I stumbled upon a slide from Canada Lithium's investor presentation while listening to Scotia's mining conference last week. You will not find these data points many other places. They provide great insight into which applications are driving demand for lithium.

Breaking lithium carbonate usage down per application:

Source: Canada Lithium

Not included in the slide, the speaker indicated that 50 kg of lithium carbonate are used per Tesla (double the average EV). Increased battery power requires increased amounts of lithium carbonate, the lightest metal with the highest energy density. Lithium has already captured over 90% of the consumer electronics market

Demand going forward is expected to be driven by electric vehicles, grid storage, and aerospace. FMC Corp (NYSE:FMC) predicts that energy storage products will be the key factor leading to a 9% CAGR for lithium between now and 2020. 

Kingpins of lithium
Half of the world's lithium comes from Argentina and Chile. Sociedad Quimica (NYSE:SQM), Rockwood Holdings (UNKNOWN:ROC.DL), and FMC Corp are the kingpins operating there. Australia is responsible for roughly 30% of total lithium supply. Back in August, Rockwood announced its intent on teaming up with Australia-based Talison, the world's largest producer of lithium ore. Upon closing, this deal will strengthen Rockwood's already tight grip on the lithium trade.

Lithium mining methods
Approximately 75% of lithium is produced from lithium-rich brine located in Argentina and Chile. According to Bank of America, brines operated by Sociedad Quimica and Rockwood have the lowest cost of production -- below $2,000 per tonne of lithium carbonate. Extracting lithium from ore costs between $4,000 and $5,000 per tonne in Australia and China. 

Time to market
Besides price, the striking difference in mining methods (hard rock and brine) is that brine operations require nearly two years of lead time before having an end-product to sell. Hard rock mines have the ability to convert lithium ore into an end-product in less than a week. Lithium kingpins (SQM, ROC, and FMC) and smaller players discuss changes in per ton pricing twice a year. Of late, battery-grade lithium carbonate is selling for roughly $6,000 per tonne.

New mates
Chengdu Tianqi Industry Group, the world's largest converter of hard rock lithium partnered up with Rockwood on the $728 million Talison deal. Expected to close in the first quarter of 2014, Talison's lithium ore (spodumene) resources at Greenbushes, Australia are expected to be productive for decades to come -- while providing the new mates with geographic diversification.

It takes two to tango
Sociedad Quimica highlights the "e-car" market, predicting between 1.5 and 3 million will be produced by 2015. Qualifying as an e-car means it uses lithium ion batteries. Finishing off where we started, Canada Lithium looks to be taking a page out of Sociedad Quimica's playbook by moving into iodine as a complimentary product. Planning to unite as one, Canada Lithium and Sirroco Mining aim to become the only public company besides Sociedad Quimica that produces lithium and iodine.