Lithium, frequently referred to as "white petroleum," drives much of the modern world, as it has become an irreplaceable component of rechargeable batteries used in high tech devices.

The market, while still relatively small — worth about $1bn a year — is expected to triple in size by 2015, according to analysts at Goldman Sachs

That should be great news for Chile, as the country contains half of the world’s most “economically extractable” reserves of the metal, according to the US Geographical Survey (USGS). It is also the world’s lowest-cost producer, thanks to an efficient process that makes the most of the country’s climate.

Chile is essentially “the Saudi Arabia of lithium,” according to Marcelo A. Awad, executive director of the Chilean brand of Wealth Minerals, Canadian company that also has interests in Mexico and Peru.

The country, he noted in a recent interview, is perfectly positioned, with ports across the Pacific from the world’s largest car market, China, which is expected to increase electric vehicles production in years to come. There, lithium is also used to manufacture rechargeable ­batteries that power hundreds of millions of smartphones, digital cameras and laptops.

The challenge for foreign investors, particularly the Asian conglomerate, is to persuade Chilean authorities of making the leap from exporting the white metal to producing lithium batteries at the point of extraction.

Estimates from the group’s advisors believe opening the proposed plant would make the value of the product 35 times higher than what it could be obtained by just selling it as lithium carbonate

Eoin Treacy's view

Elon Musk might be one of the world’s great promotors but there is no denying that he has upended the automotive sector with just about every major auto manufacturer planning to release a range of electric vehicles within the next few years. 

Improving global economic growth should bolster demand for vehicles in aggregate and electric vehicles are projected to take an increasingly large share of that market towards the end of the decade which is why companies are now planning on building more large battery factories. 

Tesla announced last month it is planning on building another gigafactory, this time in Europe, once it has a better idea of what demand is going to be for the Model 3. BYD is also ramping up production of batteries in China. The above story about plans to build another plant in Chile is a further example of the planned growth of the lithium battery market. 

These plans also highlight that while there are promising technologies in the works to greatly enhance battery efficiency, recharging rate and energy density. improvements are likely to be incremental rather than breakthrough. That suggests demand for lithium is likely to continue to trend higher over the medium-term. The majority of lithium miners are investing in an additional supply but major new projects may not open for another couple of years. 

US listed Albemarle hit a new closing high today as it breaks out of a three-month consolidation. 

SQM (Socieda Quimica Mineral de Chile) continues to hold a progression of higher reaction lows and moved to a new recovery high yesterday. 

Australian listed Mineral Resources pulled back sharply last week from the region of its previous peaks and some consolidation of this year’s powerful gains looks more likely than not. 

Neometals has found at least near-term support in the region of the trend mean and a sustained move above 37¢ would break the six month progression of lower rally highs. 

Orocobre staged an impressive rebound from its October low and some consolidation of that gain is now underway.