The Great, Fake Lithium Supply Scare

“But there’s not enough lithium for all those batteries- and now you’ll switch dependency to a few lithium supplier countries!” That is the claim less informed journalists and hacks often make when they need a counter point to balance their first article on the emerging, electrified transportation sector. Why do we care? Because if true would significantly affect the battery, transportation, grid storage and electronic appliance sectors. Let’s try a fact check:

1) Claim: Dependency on 2-3 countries for lithium (similar to oil dependency)
False. This table from the USGS best answers this claim:

Country Reserves (000’s ton Li) Reserves Base(000’s ton Li)
Argentina 2,000 2,000
Australia 170 220
Bolivia NA 5,400
Brazil 190 910
Canada 180 360
Chile 3,000 3,000
China 540 1,100
Portugal NA NA
USA 38 410
Zimbabwe 23 27

Plus, ore deposits in these plus other countries bring the total to over 17.1 million tons of reserves.

2) Claim: Lithium is the sole material these sectors must have to advance.
Yes and no. Shorter term most known batteries for next gen autos and electronics will use lithium (bar the also popular nickel metal hydrides.) Longer term- let us not ignore 15 start ups that are readying ultracapacitor break throughs, 27 manufacturers and 29 other companies that have recently developed ultracapacitor technologies plus 52 research institutions working on advancing ultracapacitor technology. We do concede however that lithium will play by far the largest role for at least the next 15 years.

3) Claim: All of the suppliers in the world won’t be able to keep pace with demand & thus prices will skyrocket.
There are an estimated 17.1 million tons of contained Li in reserves worldwide. In 2008, total global demand was 100,000 tons and of course projected to grow significantly. Lithium can be recycled. Do the math with your own assumptions and it appears we have a few years before supply concerns arise. One may even want to account for new, future reserves of Li to be discovered.

Additionally- advances in nanotechnology as noted here, here and here are making the current battery chemistries that do incorporate lithium much more powerful, economic and robust.

Let’s make money: 77% of lithium carbonate currently comes from 3 companies which are SQM of Chile, Germany’s Chemetall and FMC of the USA. Talison Minerals, a private Australian firm, is the largest spodumene producer and accounts for about 23% of global contained lithium. However, only 15% of this production is sold into the lithium chemical markets via Chinese lithium carbonate converters. (Special thanks to Dundee Capital Markets for the above research, “Lithium- Hype or Substance?” October, 2009. )

Conclusion: If you are bullish on the technology advancing, you likely believe the improved economics offered by advanced lithium batteries will enable stronger investments in the related sectors of grid storage, consumer electronics, military applications and of course transportation. The sky is falling claims should not play a role in any related investment decisions.


Norwegian Think exits court protection and plans to resume production

TH!NK-city-Michigan-USA_imagelargePhoto Source: Think website

Norwegian electric carmaker Think announced on 27 Aug 2009 (see its press release) that the Norwegian courts have approved its debt settlement plan, enabling the company to exit court protection. This effectively puts Think back in business and to resume production of new electric vehicles (EVs), called TH!NK City model. (Update: On December 10th, Greentech Media reports that Th!nk is on track to deliver cars by Christmas.)

In addition, Think secured $47 million in new capital financing from new investors, namely Ener1 from the US, Valmet Automotive from Finland and Investinor, the Norwegian Government-backed investment fund.

Ener1 (Update: Strategic Partners are Argonne National Laboratories, Itochu) is the largest investors in Think and once the transaction is complete, will hold 31% equity stake of the company. Ener1 will invest about $18 million in 3 rounds and convert about $3 million in debt to shares of Think. Ener1 is the parent company of EnerDel, which supplies lithium-ion batteries to Think. EnerDel and Think have agreed to enter into a long-term battery supply agreement as part of the transaction.

Valmet Automotive will invest 3 million euros ($4.3 million) and as part of the deal, Valmet will start making TH!NK City cars in Finland this year. Think will close its Norwegian factory and lay off about 85 workers there. (Comment: Norwegian carmaker is now Finnish?) Valmet makes the Porsche Boxster, and is also to be the manufacturer of startup Fisker Automotive‘s high-end Karma hybrid – another company EnerDel plans to supply batteries to.

Investinor is a Norwegian venture fund backed by the Government’s Ministry of Trade and Industry. The fund invests in Norwegian companies on strict commercial terms in return for share capital, and is investing NOK30million ($5million) in Think’s capital increase. (Comment: So why didn’t the Norwegian fund push to keep the jobs in Norway since it has higher equity share than Valmet? Hmm…)

All in all, it’s a very good news for the company which was under the threat of bankruptcy earlier this year and was forced to halt its production of EVs just 2 months after it started. Think, which had raised about $85 million in venture capital as of last year (Kleiner Perkins, RockPort Capital, General Electric are some of its investors) reported early this year that it could be facing bankruptcy. Ener1 was one of the creditors that loaned about 40 million crowns ($5.7 million) to Think in January. And new and existing investors put about 250 million crowns ($39 million) into the company in June 2009.

In March 2008, Think also signed up lithium-ion battery manufacturer A123Systems to power its vehicles. (Comment: However, there may be doubts that the deal with A123Systems will go on as there was no further developments announced since then and because of the Ener1’s deal. Furthermore, Think and Ener1 successfully tested a lithium ion battery pack in June 2008. See TH!NK Tests Battery, But Where’s A123?)

Think: We’re Back and Ready to Make Electric Cars
Think Gets $47M, Moves Production to Finland
Is Think Still a Norwegian Car Company?
Ener1 invests in Think, EV production to resume
Metso’s Valmet to start making Think electric car

GE Energy Financial Services

About: GE Energy Financial Services’ (GE EFS) experts invest globally with a long-term view, backed by the best of GE’s technical know-how, financial strength and rigorous risk management, across the capital spectrum, in one of the world’s most capital-intensive industries, energy. GE EFS helps its customers and GE grow through new investments, strong partnerships and optimization of its more than US$22 billion in assets. In renewable energy, GE EFS is growing its portfolio of more than US$4 billion in assets in wind, solar, biomass, hydro and geothermal power. GE EFS is based in Stamford, Connecticut.

Key Personnel:
Alex Urquhart, President & CEO
Kevin Walsh, Managing Director, Power & Renewables

Their investment focus is in Power, Oil & Gas, Water, Venture Capital, Renewable Energy, Pipelines & Storage and Global Growth.
Venture Capital
– Current Communications, Ocean Power Delivery, Sub-One Technology, A123Systems, Think Global, Advanced Electron Beams, Soliant Energy, Danotek Motion Technologies, TPI Composites, Southwest Windpower (GE EFS provides mainly equity to them, except equity & debt to Ocean Power Delivery).
Renewable Energy – Alsleben Wind Farm, Babcock & Brown, Comverge, EnxCo, Forest Creek, Krusemark Wind Farm, Kumeyaay Wind, Noble Environmental Power, REpower Systems, Denker & Wulf,Serpa Solar Plant, Tawhiri Power, Theolia, Airtricity, Plutonic Power, SunPower, Scholl Canyon Landfill Gas, Invenergy Wind, Stanton Wind, Enel SpA, Renewable Energy Systems Americas, Horizon Wind Energy, Fotowatio, ACCIONA Energy (GE EFS provides mainly project equity to them, with minority of debt, debt & private equity, assets-for-equity swap, debt & project equity).

News: In June 2009, GE EFS announced it has signed an agreement with EarthFirst Canada Inc. to consider purchasing up to 300-megawatt Dokie Ridge Wind Project, the largest wind farm project under construction in British Columbia. Subject to satisfaction of conditions, including due diligence and internal approvals, GE EFS has agreed to form a partnership with Plutonic Power Corporation which, provided the acquisition is completed, will own and operate the project, located 1,100 km northeast of Vancouver, near Chetwynd. The project would represent GE EFS and Plutonic’s first wind energy investment in Canada and an expansion of their relationship from hydroelectric power development into wind energy.

In April 2009, Noble Environmental Power received long-term capital from GE and other for 3 NY windparks. GE EFS invested more than $200 million in the portfolio, which includes the Noble Altona, Chateaugay and Wethersfield Windparks. A syndicate of banks and financial institutions provided long-term debt, including letters of credit, totaling approximately $440 million. This long-term capital structure replaces construction financing used to build the Noble windparks. Noble was mentioned earlier in this post and it is majority owned by funds affiliated with JPMorgan Partners which are managed by CCMP Capital Advisors.

Kevin Walsh speaks about GE invests in electric vehicles and battery technology in this video or on vodpod. He also has a presentation “Policy Options Shaping Private Investments in Clean Tech” dated 1 May 2009 here.

ge efs

GE Equity

About: GE Equity is the private equity investment arm of General Electric Capital Corp. specializing in buyouts, co-investments, secondary direct purchases, recapitalizations, limited partner investments, and growth capital investments. The firm invests in aerospace, clean technology, communications, energy, entertainment, financial services, business services, healthcare, media, satellites, security, sensing technology, transportation, and water. It seeks to invest in companies based in Asia, Europe, Latin America, Middle East, and North America. GE Equity was founded in 1995 and is based in Stamford, Connecticut with offices across the United States, Europe, South America, Australia, and Asia.
Note: Sometimes GE Equity is referred as “GE Capital, Equity” on its website.

Key Personnel:
Sherwood Dodge, President & CEO
Frank Ertl, CFO

The website doesn’t list its portfolio but its recent transactions (though it’s only updated to 2007 only). From the list, I selected a few companies related to cleantech:
China High Speed Transmission Equipment Group
(description: $22,100,000 Growth Capital investment in wind turbine gear box supplier in Feb & July 2007), Motech Industries (description: $20,500,000 Growth Capital investment in Taiwanese solar cell manufacturer in June 2007), Think (description: €3,000,000 Growth Capital in manufacturer of electric vehicles in December 2007).

News: In January 2009, TPI Composites, Inc., a supplier of wind turbine blades to Mitsubishi Power Systems and GE, announced it has received $20 million from GE’s investment arm, Landmark Growth Capital Partners, NGP Energy Technology Partners and Angeleno Group to support its growth. The Series B funding reflects an increase in the company’s valuation since Series A financing was completed a year earlier. The capital comes from GE’s Equity unit and GE Energy Financial Services, which has made several venture capital investments in wind turbine component manufacturers as well as provided project finance for wind farms.

Comment: I’ll look at GE Energy Financial Services in separate blog as it has its own Renewable Energy and Venture Capital portfolio. The press releases for both GE Equity and GE Energy Financial Services are found in its main GE website instead.

ge equity

RockPort Capital Partners

About: RockPort Capital Partners, founded in 2000, is one of the pioneering Cleantech VC funds and focuses exclusively on the Energy and Power, Advanced Materials and Process and Prevention technology sectors. With offices in Boston, MA and Menlo Park, CA, RockPort has invested, to date, over $300M in more than 40 portfolio companies with breakthrough technologies that deliver significant economic value to large potential markets.

Key Personnel:
William E. “Wilber” James, Managing General Partner
David J. Prend, Managing General Partner
Alexander Ellis III, General Partner
Janet James, General Partner & COO
Charles J. “Chuck” McDermott , General Partner
Victor Westerlind, General Partner
Stoddard M. “Todd” Wilson, General Partner
Daniel Hullah, Principal
Dhiraj Malkani, Principal
Abe Yokell, Principal
Kevin Kopczynski, Associate

Energy & Power
– Aspen Products Group, Catalytic Solutions, Comverge, Deerpath Energy, Eka Systems, Enphase Energy, Evergreen Solar, ISE Corporation, Lilliputian Systems, Nanogram Corporation, Nanogram Devices, Northern Power Systems, Powerspan, PPT Research, Satcon Technology, Soliant Energy, Solyndra, Southwest Windpower, Sustainable Spaces, Think Global AS, Tioga Energy.
Resource Efficiency
Advanced Electron Beams, Aspen Aerogels, Catalytic Solutions, Davidson Instruments, EcoSMART Technologies, HydroPoint Data Systems, MicroSeismic, Powerspan, PPT Research, Second Rotation.
– Achates Power, Aspen Products Group, Catalytic Solutions, ISE Corporation, Think Global AS.
Advanced Materials
– Advanced Electron Beams, Aspen Aerogels, Catalytic Solutions, EcoSMART Technologies, Hycrete, Lilliputian Systems, Nanogram Corporation, Nanogram Devices, NeoPhotonics Corporation, PPT Research, Solyndra.
Green Building – Aspen Aerogels, Comverge, Deerpath Energy, Eka Systems, Enphase Energy, Evergreen Solar, Hycrete, HydroPoint Data Systems, Project FROG, Renaissance Lighting, Satcon Technology, Soliant Energy, Solyndra, Southwest Windpower, Sustainable Spaces, Tioga Energy.

Fundraising: RockPort raised its first fund of $125 million in 2001, closed its second fund of just over $260 million in January 2006 and raised its third fund of $453 million in June 2008 which is one of the largest venture funds focused on clean technology investments.