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Toyota Group Company to Form JV with Australian Lithium Resource Developer to Secure Access to Competitive Lithium Carbonate Production

Olaroz
Salar Olaroz project tenaments and infrastructure. Click to enlarge.

Orocobre Limited, an Australian minerals exploration company with a focus on developing “best of class” Lithium, Potash and Boron resources in Argentina, and a Toyota Group Company, Toyota Tsusho Corporation, will establish a joint venture to develop Orocobre’s flagship Salar de Olaroz Lithium-Potash Project in Argentina. Toyota Tsusho’s interest in the project stems from the desire to increase its exposure to reliable and diversified lithium supplies as global demand for lithium batteries in the automotive sector continues to grow.

Toyota Tsusho said the company had a strategy to invest in the Olaroz Lithium-Potash Project in order to secure access to competitive, low-cost lithium carbonate production in a timeframe closely aligned with worldwide lithium requirements for hybrid and electric vehicles.

Toyota Tsusho Corporation is one of the largest trading companies in the world and a Tier 1 supplier to the Toyota Group. Owned 22% by Toyota Motor Corporation, Toyota Tsusho provides material supplies to Toyota Motor Corporation and many other Japanese and Asian companies including Panasonic and Sanyo. Toyota Motor Corporation and Panasonic are partners in the development and productions of lithium-ion battery packs.

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Exploration sampling at Salar de Olaroz. Source: Orocobre. Click to enlarge.

The Salar de Olaroz resource is in the heart of the lithium-rich zone of South America, and has JORC compliant inferred resource under its control of 1.5 million tonnes of lithium carbonate. The project is 138 kilometers due east of SQM’s Salar de Atacama, the largest and highest operating margin lithium production in the world, and 210 kilometers north of FMC’s Hombre Muerto production, the second highest operating margin commercial production in the world.

Several factors enhance the potential for Salar de Olaroz resource to be the next premier lithium brine resource to be developed, according to Orocobre:

  • The overall brine chemistry at the salar allows the company to use well understood, and thus lower risk processing sequences.

  • The resource is located immediately adjacent to a well maintained and sealed road leading directly to Antofagasta, Chile, which is the primary lithium export port in the world.

  • A large natural gas pipeline and compression station exist nearby and within the same valley as the resource, thus providing low cost access to power.

Under a joint venture agreement, in the current feasibility study phase, Toyota Tsusho will provide US$4.5 million to fund the completion of the Definitive Feasibility Study and other associated pre-development activities. This is expected to be completed in the third quarter of 2010.

Subject to the finalization of the terms of a joint venture operating agreement on completion of the Definitive Feasibility Study, Toyota Tsusho will acquire a 25% equity interest in the joint venture at a cost based on the NPV estimated from the Definitive Feasibility Study.

Additionally Toyota Tsusho will be responsible for securing a Japanese government-guaranteed low-cost debt facility for at least 60% of the project’ development costs. This facility is expected to be secured through the Japan Oils, Gas and Metals National Corporation (JOGMEC), a state-owned entity that provides assistance to Japanese companies in securing supplies of mineral resources Orocobre will continue to own 75% of the project after construction, and will operate the joint venture.

Toyota Tsusho becoming our strategic partner allows Olaroz direct access to Toyota Motor Corporation and its partners such as Panasonic and Sanyo. These companies have significant expertise and understanding of supply requirements in large format lithium-ion batteries for the automotive industry and consumer sector, and that will add greatly to our understanding of end-user requirements and demand.

—Orocobre Managing Director, Richard Seville

As environmentally-friendly electric car demand continues to grow, Toyota Motor Corporation will have the opportunity to become a cornerstone offtake customer.

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Comments

HarveyD

As various type of lithium batteries will play an important role for electrified vehicles mass production for at least one decade or more, this will be a wise investement for Toyota.

clett

I'm quite surprised it has taken Toyota so long to do this.

I'm also very surprised that they don't yet have their own neodymium/lanthanum mines in case the Chinese make good on their suggestions to cut off supplies to Japan.

MG

If you think of investing in Australian penny mining stocks, my advice is to avoid them all like a plague, unless you personally know management people. Chances are you'll lose 90+% of your money.
Forget about Arafura, Lynas (Rare earths).
Last year Admiralty resources (ADY.AX) went bust, they also were claiming they were developing some lithium salars in Argentina, then suddenly said they sold the property to another company (perhaps to themselves) to cover debt. Stock price went from 20 cent to below a cent.

Arnold

I've heard of numerous distasteful activities from miners and other stock market participants as with any money related activities always buyer be ware . "If it sounds too god to be true - it probably is".
Having said that one could expect that Toyota are savvy enough to have this worked out.

Toyota have announced the imminent release of the Australian made Camry Hybrid and we await to see the details.

Toyota has sold an Australian Camry for many years with it rating as the most popular mid sized (4 or V6) in the country year on year.

Compared to the more technically advanced Prius, one can expect lesser fuel economy and appointments but a well proven pedigree with regards to suitability for both the road conditions and consumers body style and practicality which is hardly suprising as it is largely Australian design input.
The new hybrid production line benefits from substantial govt ' simulus' funding
I hope it is a great sucess and can compete as a world class product.

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