106 - The International Resource Journal

FEBRUARY 2013 The International Resource Journal43more than $40 million for a 20-year concession.The tender was voided, however, when it was discoveredSQM was involved in lawsuits against theChilean government – a violation of the terms ofreference in the tender. This caused the resignationof the Deputy Mining Minister and uncertaintysurrounding how the tender process will beheld going forward. The runner up in the processwants the process declared invalid, but the ChileanPresident appears to have the final say. Hehas declared that there will be a re-tender.A brief segue – peak oil and lithiumWhile the debate over Peak Oil rages on, weprefer to believe in the question of Peak cheap Oil.Source: www.electricdrive.orgOtherwise, why would WTI be trading at $93.12per barrel and Brent crude trading at $112.34 perbarrel against the backdrop of the global economywhere consumer demand is now questionable?We are on record as believers in the future ofelectrification, both with respect to vehicles andenergy storage. Nobody can be sure when thetipping point will occur, but this transformationwill no doubt take longer than many would likejudging by sluggish sales in the electric vehiclemarket. Sales are increasing, but from a verylow base as we see in the chart below. Whencompared to traditional auto sales, however, withapproximately 12.7 million automobiles sold inthe US in 2011, our vehicle electrification thesiswill take some time to play out indeed.This lends credence to our thesis that theway to create discovery wealth in lithium investingis through a take out in the M&A space. Theresimply isn’t enough demand growth in lithium towarrant an excessive number of players in thespace. With the growth rate in lithium demandand our consolidation theme, lithium promisesto be a tight market in the short to intermediateterm, but with ample spare longer term capacityon the part of the major producers, you mustchoose your lithium investments wisely.That said, with oil prices near historic highs,perhaps poised to go higher on the back of re-