By Kishori Krishnan Exclusive To Lithium Investing News Share

He’s going around the world making friends. Just like the new metal, lithium, that he is inadvertently promoting.

Iranian leader Mahmoud Ahmadinejad won support for his country’s nuclear ambitions and expanded his reach in Latin America in a three-country goodwill tour.

He also demonstrated his eagerness to research lithium.

In Bolivia on Tuesday, Ahmadinejad signed an agreement with leftist President Evo Morales. The duo has agreed that Bolivia will help Iran conduct research on exploiting lithium, the lightweight metal used in electric cars and other batteries.

Bolivia possesses half the world’s known lithium reserves. The region is estimated to contain up to 100 million tons of lithium.

And it is available in plenty in the vast 6,575-square-kilometre salt desert known as Salar de Uyuni in southern Bolivia. The lake of ancient brine is said to contain over half the world’s known and easily accessible reserves of the ultra-light metal lithium.

What is of importance to this particular visit is that Iran has now joined a list of nations including France, South Korea and Japan, all eager to help Bolivia commercialize its lithium.

Already, the rare metal is finding a niche in geo-politics, given that Iranian president’s strained relations with Washington are shared by Bolivia’s first indigenous president, who expelled the US ambassador last year.

Ahmadinejad has repeatedly denied allegations by Washington and its European allies that Iran is trying to build atomic weapons. On their part, both Bolivia and Venezuela have categorically denied Israeli allegations that they have supplied uranium.

Pledging mutual cooperation with five countries during his visit, the Iranian president clearly aimed to bolster political ties with sympathetic governments.

Analysts don’t attach much significance to Ahmadinejad’s visit, other than bolstering each country’s politics against the United States.

Some analysts also maintain that the US has little to fear from this trip. “He loves the spotlight, and he loves the limelight,” says Gary Sick, an Iran expert at Columbia University in New York.

“Iran is in no position to build a strategic beachhead in Latin America that would somehow threaten the US, certainly not in the next four years,” by which time the President’s term would be over.

And as the Iranian President Mahmoud Ahmadinejad moved to more familiar territory on Wednesday, and despite the attempted “sabre rattling”, the spotlight has clearly turned full-on lithium.

Country specific

Bolivian President Evo Morales has been quoted as saying that lithium is not only important to his country’s economic future but is “the hope of humanity,” as the lightweight metal efficiently stores energy capable of powering the eco-friendly cars of the future.

The Bolivian government now appears to be moving ahead with increasingly concrete plans for extraction and production of the metal.

It may be recalled that Bolivia’s rich lands once yielded immense amounts of silver, tin and other mineral wealth.

Now, the world has woken up to its “grey gold” as lithium is popularly called.

According to the United States Geological Survey, Bolivia holds nearly half of the world’s known lithium deposits. However, unlike neighboring Chile and Argentina, two countries that also have significant deposits of the metal, Bolivia has yet to contribute to the supply of the global market.

In 2008, Chile led the world in lithium production with an output of 12,000 tons, with Argentina presently supplying 3,200 tons annually. Between 2004 and 2007, the United States imported 61 per cent of its lithium from Chile and 36 per cent from Argentina.

With a limited domestic reserve of only 760,000 tons of identified lithium reserves, the US must turn to these South American countries for its supply and to capitalize on what is and will continue to be a rising demand for the lightweight metal, according to an analysis prepared by COHA Research Associate Megan McAdams.

For Bolivia, its deposits of lithium is seen as a new El Dorado. Though the Bolivian government has launched a $6-million project to assess the mineral’s deposit, there are worries it might be contaminated with magnesium, which would make it expensive to extract usable lithium.

Despite the negatives, French, South Korea and Japanese firms have lined up to offer free services. Four foreign firms have also shown interest.

All with the hope that they could stand to get a lot more than they bargained for (in terms of compatible partnerships) once the assessment is suitably conducted.

Also on the anvil is the building of Bolivia’s first lithium refining facility at a cost of about $500 million, with the aim of producing about 20,000 tonnes of lithium a year by 2014. But there are other politics to this deal.

Not to forget, earlier in October, Bolivian officials had reported that the construction of a pilot lithium extraction plant, which began in April 2008, is 75 per cent complete and on schedule to be finished by the end of the year.

Poll position

Bolivians go to the polls on December 6. Currently, Morales is said to command a 52 per cent majority while his nearest competitor rallied only 18 per cent in a November 15th poll.

Given these uncertain statistics, and other political barriers, Morales could well return to lead the Bolivian government for the next five years. What has sparked concerns however, is Morales’ stated mission – that lithium in Bolivia should be controlled by the state and used to benefit Bolivians, not foreign companies.

He said this in response to outside interest in exploiting Bolivia’s lithium reserves at the end of October, when scientists and academics from around the world had gathered in La Paz for the “Inaugural International Science and Technology Forum for the Industrialization of Lithium and Evaporative Resources.”

Undeterred, experts from Canada, China, South Korea, France, Russia, Brazil, Chile, Argentina and Spain met with Bolivian scientists and policy makers at the meet.

Interestingly, Bolivia’s potential could well be “very exaggerated” as Eric Norris, global commercial director of the lithium division of US-based chemical producer FMC said, and some might even question the country’s position to radically reduce the world’s reliance on dwindling fossil fuels.

But for several Canadian firms, lithium just IS the new power generator. Check out the rush for initial public offerings (IPO).

Canadian flavour

While Quebec is to have a mine north of Val d’Or on stream in 2011, Australia’s Talison Lithium is coming with an initial public share offering in Canada and at home.

Talison Lithium Ltd is seeking to raise as much as A$196 million (US$ 181 million) in an IPO in Canada and Australia to pay debt and and will later list the stock in Toronto and Sydney.

The company, which mines lithium in Western Australia, is seeking to sell 35 million new shares at a range of between A$4.10 and A$5.10 each.

The Canadian IPO will be underwritten by a group led by Cormark Securities Inc and including Macquarie Capital Markets Canada Ltd, amongst others.

Canadian Orebodies Inc (TSX V: CO) which has increased its land position by way of staking in the Crescent Lake area, which is in the general area of Orebodies Falcon and Despard Lithium/Rare Metals properties, has filed documents with the TSX.

The deal relates to a purchase and sale agreement dated November 20, between Joe-Anne Salo and Larry John Salo and Canadian Orebodies Inc, pursuant to which, the company shall purchase a 100 per cent interest in five separate lithium/Rare Earth properties, located in various regions in Ontario.

The Canadian firm will issue 1,600,000 common shares and 1,600,000 common share purchase warrants (each exercisable into one common share at a price of $0.15 for a period of 24 months) to Larry John Salo.

The properties are subject to a 2 per cent NSR retained by the vendors, 50 per cent of which can be purchased by the Canadian firm for $1,000,000.

On Tuesday, shares of EMC Metals Corp surged as much as 31 per cent after the Canadian specialty metals company said it would acquire Technology Store Inc. EMC Metals said it will issue 19.0 million common shares, pay $500,000 in cash and issue a promissory note worth $500,000 with a principal maturity of two years.

Technology Store specializes in the development of specialty metals extractive technologies, with emphasis on improving recoveries in the extraction of tungsten, boron, lithium, scandium, titanium, and nickel.

Even as Canada Lithium has undertaken a review of its open-pit potential, Western Lithium, which is developing the Kings Valley, Nevada lithium deposit, has announced grant of stock options.

Electrovaya Inc (TSX:EFL), another Canadian company that develops lithium battery systems for the automotive industry, has plans to target the Japanese market in partnership with Nippon Kouatsu Electric Co Ltd.

Surely, Canadian firms can’t be that far behind?

Questions about this article? Leave a comment below or contact our editorial team at editor@resourceinvestingnews.com.