Consolidated Abaddon Resources Inc. - Lithium and Rare Earth Elements - Information About Lithium and Rare Earth Elements

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Information About Lithium and Rare Earth Elements

Lithium and Its Uses

Lithium (Li) is a Group 1 (IA) element containing just a single valence electron (1s22s1). Group 1 elements are called "alkali metals". Lithium is a solid only about half as dense as water. A freshly cut chunk of lithium is silvery, but tarnishes in a minute or so in air to give a grey surface. Lithium is mixed (alloyed) with aluminum and magnesium for light-weight alloys, and is also used in batteries, some greases, some glasses and in medicine.

Lithium was first discovered and defined by J.A. Arfvedson in 1817 when he did an analysis of a mineral he had found. This mineral, petalite (LiAl(Si2O5)2), was first found by Brazilian scientist José Bonifácio in 1800. Arfvedson was never able to fully isolate lithium, and it wasn't until 1855 that it was isolated, by W.T. Brande. Lithium was first produced commercially in 1923 by Metallgesellschaft AG.

Lithium has a number of uses in different sectors of society. The most common use is in lithium batteries. These are lightweight and not as toxic as lead and cadmium batteries. These batteries have applications as small as watch batteries and as large as military and space vehicles.

Lithium ion batteries have become the rechargeable battery of choice and are now almost used exclusively in cell phone and computer batteries with items such as shavers, power tools, and hybrid and electric cars switching over from the nickel varieties. The benefits of lithium ion batteries include: higher energy density to weight ratio, longer life and no memory effect.

Other Uses:

• lithium stearate is mixed with oils to make all-purpose and high-temperature lubricants
• lithium hydroxide is used to absorb carbon dioxide in space vehicles
• lithium is alloyed with aluminum, copper, manganese and cadmium to make high performance alloys for aircraft
• Bahnmetall consists of lead containing 0.04% lithium, 0.7% calcium and 0.6% sodium; it is harder than pure lead and was used for railroad car bearings in Germany
• compounds such as LiAlH4 and organolithium reagents (LiMe, LiPh, etc.) are very important as reagents in organic chemistry
• lithium metal has the highest specific heat of any solid element making it useful for heat transfer applications.
• various nuclear applications
• lithium is sometimes used as battery anode material (high electrochemical potential) and lithium compounds are used in dry cells and storage batteries
• lithium is used in the manufacture of special high strength glasses and ceramics
• sometimes, lithium-based compounds such as lithium carbonate (Li2CO3) are used as drugs to treat manic-depressive disorders

Global Lithium Demand, Supply and Price

The demand for lithium has started to outpace its supply due to the fixed supply coming from the South American brine properties and the very limited existing proven resource. There is a strong belief that lithium prices are going to increase significantly in the next few years. Because lithium compounds are sold directly to end-use markets for a negotiated price per ton, price data is difficult to confirm but recently lithium traded at USD $6,600/ton or USD $3.30/lb.

Demand for lithium is increasing from the current market of 100,000 tons Li2CO3 equivalent. According to the USGS, overall demand for lithium is growing at a rate of 4-5% per year while demand for lithium destined for battery usage is predicted to grow by 20% per year. In particular, as automobile manufacturers transition to high performance hybrid lithium-battery driven cars, the demand for Li will continue to increase as will the price. Toyota is targeting 1 million hybrid cars for 2010. Hybrid car numbers continue to increase as a result of increasing fuel prices and emission issues with conventional vehicles. For every one unit of lithium in a cell phone battery there are 7 in a computer battery, 3,000 in a hybrid car and 7,000 in an electric car; this works out to 9 to 30 kilograms of lithium oxide per car battery.

According to A.T. Kearney, the global lithium-ion battery market for automotive application in HEV's, PHEV's and EV's is estimated to be $31.9 million in 2009. A.T. Kearney projects that this market will grow to approximately $21.8 billion by 2015 and $74.1 billion by 2020, based on a moderate drive for change influenced by increasing governmental regulation, emerging power-train technology, changing consumer demand and OEM product strategies toward more fuel efficient vehicles. So the dollar value of the lithium-ion battery market is expected to grow by over 2300 times in the next 11 years.

Economic concentrations of lithium are found in brines, minerals and clays in various parts of the world. Brines and high-grade lithium ores are the present source for all commercial lithium production. South America accounted for 60% of world lithium output in 2008, followed by Australia and China which combined produced 30% of the total. About two-thirds of the world production is from brines and one-third from lithium minerals. Currently in the Andes of South America, brine Li deposit grades range from approximately 0.3% Li at the SQM operation in Chile to 0.062% and 0.034% at the two Argentinean salares of Hombre Muerto and Rincon respectively.

The recovery of lithium from hard rock minerals, such as spodumene in pegmatites, is through open pit or underground hard rock mines using conventional mining techniques. The ore is then processed and concentrated using a variety of methods prior to direct use or further processing into lithium compounds. Average lithium grades from several developing lithium projects around North America range from about 0.25% Li to 1.50% Li.

Other Rare Earth Elements and Their Uses

Rare earth elements (REE) or rare earth metals are a group of 17 chemical elements in the periodic table, which usually occur within the same ore deposits. The group includes 15 lanthanide metals: lanthanum, cerium, praseodymium, promethium, neodymium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium. The metals scandium and yttrium are also included with these rare earths as they have very similar chemical properties. In addition to these 17 light and heavy rare earth metals, there are 12 other rare metals.

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Rare metals are used in everyday green energy products such as hybrid cars, catalytic converters, wind turbines, next generation thin-film solar cells and energy saving opto-electronics such as LED lighting and flat screen displays. Alongside the green energy sector, rare metals are also essential for the future of the world's high tech industry, being used in industrial motors, medical Magnetic Resonance Imaging (MRI) machines and other new medical applications, lasers, hard drives, high performing speakers and headphones, as well as many more military applications. The use of rare earth elements in modern technology has increased dramatically over the past years. This new demand has strained supply and there is growing concern that the world may soon face a shortage of the materials.

Global Supply and Demand of Rare Earth Metals

Over the past 50 years the tables have turned with regards to the global production of rare earth metals. Whereas the United States previously held world dominance in rare earth metal production, China now dominates the supply, and today produces over 95% of the world's rare earth elements. The bulk of the remaining 5% comes from new sources being developed in Canada, the USA and Australia.

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On Sept. 1, 2009, China announced plans to reduce its quota for a number of rare metals to 35,000 tons per year in order to conserve scarce resources and protect the environment. China is also expanding and investing in rare metal companies overseas in a bid to further corner the marker by controlling some of the remaining 5% of rare metals outside of their country. With China having a 95% monopoly on the rare earth metals market, key countries around the world are rushing to explore, define and mine new sources of these rare metals. These countries include the United States, Canada, Australia, South Africa, New Zealand and Brazil. A unique investment opportunity exists to profit from the urgent need to secure the remaining 5% of rare metal production not under China's grip.