Powered by Lithium - Bruno del Ama
They are all powered by lithium.
Bruno Del Ama, portfolio manager, New York
Global X Management, an exchange-traded fund issuer, recently launched an ETF for lithium companies because of this.
In an exclusive interview with this energy report, delAma discusses why the large amount of lithium deposits that have just been developed may not be enough to meet the needs of the consumer electronics and emerging electric vehicle industries over the next decade.
Energy Report: Bruno, your company recently launched the Global X lithium ETF (NYSE: NYSE ). Why lithium? Why now?
Bruno Del Ama: lithium is of great interest today for a variety of reasons.
The main reason is that demand for lithium is growing by about 10% per year.
Most of the growth is driven by lithium.
Batteries for small household appliances, mobile phones and laptops, and other portable electronic devices.
The factor that did not take into account the growth was Lithium-
Ion batteries used in electric vehicles. Lithium-
Ionbatteries is the best technology and it is being adopted by all new hybrid and electric vehicles.
For example, the amount of lithium needed for an electric car is much larger than the amount needed for a laptop.
This growth has not yet been incorporated into a market that has grown very rapidly.
We expect the market for electric vehicles and hybrids to grow significantly from the current level, which is basically notexistent.
This should have a huge impact on the demand for lithiumTER: But why do you want to form an ETF for lithium?
Today\'s investment in lithium is basically impossible.
There is no futures market for lithium.
There are no other lithium products to invest in.
Today, or before these products go public, the only way to invest in lithium is to buy individual stocks of lithium mining or processing companies.
What this ETF does is provide investors with a simple package that will allow them to access the entire lithium market.
TER: what type of investors are investing in Lithium ETF?
BTW: at one end of this range, we received inquiries from some of the largest institutional investors.
At the other end, any investor with a brokerage account can buy a lithium ETF for $20.
When it first went public in July, the fund\'s share price was about $15 and now traded more than $20 per share.
The return was incredible in a very short time.
TER: How much is lithium per ton at present?
Until 2004, lithium was traded at around $2,000 a tonne.
Since then, prices have more than doubled to $6,500 a tonne.
TER: This growth is obviously accelerating as lithium technology replaces existing technology, but what if lithium technology is replaced by other technologies?
Lithium is the best battery technology at the moment.
Partly because of the properties of the metal, this is the best technology.
It is the lightest metal in the periodic table and stores three times the energy density of competing materials.
We have not seen the development of replacing lithiumin energy storage.
But we do see the development of the anode composition that replaces lithium --
Ionic molecules are typical carbon molecules that eliminate the most important parts of the material.
There are already researchers working on lighter lithium batteries like ium thium --
Make full use of air batteries, for example --
The oxygen available in the environment completely eliminates the anode storage in the battery.
TER: is there any other growth aspect of the lithium story?
Q4: Another aspect that has a big impact on demand is storage in the alternative energy industry.
Wind farms, for example.
At any time of the day, the wind can blow.
This is not easy to predict.
When this energy is applied to the grid, it will be wasted if it is not consumed quickly.
There are significant investments in storage of alternative energy, beit solar, wind or hydro.
There is also a lot of research on the \"smart\" grid, where we have set up a large battery bank to store the electricity we are producing but not using.
TER: There are about 20 companies in the index your Global X Lithium ETF tracks.
How did you choose these 20 companies?
BTW: the selection was done by a separate index provider, structural solutions, which maintains the only lithium index in the world at the moment.
Over time, the company will keep updating the index to reflect the new companies in the space.
We expect the index to expand from the current 20 companies, including more mining or batteries --
Future production company.
The index is designed to reflect the entire life cycle of lithium, from lithium miners and producers to the deployment of lithium from which most of the growth comes from: Lithium-
Ion battery manufacturers
Lithium batteries produced in the world are made by three companies: Minera Quimica y Sociedad de Chile (NYSE: m2), FMC Lithium (NYSE: FMC) with Rockwood Holdings (NYSE: ROC ).
This is a global fund.
There are many primary lithium mining companies in the United States. S. and Canada.
Today, many lithium developments have taken place in Latin America.
Ion battery manufacturers in the United StatesS.
Japan and Europe.
How often do you rebalance the fund?
What parameters do you use?
BTW: since it tracks an index, we will rebalance when the index is re-balanced, which is semi-balanced
At the end of November and 5 each year.
TER: can you tell us how to make sure that the new stock will enter the index?
NASDAQ: Basically, these indices will include all lithium mining companies that exceed a certain scale, as well as companies that mainly deploy lithium.
Ion battery manufacturers
So if, for example, some private mining or start-
Mining companies becoming listed companies, or existing listed companies exceeding the minimum liquidity or minimum scale threshold, will be included in the index.
Same about lithium-
Ion battery manufacturers
If there is a new IPO, if there is a stock split, for example, the company is divided into two parts, then they are all eligible.
Or let\'s say they made a spin.
In addition to the lithium business, this may remain in the index, and the part that does not pay attention to lithium will appear.
So basically, they are fully covered in the lithium market and any new listed company will enter the index.
Tel: a private company of Talison Lithium Co. , Ltd.
(OTC: TLTHF) merged with Salares Lithium in July to become a listed company, but it is not in your fund.
As far as I know, it seems to be one of the largest producers of lithium, if not the largest.
So that\'s why I was surprised when I looked at your stake and didn\'t see it.
But because you re-balance twice a year, it probably hasn\'t gone up yet, right?
BDA: it will be added if it is large enough, liquid enough, and focused on lithium, yes.
TER: another company I am familiar with is the Western lithium American company. (WLCDF.
PK), this is not on the index either.
Are you familiar with them?
BTW: I think I may have seen the Western lithium on the list of companies considering inclusion in the index.
So if they don\'t succeed, not because index companies don\'t know about the company, but because they don\'t meet the standards for some reason.
As a result, lithium in the West may be too small or too mobile, but all these companies are rapidly becoming larger and more liquid.
So, I expect that the West lithium will enter the index at some point.
TER: about 60% of the Global X Lithium ETFs are foreign companies.
Does this reflect a better opportunity for the lithium market or a lack of US companies with strong lithium --basedassets?
It reflects the composition of the global stone industry.
This is a global fund designed to reflect the situation of the entire lithium industry, no matter where it is, and the reality is that many global lithium industries are located outside the United States. S. TER:Pure-
If it\'s not impossible, it\'s hard for lithium to find.
Can you tell us about some of the junior mining companies? Are these companies holding some lithium exposure in your ETFs?
Some components will include companies such as lithium one.
(OTC: LITHF, Canadian lithium company)
(OTCQX: CLQMD) or Avalon Rare Metals(AVARF. PK).
These are professional junior mining companies with important lithium components.
They are in the development stage of exploration, mining and development of new mining processing.
The simplest lithium mining process is where the weather is basically useful to you: salt water operations based on evaporation processes, where time and Sun do the work for you.
Some of these companies are also investigating the spudomene mining industry.
The price is more expensive, but it allows the exploitation of lithium resources in places where the weather may not be very good.
TER: Avalon has large rare earth projects in northwest Canada.
In this case, is it common for companies to send lithium to markets separated from other metals?
BDA: it is usually separated from magnesium, which is the most common metal mixed with lithium extract and is usually sold at a price
The reference is lithium carbonate.
At present, all lithium transactions are over-completed. the-
It was countered by industrial companies using ium thium.
With the expected growth of suppliers of electric vehicles and lithium batteries, many automakers such as Toyota, Nissan and Ford are entering a state of direct shutdown
Enter into agreements with these companies.
They are entering
Reach an agreement to ensure their long-term safety
Long term supply of lithium before they invest billions of dollars to develop all-electric car brands and cars.
TER: is there an estimate of how much lithium the Nechalacho project in Avalon can produce each year?
BTW: Actually, it\'s still in the early stages of development, so they haven\'t published specific predictions about the quantity yet.
The company does point out that rare earth is also an important part of the project, so it is not a pure rare earth
Play with lithium.
TER: Will Canadian lithium be more like this?
Canadian lithium is more of a pure lithium.
Play with lithium.
It also has more developed lithium ore.
It has specific projects and estimates in terms of production, and is clearly a company that is very suitable for ETF.
What is their proposed output?
It has an open
A mine in Quebec called Val d\'Or.
Processing equipment capable of producing about 43 million of batteries
According to their estimates, by 2012, carbonated roots were gradually formed.
This will make them an important player in the lithium industry.
TER: What is the current global demand for lithium?
Today, global demand exceeds 27,000 metric tons.
If the Val d\'Or project of CanadaLithium is put into production, it will certainly greatly help to meet some of the needs.
TER: does it make sense to put the project into full capacity at the beginning?
It seems to flood the market.
Q4: The current forecast of new supply and demand by major investment banks shows that the market will be fully serviced in the next 8 to 10 years.
According to the speed of evolution and the adoption of electric vehicles, we will face a huge deficit from now on for 8 to 10 years.
This will obviously affect the price of lithium.
How will this affect ETF?
NASDAQ: prices have an impact on performance because ETFs are in contact with companies that produce and sell lithium.
The more expensive the goods are, the higher the profit margin of the fund company.
However, high yields through ETFs do not require higher lithium prices.
These companies can make higher profits by increasing demand for goods at the same profit margin.
Any increase in profit margins from there means a higher return as it not only increases revenue but also increases pricesto-earningsratio.
TER: can you tell us about the role of FMC, SQM and Rockwood Holdings in lithium exposure and the market?
Their role in the market is enormous.
The three companies account for more than 70% of the lithium supply.
However, they are diversified mining companies.
Lithium may account for less than 1-
Third of their profits.
Are they Mining lithium as a by-product?
They were originally potash producers, and lithium was a by-product of potash.
As demand for lithium increases over time, and as the price of lithium starts to rise, lithium becomes more and more a strategic mineral, and they attach great importance to increasing production.
The lithium part of their business is the most profitable for all three companies.
This is also the fastest growing part of the three companies.
It is expected that lithium will account for much more in the next decade.
TER: What are the different ideas about the lithium market?
BTW: To some extent, it\'s like buying an option.
Your market is already growing rapidly and does not take into account any impact of electric vehicles or energy storage.
Look at all the iPads and phones.
This is a fast-expanding market where all these technologies are using lithium-ion batteries.
Any growth from electric vehicles will be the most important.
The potential of these markets may have a huge impact on the growth of lithium.
ETF allows investors to buy a market that is growing very rapidly, and if the electric car market is ultimately a general reality, the market can choose to expand at a more compelling rate.
TER: is there any other commodity etf in Global X?
NASDAQ: We currently offer the Global X copper trader ETF (NYSE: COPX ).
Over the past three months, it has achieved incredible returns.
The fund\'s return was driven by industrial growth and demand in China.
We also offer the Global X silver exchange trading Fund (NYSE: SIL ).
This is the biggest basket-
Liquid Silver mining companies around the world.
This week, we will launch two new ETFs, including the Global X Gold ETFs (gl: GLDX ).
This will be done by the early-
Phase exploration company and pre-cash-
To some extent, we see this product and this market as a venture capital of Gold.
We also hope to bring the Global X-Uranium ETF (NYSE: URA) to market this week.
This will serve the world\'s largest uranium mining company.
Very good, Bruno.
Thank you for your time.
Bruno Del Ama is
Founder and CEO of New York
Asset manager based in Global X fund.
The company is committed to developing innovative exchange traded funds (ETFs) focused on emerging markets, global commodities and clean technology resources ).
The Global X fund manages more than $1 billion in assets and is rated by BlackRock as the fastest-growing ETF provider. Previously, Mr.
Del Ama was the head of operations for the structured product business of Radian Asset Assurance.
Prior to that, he served as a senior advisor to Oliver Wyman, advising leading financial services companies in a range of strategic matters. Mr.
Del Ama, the holder of CFAcharter, received an MBA from Wharton.