Mike Fagan,
Editor
Dec. 6, 2022
With blue chip tech stocks leading the markets lower, it’s important to diversify one’s portfolio holdings into the commodities space — particularly the specialty metals needed in the clean-energy revolution.
Often referred to as the battery metals, these include PGMs, copper, cobalt, and, of course the “white petroleum” — lithium!
Lithium is the undisputed clean-fuel of the present and future. It powers everything from EVs to the smartphone or tablet you’re currently using to view this article, along with advanced applications in industry, technology, and battery storage.
Demand is rising at such a rapid clip that supply is going to have a very difficult time keeping up.
Benchmark Mineral Intelligence — a leading entity tracking and analyzing lithium market information — states that the lithium market needs to scale up to 25X last year’s production level by 2050 to meet rising demand.
That’s a lot of new mining that will likely require between 200 and 300 new lithium mines coming online over the course of the next several years.
Of course, there are plenty of naysayers out there, including some of the big banks. Goldman Sachs, as perhaps the loudest example to-date, believes demand has been overblown, calling for lower lithium prices next year.
Goldman, however, has since revised its forecast for supply, predicting an 84,000 tonne deficit this year compared to its previous forecast of an 8,000 tonne surplus. It also changed its outlook for next year and is now expecting a small surplus compared to the 76,000 tonne surplus it previously called for.
In other words, even the loudest of naysayers is now getting the message that the green-energy revolution is going to require a lot more lithium than what’s currently in the global production pipeline.
Also important to keep in mind is that all lithium is NOT battery-grade lithium, which is to say a lot of the lithium being produced today will not qualify into the supply chain.
There are also some misconceptions in regard to recycling. Whereas a lot of metals — including iron, steel, lead, copper, and aluminum — are recycled in large volumes… lithium is not.
According to recent estimates, less than 1% of lithium-ion batteries get recycled in the US and EU compared to 99% of lead-acid batteries, which are most often used in gas vehicles and in power grids.
As processing technologies improve and as more facilities come online, that 1% figure will indeed climb… but the bottom line is that the overwhelming majority of lithium supply will continue to come from new mining for the foreseeable future.
Lithium demand really has no place to go but up: a rise in EVs is taking place all over the world as part of global efforts to attain net zero carbon emissions by 2050.
According to CBInsights, EV sales are slated to increase from a 4% global share in 2020 to 22% by 2030.
Over that same timeframe, global lithium demand is expected to rise from roughly 500,000 tonnes per annum to upwards of 4 million tonnes by 2030 — an 8-fold increase.
Lithium mines, on the other hand, produced just 100,000 tonnes worldwide in 2021 — a far cry from what’s needed even by today’s standards.
Hence, a timely investment opportunity in lithium exploration and development companies is now upon us.
Around half of global lithium resources are found in the Lithium Triangle of Chile, Argentina, and Bolivia where lithium is produced from brines.
Of course, mining in those countries brings with it a number of geopolitical risks, which is why we tend to focus on lithium companies with quality assets in Tier-1 mining jurisdictions such as the United States, Canada, and Australia.
Canada, in particular, is quickly emerging as one of the primary Tier-1 jurisdictions for lithium discovery and production from hard rock sources.
We’ve identified an extraordinarily well-run lithium explorer/developer that’s advancing a key hard rock lithium project in Quebec — one of the absolute best places anywhere on the planet for mining.
We also mentioned the importance of “lithium purity” for inclusion in the lithium-ion battery supply chain.
To that end, this company’s flagship has already been deemed among the highest-purity hard rock spodumene deposits with expectations for the production of battery-quality lithium hydroxide.
In other words… a potential near-term supplier of high-grade lithium to an increasingly hungry global EV market.
Right now is the perfect time to check out this emerging lithium player while it’s still relatively undiscovered by Wall Street.
Mike Fagan
Editor, Daily Profit Cycle