Greenland Holds Promise of Rare Earths

Greenland, a self-governing territory of Denmark, is being eyed by the United States as a source of rare earths that could reduce reliance on China. It has the world's eighth largest store of rare earths. It also has supplies of key energy transition metals like lithium and cobalt. While Greenland has oil and gas deposits, new drilling for these resources is banned. Three quarters of the land is covered by ice sheet.

Lithium Stocks Up with Takeover Speculation

The world's largest lithium producer, Albemarle, saw its stocks lift 5.9% on Friday, and Arcadium, another large producer saw its stock lift 9.2%, on speculation Rio Tinto (NYSE: RIO, LSE: RIO, ASX: RIO) might buy them. 

Rio is facing challenges developing its Jadar lithium (and boron) mine in Serbia where activity has halted since 2022 due to fears of environmental damage. It has the potential to be the biggest lithium mine in Europe. 

Lithium prices have dropped 88% over the past two years. Rio has shown increasing interest in lithium mining, reportedly previously attempting to buy a stake in SQM in 2021.

Oversupply in BattMats Leads to 80% Fall in Lithium Price in 1 Year

Lithium, a key raw material in batteries for electric vehicles, has fallen in price, with oversupply and a scaling back in EV production forecasts. 

Lithium carbonate trades at around 95 000 CNY/tonne from around almost but not quite 500 000 CNY/tonne at the same point last year. Its absolute peak was in November 2022 at just over 600 000 CNY/tonne. 

At the time of this update, 1 USD buys 7.18 CNY.

China is the world's largest electric vehicle market, where EV penetration continues to grow but at a slower rate. At the end of 2023, Goldman Sachs cited the trend in a report entitled "The Short Trade Must Go On" highlighting both supply and demand drivers.

For a good introduction to lithium's role in the energy transition, the following report from IRENA (the International Renewable Energy Agency) is worth reading.