By Kishori Krishnan Exclusive To Lithium Investing News

In a new wave technology, Posco, Korea’s largest steelmaker, plans to team up with government offices to develop technology to collect lithium by abstracting the mineral from sea water.

The deal will add to its $4.8 million investment into Pan American Lithium (PAL).

The Asian major believes research into a variety of lithium sources is the key to future security.

Analysts have predicted that the increase in demand for lithium carbonate is expected to increase four-fold by 2017. High demand and low supply has already pushed lithium carbonate (Li2CO3) prices to US$ 6,600.00 per ton.

And Posco’s move buying into a new lithium producer PAL may send a strong signal as to where at least one steel producer sees not only improved demand but also new demand.

Both Toyota and Posco have started to place their bets on the market for electric vehicles (HEV’s & PHEV’s) and buy-outs of these types tell us much about how these firms view supply risk.

Posco (005490.KS), shares started rising after four sessions of declines. The company forecast last month that global steel demand would rise about 10 per cent in in 2010, recovering to 2008 levels.

The company signed an agreement on the joint project Tuesday with the Ministry of Land, Transport and Maritime Affairs and the Korea Institute of Geoscience and Mineral Resources (Kigam).

Until 2014, Posco and the ministry will invest 15 billion won (US$ 12.9 million) in the development to be carried by Kigam and the Pohang Research Institute of Industrial Science & Technology.

The two institutes aim to establish a commercialized plant to produce lithium carbonate through the project. They started a project to develop technology to abstract marine dissolved resources in 2000, and came up with the lithium-collecting method last year.

Once completed, Posco expects the new plant to greatly contribute to the nation’s resource industry.

In 2008, South Korea imported around 11,000 tons of lithium batteries and other related products worth about 660 billion won to meet local demand, according to the ministry.

Strategic play

Lithium is a strategic resource since it can also be used as a material for nuclear fusion power generation. But most of it is found in Chile and China and only 4.1 million tons of buried lithium can be mined, so experts forecast that the deposits will dry up in 10 years.

An interesting facet has been brought home following the presidential election in Chile of Sebastian Pinera.

The mineral-rich South American nation is seen as being more proactive towards foreign mining concerns – especially smaller companies.

“His reputation is to have a favourable stance towards business and tax, so those are all positives. But even before he stepped in, we think Chile is absolutely one of the best jurisdictions in the world for what we do,” said Tye Burt, the president and chief executive officer of Kinross Gold Corp, which operates two mines in Chile and is considering investing close to $2-billion more on a pair of development projects.

His presidency cheered Canadian miners. Though he faces criticism over the proposed sale of Codelco,  Chile’s national copper company, Pinera is firm.

“Codelco is going to remain a public company during our government, but we are going to make deep changes to Codelco because it recently has lost productivity, lost efficiency,” Pinera told foreign reporters.

In a bid to shore up its position, Pan American Lithium has also announced that it is moving forward with its Chilean project to develop an inferred resource estimate for lithium content, and IMPORTANTLY, compliant with National Instrument 43-101 at its 100 per cent owned Laguna Verde salar in Atacama Region III, Chile.

The study will determine the levels of lithium from the lake brine. Pan American’s Posco project involves metals recovery from brines as well.

Should Pan American Lithium’s Chile brine report come back positive, Posco may consider becoming an extended partner on PL’s Chilean project considering the stability President Pinera brings to the South American nation.

Not to be outdone, American Lithium Minerals, (OTCBB: AMLM) has also announced that it has closed its transaction with the Gold Summit Corporation previously announced on January 5, 2010.

American Lithium Minerals had entered into an agreement to acquire five grassroots exploration brine projects in Nevada from Gold Summit Minerals.

Hugh Aird, CEO and President of American Lithium Minerals said, “Having completed all of our due diligence of these target properties, we are excited to now take control.”

He went on to add: “A look at a map of the properties we now control and their proximity to the only operating lithium facility in the United States graphically shows how we are strategically positioning American Lithium Minerals through control of essential assets.”

Shining on

The market is clearly lit up for lithium. Even as West Quebec residents fear prospecters’ race for lithium with Stelmine Canada Ltd, a Montreal-area mineral exploration company staking claims on 5,200 hectares of private land near Wakefield in La Pêche, Gatineau, Cantley and around Meech Lake in Chelsea, scientists warrant that funding to develop an electric car battery will come with the $532 million allocated for Argonne National Laboratory in the proposed federal budget.

The demand is huge and only set to get bigger. After all Argentina’s newest producers of lithium carbonate, Rincon Lithium has begun production in the Salar del Rincon region not for nothing.

And Canadian exploration group Pacific Wildcat Resources Corp is also said to be exploring the prospect of developing Mozambique’s first ever lithium mine.

Action is certainly heating up.