A Japanese trading house affiliated to Toyota Motor on Wednesday sealed a lithium supply deal in Argentina that could help maintain the automaker’s lead in petrol-electric hybrid cars.
The deal sent shares in the lithium project’s owner and operator, Australian-listed Orocobre, soaring almost 50% to an all-time high, according to Reuters.
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Lithium is expected to be in increasing demand as carmakers choose costly but more efficient lithium-ion batteries to power hybrid and electric vehicles.
Toyota uses nickel metal hydride batteries in its current hybrids, arguing they are proven and durable but will use li-ion cells in the planned plug-in version and other all-electric or hybrid models it has in the works.
“When it comes to mass production of hybrids, the main hurdle has been a shortage of batteries,” Kazaka Securities chief analyst Yoshihiko Tabei told the news agency. “Toyota is taking a step on its own to secure the materials it needs to ensure stable production.”
Toyota Tsusho, a trading house and key Toyota supplier 22% owned by the automaker, said it would jointly develop a new lithium project in Argentina with Orocobre.
The Salar de Olaroz project in Argentina is estimated to cost around US$80-$100m with the final figure to be determined after a feasibility study, Orocobre spokesman Paul Ryan told Reuters, adding the study should be complete by end-September.
“As environmentally friendly electric car demand continues to grow, Toyota Motor will have the opportunity to become a cornerstone offtake customer,” Orocobre said in a statement.
Orocobre managing director Richard Seville said the lithium market had been growing at a compound annual growth rate of about 7% between 1997 and 2007, before the global financial crisis, thanks largely to demand from consumer electronics makers.
“That growth will continue, but on top of that we have the step change in demand with a new application which is in large format batteries for use in electrical vehicles,” Seville said.
Subject to final terms, Toyota Tsusho will acquire a 25% equity interest in the joint venture while Orocobre will continue to own the remaining 75% and will operate the venture.
The Japanese government-affiliated Japan Oil, Gas and Metals National Corp (JOGMEC) is looking to take a part of Toyota Tsuho’s 25% stake, as part of Japan’s efforts to secure stable sources of rare metals, government officials said.
“Rare metals are essential not just for the high-tech sector but for Japan’s manufacturing industry overall,” said Hiroshi Kuwayama, a deputy director at Japan’s Agency for Natural Resources and Energy.
“With other countries, such as China, investing in mines around the world, we want to be more aggressive to support the private sector in securing stable supplies.”
Boliva has around 50 percent of the world’s lithium reserves, but does not yet mine the metal, while Chile, China and Brazil also hold big reserves, the report noted.
