Lithium Rush 2.0 & How to Profit

Lithium Rush 2.0 is on! 

With virtually ALL automakers going at least partially electric these days… there simply may not be enough lithium supply to go around. 

Benchmark Mineral Intelligence says the world will need $51B to build out the global lithium supply chain. And if you took all of the lithium mined from 2015 to 2022, it wouldn’t be enough to meet lithium demand in 2030 (yes, just for that one single year’s projected consumption!).

Lithium Rush 2.0 & How to Profit.

Those alarming truths have automaker execs donning hard hats and steel-toed boots in a quest for direct lithium procurement deals with, you guessed it, mining companies — hence, essentially sidestepping the big-name battery suppliers.

For example, Tesla is reportedly considering buying Brazil-based lithium miner Sigma Lithium, which currently boasts a $3B valuation.

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Tesla CEO Elon Musk has called lithium refining a “license to print money” due to the high margins in the industry, cautioning that there isn’t enough global capacity to process raw materials into ingredients needed for lithium-ion batteries. 

Likewise, GM is investing $650M in Lithium Americas to develop the Thacker Pass lithium mine in Nevada, wherein it beat out dozens of deep-pocketed bidders, including major battery and component makers. 

Sham Kunjur, who oversees GM’s program to secure battery materials, said, “We quickly realized there wasn’t an established value chain that would support our ambitions for the next 10 years.”

Not to be left out in the woods, Ford has secured lithium deals with SQM, Albemarle, and Nemaska. Lisa Drake, vice president for electric vehicle industrialization at the auto giant, commented, “These are some of the largest lithium producers in the world with the best quality.”

Ford is also in line for a $9.2B federal loan for the development of two massive battery plants in Kentucky and one in Tennessee. 

The plants will source Ford’s new assembly plant in Tennessee, which will reportedly have capacity for up to 500,000 electric pickup trucks per year starting in 2025.  

In the United States, EV market share presently stands at just 7.2% of total vehicle sales. Yet, what’s hidden in that figure is the fact that EV sales in Q1 2023 increased by 50% year-over-year, reaching 258,882 units — a record quarter for the US market.

And it means we’ll likely see over 1 million units per annum in the US for the first time ever. 

There are also many more EVs for consumers to choose from. In just the last year, the figure has risen from 34 to 42 EV models with expectations for further model expansion throughout 2023 and well beyond. 

On top of all that, EV inventory volume for Q1 jumped 70% compared to the same timeframe last year. And, as we all know, higher inventory means more sales… and, hence, increased demand for the element that makes these vehicles go — lithium! 

As a result, lithium prices are beginning to tick higher for the first time in 6 months after falling some 72% following China’s curbing of EV subsidies in January. 

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China, quickly realizing their massive blunder, has since announced an extension of its tax exemption policy for domestically produced and imported EV models to 2027.

In America, buyers of new EVs can get a tax exemption of up to $7,500 on certain models and price ranges. 

With sales trending upward, the EV craze is indeed gaining traction… and Lithium Rush 2.0 is absolutely 100% on! 

For foresighted investors, it means we’re only just entering turn-one with miles and miles of roadway ahead.

With the nationalization of lithium assets sharply on the rise — particularly in South America’s Lithium Triangle — the vast majority of the world’s future lithium investment will undoubtedly be centered in safe mining jurisdictions such as the US, Canada, and Australia. 

To that end, we have our collective eye on a select group of small-cap lithium explorers that understand this and have set up shop in these premier lithium districts. 

With a perfect storm now brewing in the lithium space, it’s a timely report you simply do not want to miss.

Mike Fagan

Mike Fagan
Editor, Daily Profit Cycle