The lightest metal on Earth, lithium, is the backbone of the 21st century tech boom.
It is the next oil, the next gasoline... and much, much more.
Lithium’s rise to superiority as a commodity stems from the world’s green energy revolution.
While lithium plays a huge role in storing renewable energy, it’s also highly sought after in the auto-industry and the tech sector, with mega-corporations rushing to secure supply.
After global lithium demand grew by 10 percent between 2000 and 2010, growth took off in the last few years, and demand is now growing at an astonishing pace. And this is just the beginning…
According to Bloomberg New Energy Finance, demand for lithium is expected to rise 38-fold by 2030, a truly unprecedented surge.
The rise of lithium will come hand in hand with the surge of renewables, ushering in the next generation of energy.
Here are five stocks that could feature prominently in the lithium revolution:
#1 Rio Tinto (NYSE:RIO)
Rio Tinto is one of the world’s largest mining conglomerates, looking back at a history that dates back to the 19th century. Rio Tinto has its hands in every major metal source, from aluminum to iron ore and copper.
Rio Tinto is now getting serious about lithium, too, and within a few years, thanks to its traditional chain of acquisitions and organic growth possibilities, the London-based multinational could find itself at the forefront of the lithium market.
The strategy’s main tenets are extending Rio Tinto’s lithium portfolio by buying into the world’s leading lithium-producer, the Chilean Sociedad Quimica y Minera de Chile (SQM) and developing the Jadar deposit in Serbia.
It is an open secret that the 32 percent of SQM, which the Canadian PotashCorp is obliged to sell as per the conditions of its merger with Agrium, will inevitably go to Rio Tinto.
Rio Tinto wants it and the Chilean government does not want the stake to be sold to China. Therefore, it is only a question of time before the long-awaited acquisition will take place. It would be reasonable to expect that buy-ins will not cease at that.
Yet Rio Tinto is eyeing to ramp up its own production – it fully owns the Serbian Jadar lithium-borate deposit, estimated to contain more than 136 million tons of mineral resources. At a 1.8 percent grade, this results in a recoverable volume of roughly 2.5 million tonnes of lithium.
When first lithium will be extracted from Jadar, Rio Tinto will catapult itself into the position of Europe’s leading lithium supplier. 2018 will be a very busy year in the lithium business and Rio Tinto will be one of the crucial elements in raising the stakes all across the board.
#2 Power Metals Corporation (TSXV:PWM; OTC:PWRMF)
The overwhelming majority of the lithium buzz has been about brine – with the Atacama (Chile) and Uyuni (Bolivia) deposits being far and away the largest in the world – and for that reason, other promising extraction methods have often been overlooked.
Power Metals Corp., a relatively unknown C$57 million market cap Canadian company, is helping to spearhead the hard rock lithium mining drive. By setting its sight on pegmatite, a holocrystalline igneous rock loaded with lithium spodumene, it is tapping into a long-overlooked opportunity.
Why are pegmatites tomorrow’s talk of the town, you ask? Well, they are made of more lithium-dominant compositions and are much more evenly spread geographically.
Power Metals Corp. has three properties, most notably its paragon Case Lake deposit in Ontario, Canada. As an analysts’ general rule of thumb, average pegmatite deposits must contain an average of 1 percent lithium in order to be economic. PWM’s Case lake property recently returned samples well above that in percent lithium, and a recent company news release can be accessed here.
This is no coincidence. The exploration efforts of Power Metals Corp. are led by Dr. Julie Selway, Ph.D, one of the world’s leading geologist of lithium pegmatites. Whilst working for the Ontario Geological Survey, she has more knowledge of the region than any other geologist in this field.
Ontario is an ideal place for PWM’s surge – with excellent infrastructure and proximity to demand hubs, it offers a flat 10 percent tax rate on profits above the first $10 million in annual sales and no tax is payable for three years (Chile’s tax intake is three times as high).
This fully eliminates any drawback caused by the higher extraction costs.
PWM is fully budgeted and funded for a phenomenal 15,000 meters of drilling this year. This is by far the largest drill program being undertaken amongst all lithium hard rock companies – as soon as the snow melts in Ontario, expect a flurry of news coming your way.
#3 General Motors (NYSE:GM)
Just imagine, if only 25 percent of the car market would consist of electric vehicles by 2030, we would need to ramp up lithium production six-fold to satisfy the automotive industry’s needs. And it seems that carmakers are poised to go electric as soon as possible.
One of the top contenders is General Motors, planning to put 23 all-electric models on the market by 2023.
Production-wise, the goal is to produce 1 million EVs by 2026, with a major focus on sales in China which has set strict quotas for EV production.
Cognizant that such a growth would require a lot of lithium, GM aims to cut the average cost of a lithium-ion battery to less than $100 per KWh from the current level of $145 per KWh.
By doing so, GM’s new battery design cuts down on cobalt usage and replaces it with nickel, leading to higher storage and energy production capacity.
Concurrently, it wants to increase its EV battery range from the current 230-240 miles to more than 300 miles (500km).
Thanks to its proprietary battery technology, General Motors will be able to convert any car category, be it a SUV, crossover or van into a full-fledged EV.
The ambitious goals of GM’s electric vehicle drive (other competitors have been wary of going full-electric and concentrate for the moment on hybrid motors) puts it in a great position for very robust growth within a two-three years’ timeframe.
#4 Lithium Americas Corporation (NYSE:LAC)
The Vancouver-based Lithium Americas Corp., beyond its traditional scope of activities, is tackling the lithium production issue from a new angle by focusing on extracting lithium from hectorite clay.
Clay deposits might not be as productive as brine or pegmatites, but as no one produces lithium from them currently, Lithium Americas’ push might become a technological breakthrough.
Having completed the exploration program and finalized process testing, the Lithium Nevada project is now progressing steadily – making use of its great connection to infrastructure and location (just a couple hundred kilometers from California’s tech clusters).
Lithium Americas is aiming to extract lithium with the speed of the hard-rock process while remaining more affordable than traditional brine extraction. However, the company keeps a diversified portfolio that includes the 3rd largest lithium brine deposit in the world, Cauchari-Olaroz.
Being the “largest shovel-ready lithium brine development project in the world”, LAC is readying to extract the 8.7 million tonnes of 666mg/L grade lithium.
Cauchari-Olaroz does not have the impurity level that the Bolivian Salar de Uyuni has and by virtue of being located in Argentina Jujuy province, it is not subject to the crippling Chilean royalty tax rate.
Apart from the Cauchari-Olaroz project, LAC holds three other projects in the Puna Plateau, extending from Chile to Argentina, where reportedly 80 percent of the world’s brine resources are located.
Lithium Americas Corp. stock has has rallied 87 percent in the past year, smart investors expect an even more robust performance this year.
Bearing testament to Lithium America’s anticipated rise is the company’s listing on the New York Stock Exchange this January.
#5 AES Corporation (NYSE:AES)
AES Corporation, one of world’s leading power generation and distribution companies, is betting big on its lithium-ion batteries. But not just the regular ones, used across the board in consumer electronics.
AES is developing long-duration lithium-ion battery system that can provide energy for hours to satisfy any grid’s needs. By claiming that AES can do a “two-hour product” at less than $1000/KW, which by far beats sodium-sulfur batteries.
This is particularly pertinent with regard to renewable energy technologies.
By involving high density lithium-ion batteries in a smart grid, renewable energy fluctuation (which occurs in wind, solar, tidal energy alike) can be minimized.
Last year, AES and utility provider SDG&E completed the world’s largest lithium-ion battery /120MWh energy storage facility in Escondido, California, where a 30 MW system (a total of 400,000 batteries) can for hours store enough energy for the equivalent of 20,000 residents.
For smaller or isolated grids, this is fantastic news as they finally get an energy option that is both cheap and completely adjustable to fit specific needs.
AES took a further step ahead by teaming up with German technology giant Siemens to create a joint venture, Fluence, which would combine the two company’s unique know-how in energy storage systems.
All this, combined with demand growth from the automotive industry, IT and other sectors, will lead to a massive demand increase for lithium.
Wise investors have already noticed AES’s success, after a prolonged period of stagnation its shares are on the brink of rising, substantiating the management’s target of annual earnings growth of 8-10 percent through 2020.
Honorable mentions:
Orocobre (TSX:ORL): This company has had some serious problems and its stocks have seen major extremes. Right now it’s really low and has earned the title of one of the most-shorted stocks in this space because of production delays and even a gross spreadsheet error. But the company still must be viewed as the first brine concentrate lithium project in 20 years, and a new catalyst may end up being the ability to self-fund the expansion of its Olaroz lithium hydroxide plant in Japan.
Right now, Orocobre is on a rampage. The TSX traded stock has risen 25% in three months, with no signs of slowing. The company has just announced big news and could be a potential target for takeover.
Lithium Americas Corp. (TSX:LAC) is a resource company with a focus on lithium development. The company’s two large plays, the Cauchari-Olaroz project in Argentina – a joint venture with Sociedad Química y Minera de Chile - and the Lithium Nevada project in Nevada, are promising assets that will be sure to provide the company for many years to come.
The company’s impressive market cap, keen eye for investments, and excellent partners have certainly sparked the interest of investors. The company’s YTD stock value has increased by over 100% and shows no signs of slowing down.
Neo Lithium Corp.(TSXV:NLC) is a new player having entered the scene in 2016, but it is certainly not a company to overlook. In early 2017, Neo Lithium announced a huge discovery of a high grade salar and brine reservoir in Argentina’s lithium triangle.
Taking full advantage of increased lithium demand, Neo Lithium is making moves within the space that investors are paying close attention to. As demand continues to grow, supply will not be able to keep up, making Neo Lithium a hot target in the market.
Nemaska Lithium Inc. (TSX:NMX) is a smart company which realizes that lithium will be used in nearly every major tech-leap in electric vehicles and consumer products using batteries the coming years. With a looming lithium supply squeeze coming, Nemaska has a unique technology and great government support. Nemaska explores and develops hard rock lithium mining properties and related processing in Quebec.
It’s small, and its shares are trading right now under $1, but it’s the government support you should look out for. Smart investors know a good thing when they see it and will be sure to follow Nemaska in the coming years.
Blackberry Ltd (TSX:BB) This well-known cell-phone pioneer is engaged in the sale of smartphones and enterprise software and services. The Company's products and services include Enterprise Solutions and Services, Devices, BlackBerry Technology Solutions and Messaging.
Blackberry used to be a worldwide leader in phones, but Apple, Google and other Android manufacturers have rapidly acquired market share. Blackberry has since focused on software and is now developing systems for autonomous vehicles. Tech giants such as Apple and Google won’t be able to repeat Blackbery’s success in this sector that easily.
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Forward-Looking Statements
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for lithium will retain value in future as currently expected; that PWM can fulfill all its obligations to maintain its property; that PWM’s property can achieve drilling and mining success for lithium, that the lithium extraction process being developed will be cost effective and can work much more quickly that other extraction technologies; that the process can be commercialized for large scale production; that PWM can use the newly developed process, if successful, to reduce its costs of production; that high grades found in samples are indicative of a high grade deposit; that high-grade lithium is in sufficient quantities at surface to keep drilling costs down; that batteries and EVs will continue to use large amounts of lithium; and that PWM will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that the Company may not be able to finance its intended drilling program, aspects or all of the property’s and the new process development may not be successful, mining of the lithium may not be cost effective, PWM may not raise sufficient funds to carry out its plans, changing costs for mining and processing; increased capital costs; the timing and content of upcoming work programs; geological interpretations and technological results based on current data that may change with more detailed information or testing; potential process methods and mineral recoveries assumptions based on limited test work with further test work may not be viable; competitors may offer cheaper lithium; more production of lithium could reduce its price; alternatives could be found for lithium in battery technology; the availability of labour, equipment and markets for the products produced; and despite the current expected viability of its projects, that the minerals cannot be economically mined on its properties, or that the required permits to build and operate the envisaged mines cannot be obtained. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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