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The Lithium Gold Rush: Inside the Explosive Growth and Future of Lithium
Curious about Lithium?
In 2010, I witnessed a surge in lithium stocks that felt like striking gold. Little did I know, this was just the beginning of an electrifying journey into the world of battery metals.
My first foray into lithium was back when I was a broker (Investment Advisor) at Canaccord in 2010 and Canada Lithium Corp started to move.
We were all over it.
A few years later, Canada Lithium was acquired by RB Energy through a business combination that also involved Sirocco Mining Inc., completed on January 31, 2014.
This deal resulted in Canada Lithium acquiring all the issued and outstanding common shares of Sirocco, making Sirocco a wholly-owned subsidiary. Canada Lithium then consolidated its shares on a 3-for-1 basis and changed its name to RB Energy Inc.
The Quebec Lithium Project, a crown jewel asset of Canada Lithium, had just completed construction and was in the commissioning phase at the time of the acquisition. This project aimed to produce high-quality battery-grade lithium carbonate.
Despite initial progress, RB Energy faced financial difficulties and had to cease operations by October 2014. The company eventually filed for creditor protection, and in 2016, the Quebec Lithium assets were acquired by Jien International.
The road for lithium explorers was not always paved with gold…
Lithium has always been a "hot topic," much like a sizzling fire in the realm of electrification, especially as it relates to electric vehicles.
My next venture was witnessing my friend Brian launch a company called Lithium X, or LIX, with his partners Frank Giustra and Paul Matysek.
Brian's journey with Lithium X is a testament to the wild ride of the lithium market.
From closing a private placement on December 24, 2015 of 10,825,000 shares at a price of $0.30 per share for gross proceeds of $3,247,500, to a $265 million acquisition, it was a rollercoaster driven by the globes insatiable demand for lithium and sheer determination.
Lithium X started trading on the TSX Venture Exchange (TSXV) in November 2015, with an initial trading price of around $0.60 per share.
By December 2017, it was acquired for $2.61 per share, a significant premium.
Timing, as they say, is 80% of the equation, and this deal was timed perfectly, riding the wave of the lithium market boom in late 2017 and early 2018.
The lithium market reached a peak at $16,000 per metric ton, but this height was just the beginning.
After 2018, the market experienced several years of doldrums, with prices dropping 27% in 2019 to $11,700 and a further 28% the following year before beginning to regain momentum into 2022.
2022 was a monumental year for lithium due to several key factors.
Rapid EV Adoption:
Global EV purchases surged to 6.6 million in 2021 from 3 million the previous year, accounting for 9% of the market, according to the International Energy Agency (IEA). This dramatic rise was like a tidal wave sweeping through the automotive industry, with EVs making up all the growth in worldwide car sales.
Government Policies and Incentives:
Various governments implemented policies to promote EVs, including subsidies, tax incentives, and mandates to phase out internal combustion engine (ICE) vehicles. These regulatory pushes acted like a tailwind, significantly boosting EV sales and, consequently, lithium demand.
Battery Production Expansion:
To meet the rising demand for EVs, numerous gigafactories were announced and constructed globally. By 2030, over 60 new gigafactories are expected to come online, significantly increasing battery production capacity. The battery production landscape was transforming into a bustling metropolis, with 30% year-over-year growth expected globally, reaching 3,900 gigawatt hours (GWh) by 2030.
Supply Chain Issues:
Coupled with regional production and supply chain issues exacerbated by COVID-19, the time-consuming nature of mining and processing lithium created significant bottlenecks. Developing new lithium mines and expanding existing ones require substantial time and investment. Major battery production is concentrated in regions close to demand centers such as China, Europe, and the United States, with China playing a particularly dominant role.
Geographical Factors:
Furthermore, the concentration of lithium resources in specific regions, alongside geopolitical and environmental challenges, has further strained supply chains. High water stress in key mining areas and logistical issues have also contributed to supply limitations.
These factors combined to create a significant spike in lithium prices, driven by rapidly growing demand for EVs and the necessary expansion of battery production to support this growth, occurring during a time when bad news about electric vehicles was rarer than gold.
Even with the market correcting in 2023 to $46,000 per ton and now settling at about $16,200 per ton in March, 2024, a far cry from the $84,000 reached in the fall of 2022, there is still a ton to be said for the lithium market.
And what does this do for lithium miners?
It attracts them like bees to honey.
What?! Even with the sell off in the price of Lithium?
Yes. Lithium, even at $13,000, is still 3x the price 10 years ago.
The global market includes hundreds of publicly traded lithium companies, ranging from large established firms to smaller exploration and development companies.
This number is expected to grow as demand for lithium continues to rise due to the increasing adoption of EVs, the expansion of battery production capacities and other factors noted above.
Lets take a look at what we can invest in to take advantage of this lithium boom.
📈 Public Lithium Companies in Canada
E3 Lithium (TSXV: ETL)
Focused on developing large-scale, long-life lithium production in Alberta, Canada. Their Clearwater Project boasts significant lithium resources and aims to support the growing EV market with sustainable production methods.
Century Lithium (TSXV: LCE)
Advancing its Clayton Valley lithium project in Nevada, currently in the pilot testing phase for lithium extraction.
Lithium Chile (TSXV: LITH)
Operating in Chile and Argentina, focusing on delineating lithium deposits, particularly at its Salar de Arizaro property.
Sigma Lithium (TSXV: SGML.V)
Notable for its sustainable production methods and aims to be a low-cost producer with a focus on environmental sustainability.
Lithium Americas (TSX: LAC) (NYSE: LAC)
Recently split into two entities, focusing on the Thacker Pass project in Nevada, critical for North America's EV supply chain.
Lithium Royalty Corp. (TSX: LIRC.TO)
Offers a geographically diverse portfolio of royalties in the lithium sector, providing exposure to various stages of production.
Arena Minerals Inc. (TSXV: AN.V)
Involved in lithium exploration, focusing on developing high-quality projects.
New Age Metals Inc. (TSXV: NAM.V)
Focuses on the exploration and development of green metal projects, including lithium.
POWR Lithium Corp. (CSE: POWR)
Explores and develops North American lithium deposits, with interests in Nevada.
Discovery Lithium Inc. (CSE: DCLI)
Holds significant properties in the Nunavik region of Northern Quebec and other parts of Quebec, including the prolific James Bay lithium district.
American Salars Lithium Inc. (CSE: USLI)
Focuses on mineral exploration in North America, including the Nanaimo Mining Division of British Columbia.
Standard Lithium (TSXV: SLI) (NYSE: SLI)
Develops extraction technologies and projects in Arkansas.
📈 Public Lithium Companies in the United States
Albemarle Corporation (NYSE: ALB)
One of the largest producers globally, supplying lithium for EV batteries and other applications.
Livent Corporation (NYSE: LTHM)
Produces performance compounds and is a key player in the supply chain for EVs.
Piedmont Lithium (NASDAQ: PLL)
Developing a project in North Carolina, aiming to supply high-quality lithium for the U.S. market.
Atlas Lithium Corporation (NASDAQ: ATLX)
Engaged in strategic minerals projects, including the development of the Neves project in Brazil.
American Lithium Corp. (NASDAQ: AMLI)
Works on projects primarily in Nevada and Peru, contributing to the supply chain.
Lithium South Development Corporation (OTC: LISMF)
Focuses on projects in Argentina and is publicly traded in the U.S.
Arcadium Lithium PLC (NYSE:ALTM)
Focuses on projects in Argentina, Canada, and Western Australia. The company was formed from the merger of Livent and Allkem.
Have I missed any? Let me know in the comments.
Lithium demand is expected to skyrocket by 2035, driven primarily by the rapid adoption of electric vehicles (EVs), expansion of renewable energy storage solutions, and advancements in consumer electronics, as seen in the chart above.
Projections indicate that the global demand for lithium will reach approximately 3.8 million metric tons of lithium carbonate equivalent by 2035, a significant rise from the current levels of 1,072, or a gain of 254%.
That works out to an average CAGR (compounded annual growth rate) of about 17.7% between 2024 and 2035.
To put that CAGR into perspective, we can compare it to the growth rates of other key industries:
♻️ Renewable Energy:
The global renewable energy market is projected to grow at a CAGR of 17.2% from 2024 to 2030.
⚡️ Electric Vehicles (EVs):
The EV market is expected to experience a CAGR of approximately 13.7% from 2024 to 2030.
🦾 Artificial Intelligence (AI):
The AI industry is forecasted to grow at a CAGR of around 37.3% from 2024 to 2030.
📦 E-commerce:
The global e-commerce market is anticipated to grow at a CAGR of approximately 14.9% from 2024 to 2030.
☤ Healthcare Technology:
The healthcare technology market, encompassing telemedicine, digital health records, and medical devices, is projected to grow at a CAGR of about 16.4% from 2024 to 2030.
📡 5G Technology:
The 5G technology market is expected to grow at a CAGR of around 43% from 2024 to 2030.
Compared to these industries, the projected CAGR of 17.7% for lithium demand is robust, indicating significant growth driven primarily by the expansion of electric vehicle production and renewable energy storage solutions.
While not as high as the growth rates in AI or 5G, the growth rate is comparable to or exceeds the growth rates in renewable energy and healthcare technology.
This is just an early brief on the lithium market.
Over the coming weeks, I’ll interview CEOs, investors, and other media personalities, and delve into the lithium market in depth to uncover ways you can profit.
Just like miners sifting through layers of rock to find metals, we’ll dig deep into these markets—covering lithium, uranium, gold, silver, copper, and more—to explore the future of mining exploration and how we can capitalize on it.
Stay tuned for more!
Happy Hunting.
