Should you invest into the Lithium Industry?
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Hey Guys, Ben Here and Welcome to Motivation 2 Invest.
The global pandemic sparked a lockdown on transport and thus this caused a massive drop in AIR POLLUTION!
Before and after pictures of Delhi in india show the dramatic reduction in air pollution.
The Himalayas even came into view for the first time in 30 years as northern India wen’t into lockdown!
I believe that these factors together will boost even more the growing trend for clean and renewable energy.
Even before this crisis, The Electric Vehicle industry was growing rapidly with, some estimates even suggesting Electric vehicles sales have been growing at a MASSIVE 60% per year!
With our transport turning electric at a faster and faster pace, then it makes sense to invest in stocks in this industry to take advantage of this massive growth!
But, in this video I’m not going to Tell you to invest into TESLA.
Although it is a tremendous company, there is a lot of speculation around this business and it has a high valuation.
Instead, I will ask you to consider what is the common resource which all these electric vehicles will require as their popularity grows!
The ANSWER IS BATTERIES, or more specifically LITHIUM ION BATTERIES!
According to CNBC.
“As electric vehicle production ramps up worldwide, a supply crunch for battery materials is looming”[34]
According to Bloomberg.
“All the supply from the globe’s major lithium miners…probably won’t be enough to meet demand.” – Bloomberg, Oct. 1, 2019[4]
This means the Lithium mining industry is one which is ready to pop big time!
As the old saying goes when there is a gold rush, sell shovels!
SO in this video, I’m going to analyse the Lithium industry & outline three popular Lithium Mining stocks which will allow you to take advantage of this growing industry and potentially achieve a 10x return!!
LETS DIVE IN.
Electric Car Industry Growth?
The International Energy Agency forecasts that there will be a combined 125 million EV cars and trucks on the road over the next decade.
Their batteries will require hundreds of tons of lithium.
That’s because, at an estimated 3 pounds (1.4kg) of lithium per kWh of power, the smallest EV, that runs on 20kWh batteries will use about 60 pounds lithium. Big cars with 100kWh batteries will use around 300 pounds of lithium.[24]
Right now, today’s average battery pack is 55.6kWh.[25] At 3 pounds per kWh, those batteries could need about 166 pounds of lithium.
This is a significant issue for all EV makers. And, in particular Tesla.
Because, if the average EV battery size holds 166 pounds of lithium, the world is going to need at least 20.8 billion pounds, or 10.4 million tons, of lithium over the next decade.
For, as a Global X ETF analyst reports, lithium miners are planning for scenarios where annual demand exceeds 1.1 million tons of lithium by 2025.
Global X also reports that some blue-sky scenarios are estimating annual demand at 1.32 million tons of lithium.
To put this all in perspective, the estimates represent a 50% revision upwards from 2019’s demand, and almost a four and a half times jump from 2018’s global demand of approximately 270,000 metric tons.
Tesla’s Best Strategy will be to Lock Up Long-Term SupplY
Musk says he’d like a U.S.-based lithium mine…that could be great news for Lithium mining stocks.
Tesla is one company with has a insatiable hunger for lithium.
ONE MAJOR REASON FOR THIS IS DUE TO IT’S battery Gigafactory in Sparks, Nevada.
The Gigafactory makes approximately 20 gigawatts of battery power a year. And its goal has been raised to 35kWh for 2020 and beyond.
It will take between 60,000 and 85,000 tons of lithium carbonate annually to keep the Gigafactory running smoothly, according to industry analysts who follow Tesla..
To put that into context, the entire global supply of lithium carbonate peaked at about 270,000 tons in 2018.
USA Today reported, “We’ve gone electric, and there’s no going back at this point. Lithium is our new fuel, but like fossil fuels, the reserves we’re currently tapping into are finite — and that’s what investors can take to the bank.”
TESLA POWERWALL?
But it’s not just electric cars, there is also Tesla Powerwalls.
Then there is the TESLA powerwalls, a rechargeable lithium-ion battery for home energy storage.
The residential energy storage market was worth around $6.3 billion in 2019.
That is expected to nearly triple in the next four years to $17.5 billion, according to MarketstoMarkets research consultancy.[20]
The Powerwalls weigh in at 276 pounds. Tesla’s Materials Safety Data Sheets, which contain vital information for firefighters and other first responders, state that each Powerwall is made up of 33 percent lithium.
In fact, Tesla has already sold at least 3,000 of its residential-use 13.5kWh Powerwall 2s, and the state of Vermont has ordered 2,000.[17]
Home energy storage such as Tesla’s powerwalls are not just a option they are a necessity for many cities.
For example, during the California wildlifes power outages occurred on mass highlighting the need even more for local energy supply.
Musk even offered a $1,000 discount to those affected by days of power failures caused by wildfires.
But it’s not just TESLA Amazon.com has Ordered 100,000 Electric Powered Delivery Vans
That’s a big deal because Amazon delivers 10 billion packages a year. In mid-September 2019, its CEO, Jeff Bezos, pledges to make the company carbon neutral.
As the first step, the world’s largest e-commerce company ordered 100,000 electric delivery vehicles from U.S. vehicle design and manufacturing startup Rivian Automotive LLC.
Amazon and Ford Motor Co. (F) are among the investors in Rivian. Bezos said the first electric delivery vans will be on the road by 2021, and all 100,000 will be deployed by 2024.
Amazon currently has 30,000 vehicles delivering customer orders in the United States.
The CEO of Daimler Trucks, Roger Nielsen, declared that the beginning of the post-internal combustion engine era for commercial vehicles is here. For commercial trucks he said, “the road to emissions-free driving will be driven by battery electric vehicles.”[36]
Daimler Trucks is the largest commercial heavy-duty truck maker in the United States with its Freightliner brand.
Its main competitor, Volvo Trucks, is working on building 23 heavy-duty electric trucks using a $44.8 million grant from the California Air Resources Board.
The trucks, Volvo’s first in North America, will be used to move goods at ports and distribution centers in southern California.
THE LITHIUM TRIANGLE!?
So where will all this Lithium come from, well one place is the mysteriously named Lithium Triangle.
The vast triangle is made up of corners of Argentina, Chile, and Bolivia that fit together like a jigsaw puzzle
Reasonable estimates are that the triangle holds about 54% of the world’s entire lithium resources.[31]
https://resourceworld.com/lithium-triangle/
WHICH ARE THE BEST LITHIUM MINING STOCKS?
I have discovered three stocks which have potential to take advantage of this trend!
The first is the Alpha Lithium ticker symbol ALLIF)
Alpha Lithium’s property covers 265 square miles, in the heart of the Lithium triangle at Argentina’s undisturbed Tolillar Salt Flats.
Alpha’s drilling licenses have been approved so the company can begin exploration immediately.
LOW TAX MINING?
Argentina’s president, Mauricio Macri, is a former civil engineer. Since elected in 2015, Macri has eliminated export taxes on minerals as well as doing away with import taxes on equipment and parts for mining operations.
These means 100% of its exploration will be done in this low-tax/ no-tax environment. That’s unlike the major players such as Albemarle Corp. (ALB) that established its operation in an era of heavy taxation.[33]
Alpha Lithium has the potential for a massive upside of a potential 10x.
However, it is more risky as a micro cap. So just be aware of that before investing, don’t invest anything into a speculative stock like this which you cannot afford to lose!
In addition, The majority of investing platforms in the U.K don’t seem to offer access to buy shares in this stock…which is disappointing.
However, for north American investors is definitely the one of the best potential growth stocks in the lithium industry.
Then there is Livent resources.
Livent Resources (LTHM) had its IPO on October 11, 2018. It couldn’t have come public at a worse time as there was plenty of lithium supply to meet demand at the time. But Livent is well run. It was carved out of world-famous FMC Corp. (FMC). It should thrive in Argentina.
Another less risky stock is Albemarle Corp. (ALB) a solid and diversified midcap.
Which deals in Lithium, Bromine and Catalysts. This offers it more diversification than pure play Lithium mining stocks.
Bromine is used in flame retardants and Catalysts are used in oil production. But the main growth segment is Albemarle corps lithium business.
This is a classic undervalued play. Nothing has changed about the company except lithium supply and demand is currently balanced.
According to my Stock Screen Albermale corp is the best stock, but this take into account the lack of info the micro stock Alpha Lithium…which I believe has the highest upside potential.
WHAT ARE THE RISK WITH INVESTING INTO LITHIUM MINING STOCKS?
Lithium is a commodity and thus cyclical, Lithium prices are governed by supply, demand and cost.
In 2017, prices of Lithium sky rocketed due to lots of Exuberance about electric vehicles before crashing…due to excess supply.
In 2018, Morgan Stanely predicted a further decline in lithium prices.
However, is clear that a lot has changed since 2018, so is now the time for Lithium to boom again?
WHAT ABOUT THE COSTS?
The cost of mining varies massively between different mining groups, For example, Ioneer is one of the lowest cost lithium suppliers which produce at $1,796 per tonne. To put things in perspective the average cost of lithium currently is $13,000 per tonne.
Although in 2018 it was $17,000 per tonne! (Screen capture stats)
This is just something to be aware of
In Albermale’s Investor presentation they stated they have a “low cost position globally”.
And Alpha Lithium will be able to take advantage of new the low tax environment in Argentina. Which gives it an edge of it’s competitors.
Sources:
https://investingtrends.com/allif-stock/
Problem, for US Stock holders only.
https://simplywall.st/stocks/gb/materials/lse-0hc7/albemarle-shares
ALBEMARLE invest for UK Investors.
https://www.youtube.com/watch?v=dDZaNs0m4MY
https://investors.albemarle.com/static-files/c821deef-afa7-4ed5-b0d6-65dc24ce876e
Alpha Lithium .
