John Carl,
Editor
Jan. 9, 2023
It was an inevitable match.
America’s major car companies are desperate to secure more lithium.
And lithium miners would love to boost production — but they’re short on the cash needed for such massive operations.
So it was only a matter of time before everyone arrived at the obvious solution: where car companies use their deep pockets to directly fund lithium miners as they expand operations.
Manufacturers like GM (NYSE: GM) and Ford (NYSE: F) are handing out sweetheart deals for tens of billions in a spending bonanza that’s far bigger than anything we’ve ever seen before in the history of auto manufacturing.
For example, GM is on a campaign of aggressive spending and raised estimates several times last year. It now says that it’ll spend a total of $35 billion by 2025 on electric vehicles alone. Talk about deep pockets!
GM has said repeatedly that they now believe the manufacturing process starts at the very beginning of the raw materials supply chain:
“We absolutely are convinced we need to have control of our own destiny when it comes to EV critical minerals.” — Tanya Skilton, GM’s Director of Purchasing
They’re putting that money straight to work by investing in major projects across the country.
The most notable project is a multibillion-dollar lithium brine operation in California’s Salton Sea that’s run by a company called Controlled Thermal Resources (CTR) Ltd.
The Salton Sea has recently become a hotbed of investment activity (I’ll be writing more on this in the coming weeks), and GM is trying to use its size and determination to become the 800-pound gorilla in the region.
But their competition will be tough to beat: other projects in the area are funded by a long list of powerful heavyweights that include Warren Buffett, Jeff Bezos, Bill Gates, Michael Bloomberg, and Ray Dalio. Elon Musk may soon invest in lithium operations there as well.
Given all the development, the CEO of Controlled Thermal Resources told Fortune Magazine that the Salton Sea could one day become “the single largest lithium brine resource in the United States, if not on the planet… it will be a critical hub.”
And then there’s Ford.
It has plans to spend $30 billion by 2030 and is spreading those funds far and wide. For example, they just gave a $300 million loan to lithium miner Liontown Resources Ltd (ASX: LTR)(OTC: LINRF) at favorable terms that are much better than the conventional market. Liontown is a mid-size producer in Australia that’s trying to finish an integrated refining facility that could greatly increase output once it's finished — so the investment makes great strategic sense for Ford.
The speed and scale of this transition is a major shift from what we’ve seen over the past few years. In short, we’re now in a whole new phase of the EV revolution.
As Australian-based lithium miner Pilbara Minerals Ltd. (ASX: PLS)(OTC: PILBF) CEO Dale Henderson recently told Bloomberg:
“There’s certainly a level of desperation [among car companies]… if you believe the supply-demand outlook, there’s going to be a shortage, and the car companies who haven’t secured the supply chain are going to have a problem.”
He explains that the industry wasn’t always like this. Car companies used to act as if resources were in infinite supply and were slow to commit to a deal. But he says that’s all changed: “Now, the phone won’t stop ringing.”
The flow of new funds is also driving a rapid increase in new technologies.
The BMW Group (DE: BMW)(OTC: BMWYY) is shelling out $150 million of early-round funding to a lithium refiner named Lilac Resources, which is developing a powerful new brine formula that could boost production for their US-based brine partners, which includes the Salton Sea.
If successful, they’ll be able to use their new ion-exchange technology to extract lithium from brine operations without the need for evaporation ponds — those ubiquitous pastel-colored pools that are the current standard for brine projects. This would instantly save lithium miners millions in cost, space, and environmental concerns.
Could lithium brine pools become a thing of the past?
And last, but certainly not least, all of this new funding is also changing the game for brand-new lithium exploration projects.
Car companies are no longer shy about investing in early-stage mines.
As Chris Berry, president of industry firm House Mountain Partners, recently said, car companies are so motivated to get more lithium that they’re willing to “stuff money into a bazooka and just blast it at the supply chain.”
We’re ready.
GM, Ford, and BMW are just a few of the major players that are shelling out billions — dozens of other car companies are doing the same, and we’ve found a lithium miner that’s at the top of everyone’s list.
We’ve put together a special report on a new North America-based lithium mine that’s a prime candidate for the next round of funding. It just received its long-awaited permit (the announcement came while I was researching this article), which now makes it the most viable new project in the world.
Car companies and lithium miners will both benefit from this win-win situation — and so will smart investors.
This is your chance to join in.
John Carl
Editor, Daily Profit Cycle