A very broad overview, nothing tactical but definitely worthwhile for forming a matrix on which to build and to hang details upon.
From 19FortyFive, December 15:
Lithium is one the key elements of the next energy wave. The soft, silvery white alkali metal is an essential ingredient in long-life batteries, which, in turn, are central to the global push to adopt electric vehicles and help extend the life of non-carbon-based energy supplied to electric power grids.
Although the world’s largest lithium producer is Australia, it is estimated that 60% of global lithium reserves sit in the “Lithium Triangle” composed of Argentina, Bolivia, and Chile. China, the United States and other countries are reaching out to secure new sources, which is bringing Argentina, Bolivia, and Chile into sharper geopolitical focus in Beijing, Brussels, and Washington. The great power rivals are seeking to secure the strategic metals central to the global energy transition.
Chinese Dominance
China is the world’s leading battery power. According to S&P Global Market Intelligence, in 2021 China accounted for 79% of lithium ion batteries, followed by the U.S. at 6.2%.This reflects China’s dominance in lithium refining capacity; over half of that capacity is in China. Moreover, two of the world’s largest lithium miners, Ganfeng and Tianqi, are Chinese. Tianqi also has holdings in Australia and Chile. Another of China’s large mining companies, Zijin Mining, recently added lithium to its portfolio by purchasing a Canadian company operating in Argentina.
Considering China’s role as the world’s lithium refiner, it has compelling motivation to be more deeply engaged in the Lithium Triangle.
The U.S. lags behind its Asian rival in lithium and battery production. It holds an estimated 3.6% of global lithium reserves, with a lone lithium mine in Nevada — though others are planned — while refining only 2.1% of the world’s lithium. To catch up with China, the Biden administration’s Inflation Reduction Act includes considerable incentives for domestic battery production, as well as mining. Considering that the Biden administration wants half of all U.S. vehicle sales to be electric by 2030, developing a viable battery industry and securing supplies of lithium has assumed greater urgency. Lithium batteries are also essential to U.S. electricity production in supplying storage for solar and wind power.
Opportunity in South America
The lithium boom is good news for the Lithium Triangle countries. In 2021, Argentina and Chile together produced nearly 30% of the world’s lithium, with the balance largely produced by Australia. In 2022, the lithium boom was evident in the profitability of Chile’s SQM, which accounts for 19% of global market share. In the third quarter of 2022, the company saw its net income skyrocket by 937%, powered by lithium prices and higher sales. The forward guidance for lithium is continued strength. Chile’s lithium industry is the most advanced in the Lithium Triangle. Long-established, it is considered part of national security, with lithium regarded as a strategic resource. To mine lithium in Chile, companies must apply for a special license. Only two companies, SQM and Albemarle (a U.S.-based mining company) have been granted licenses....
....MUCH MORE
I should probably note here that at the moment we don't do anything with the lithium stocks and definitely don't have much interest in the speculative stuff, keeping an eye on the two just named, SQM and ALB. As the largest producers they would provide some measure of safety at the operational level as the world heads toward the most advertised recession in memory.
As investments, not so much here's a year of ALB from BigCharts:
Definitely tradable but there's no reason it couldn't drop further, maybe $150 if the market starts hating on the group. There's no hurry. In particular be aware of a potential upmove to match the September move. That wold be a right shoulder of a head-n-shoulders formation and could really wreck your Valentine's Day plans.
Somewhere down the road deals trading on the TSX Venture Exchange (formerly the Canadian Venture Exchange, the old Vancouver Stock Exchange crowd) or London's AIM, will have their day but there is a lot of risk for the next few quarters.
