renewal party, and more red tape is sure to be slashed as time goes on. Pinera's liberal approach to mining coincided with a booming value of copper a few years ago, and his first administration was marked by a booming economy.
Politically Supported; Environmentally Ideal
It's not just Chile's political landscape which is conductive to lithium production. Its physical landscape is pretty ideal as well. The country is so rich in lithium that it forms part of the 'lithium triangle'; the nickname given to an area which covers Chile, Argentina and Bolivia. Chile's Atacama salar is the world's largest and highest-grade lithium deposit. With its low rainfall, mineral-rich brines and a lot of sun (key factors in profitably mining lithium from salars), it is a metaphorical goldmine for lithium.
The Laguna Verde lake in Chile's north-western region is another location with a great deal of potential. Where lithium brines typically occur in sub-surface brines and aquifers, the Laguna Verde itself contains brines with highly elevated lithium. It will be the focus of Wealth Minerals (TSX.V:WML)' Laguna Verde project. Drilling is already taking place, after which crews will mobilize to other projects with high-priority drill-testing targets, where 'recent geophysical surveys have defined large, near-surface brine targets,' the company said in a recent press release.
In a promising development, Wealth Minerals has announced that it has entered into an agreement with the National Mining Company of Chile (ENAMI) - a state-owned mining firm - to develop and commercialize both of the above projects. Being essentially government-backed 'will enable Wealth and ENAMI to meet the world's growing demand for lithium and secure Chile's position as a premier player in global lithium markets,' said Wealth CEO Hendrik van Alphen.
By taking advantage of such natural wealth, Chilean Development Agency VP Eduardo Bitran told CGTN America: "We could create a $10 Billion industry in Chile in 15 years," adding that this would be "very, very substantial." Bitran also heads the agency's plans to attract foreign investment. The country is already offering cheaper lithium for companies that set up industrial operations in the north, for example.
Chile's Government is paving the Future of Lithium Mining, and Green Practices Will Get Us There
Allied to this environmental factor is the willingness of certain mining projects to maintain 'green' policies. Social concerns are already beginning to mount surrounding wildlife and simple amenities like sewers and drinking water. The issue is the use of water by mining companies to bring lithium-rich brine to the surface for processing. "We are not saying they mustn't extract lithium, but it must be controlled, using water levels, and the earnings should be for the community, not the government," a Chilean resident told CGTN America.
Wealth Minerals state in their responsibility statement that: "We aim to achieve benefits for all parties involved and to contribute to the sustainability and improved livelihoods for the communities in which we operate. Mining responsibly defines who we are as a company and, at the end of the day, is plain good business sense." This makes a refreshing change from news of unethical cobalt operations in Africa, which also are essential to producing lithium-ion batteries.
Potential Comparables:
Lundin Mining (TSX: LUN.TO) is a multinational minerals company with operations in Chile, the US, and Sweden. The company mainly produces copper, nickel, and zinc, with additional engagements in gold, lead, and silver. Over the past five-day period, Lundin Mining saw an increase of 7.8% to close at $8.95 CAD.
Garibaldi Resources Corp. (TSXV: GGI.V) is a junior exploration company operating in Canada and Mexico. It currently holds projects and property for gold mining, as well as the aggressively-expanding E&L nickel-copper project in Nickel Mountain, British Columbia. Their stocks have risen nearly 17% over the past five days, closing this afternoon at $2.70 CAD.
Albemarle Corp. (NYSE: ALB) This Charlottesville, NC firm is a global specialty chemicals company with interests ranging from lithium to energy and communications. When it comes to lithium, the company describes themselves as an 'industry leader', working with raw material extraction as well as developing electronics.
FMC Corp. (NYSE: FMC) - FMC is a specialist company split into two parts: Agricultural solutions and Lithium. In regards to the former, FMC assists clients with its portfolio of advanced technology, aiming to increase crop yield and quality by solving problems to do with insects, weeds and disease. Meanwhile, the company utilizes lithium to develop energy storage technology and speciality polymers.
The Future
Chile has led the world on lithium mining for decades, and lithium demand is expected to continue to grow. Bloomberg New Energy Finance predicts that electric car production is going to increase thirtyfold by 2030. Sebastian Pinera's government is expected to drive production to meet this demand while mining firms and investors eye the country with interest. The public is on side too; according to Fortune, Pinera received more votes than any president in the country since 1990. He now has a four-year term ahead, and a lot can happen in four years.
With this perfect storm of rapidly growing lithium demand and a Chilean government that appears friendly to foreign and domestic lithium mining, firms such as Wealth Minerals are excited, and it's easy to see why.
For a free in-depth report on Wealth Minerals (TSXV:WML.V), visit Microsmallcap.com for a full report.
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