LITHIUM ALERT: “All the supply from the globe’s major lithium miners… probably won’t be enough to meet demand.” – Bloomberg, Oct. 1, 2019
By James Hyerczyk
It could be a mistake of epic proportions for investors to assume that a year of calm in the lithium market is a sign of long-term stability.
In fact, 2019’s balanced supply and demand is now forecast to be but a brief blip in the mineral’s sector history. Demand is now set to become desperate while supply is set for tightening at the most critical moment in time.
Now, as a near-certain price spike that has suddenly appeared on the horizon, it’s become the optimal time for investors to quickly refocus their attention on lithium.
They need to look no farther than California and Nevada to discover why Tesla, Inc. will be the force behind a new lithium bull.
After all, Tesla deployed 22% of all the world’s lithium battery power in 2019. That was steeply up from 18% in 2018, according to industry analysts at Adamas Intelligence.
Moreover, investors believe Tesla (TSLA) has become dominant thanks to its current lithium supply chain. TSLA’s share are up 190% since late May 2019.
That means now is the time for investors get up to speed on the new lithium boom, so they can make informed judgments about how much more to expand their lithium positions.
There’s more driving a supply crunch in lithium than Tesla electric vehicles… in fact that is the smallest part of its story.
That’s because Tesla’s dominance is due in no small part to its battery Gigafactory in Sparks, Nevada. The Gigafactory makes about 20 gigawatts of battery power a year. Its goal has been raised to 35kWh a year.
This has made the Gigafactory’s appetite for lithium legendary.
That’s because it will take between 60,000 and 85,000 tons of lithium carbonate annually to keep the Gigafactory running smoothly, according to industry watchers who follow Tesla.
To put that into context, the entire global supply of lithium carbonate peaked at about 270,000 tons in 2018.
Tesla alone is why investors should keep their eyes on three well-run lithium exploration companies.
They should look at companies such as: Albemarle Corp. (ALB), Nemaska Lithium (NMKEF), and Alpha Lithium Corp. (ALLIF).
In fact, as 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.”
While Albemarle and Nemaska are behemoths, there is a good reason investors need to their eyes on Alpha Lithium (ALLIF).
And as someone who has spent three decades involved in sector analysis and unit economics, I can attest to the power of getting into an early stage company such as Alpha Lithium (ALLIF).
Its affordably low price could have a long way to run compared to large established companies whose huge growth spurts are well behind them.
And certainly, the looming demand crisis – driven by Tesla’s voracious appetite for lithium – suggests Al.
That’s because Telsa is building lithium ion batteries at its massive Gigafactory in order to supply its big-time electric vehicle company, which makes the famous Tesla 3, and to support its commercial and residential batteries that store energy for off the grid use.
In fact, Telsa has already sold at least 3,000 of its residential-use 13.5kWh Powerwall 2s, and the state of Vermont has ordered 2,000.
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.
That comes to 85 pounds. Let’s assume that its 10 competitors use about the same weight per kWh, and you can see where this is going.
The residential energy storage market should clock in at about $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.
This is a forecast that will significantly stress the lithium market, yet, save for me, few analysts are talking about it.
Being first to know is a recipe for success in the stock markets. But there’s something else huge that will likely drive lithium higher.
That’s because as millions go without power in California for days and weeks in order to prevent wildfires and because of them, it can be assumed – and I stress this is a gut reaction, human nature assumption – that residential energy storage will be a fast emerging market.
In fact, in early November, Tesla’s CEO, Elon Musk, took to Twitter to tout is company’s product.
In a series of tweets Musk said his battery setup would help Californians ride out coming disruptions.
He noted that power shut-offs from the local utility, Pacific Gas & Electric, will only become more prevalent over the next decade.
And solar-equipped homes are more efficient and better valued on the housing market. Musk even offered a $1,000 discount to those affected by days of power failures caused by wildfires.
So you can see, as its competition intensifies across the board, and as its Powerwall becomes more popular, Tesla has a growing problem: lithium supply!
Again, awareness for investors is key: because a healthy supply chain is vital for Tesla because all of the world’s leading car and truck makers have jumped into the EV business, too.
In fact, 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 100kWw batteries will use around 300 pounds of lithium.
Right now, today’s average battery pack is 55.6kWh. At 3 pounds per kWh, those batteries could need about 166 pounds of lithium.
This is a significant issues 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.
So, you can see why so many investors are so wildly excited about the exploding EV market.
Yet, thinking investors will look at the supply chain and correctly identify lithium as the major investment opportunity.
The rapid acceptance of EV is why their makers will likely be forced to secure long-term supply contracts with mining companies. That’s a formula that could put companies, such as Albemarle (ALB) and Alpha Lithium (ALLIF) in the driver’s seat when it comes to setting price per ton.
Because, in all, given rising demand for EVs, there’s a big reason for battery makers to secure long-term lithium supply contracts. 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 2019s demand, and almost a four and a half times jump from 2018’s global demand of approximately 270,000 metric tons.
All this means is that Tesla could be in a serious bind unless it locks up a long-term lithium supply agreement.
That idea likely gained some urgency last year.
That’s when reports said that Telsa had to dramatically slow down battery production due to a significant lithium supply chain problem.
So, with every other leading car and truck maker set to roll out tens of millions of EVs, Tesla’s CEO, Elon Musk, is basing his company’s long-term survival on a simple proposition: Tesla’s ability to buy a lithium mine in order to secure a private supply chain.
To be frank, Musk says he’d like a U.S.-based lithium mine. He might get his wish if new mine projects could get off the drawing board.
But, in an era where people are concerned with climate change, that could be easier dreamed than done.
And, since lithium prices fell in the past two years, miners have been having trouble getting financing.
It’s why investors should be intrigued by Alpha Lithium (ALLIF).
Its mine faces no such obstacles.
That’s why whether Musk finds Alpha’s shovel ready mine attractive or not, there is little doubt that massive global demand could uniquely position Alpha Lithium to thrive in an era of bourgeoning demand.
Just look at its holdings.
Alpha Lithium (ALLIF) has snagged what is a potentially massive lithium deposit in South America’s world famous 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.
Alpha Lithium’s property is located in Argentina’s undisturbed Tolillar Salt Flats, in Salta Province. The property covers 68,000 acres, which is about 265 square miles.
In other words, Alpha Lithium (ALLIF) has a huge property in an area that holds world’s biggest lithium deposit. Its neighbors are a Who’s Who of lithium miners.
Moreover, Alpha’s drilling licenses have been approved so the company can begin exploration immediately.
But beyond demand and immediate exploration, there’s another significant reason for investors to focus on Argentina-based lithium explorers.
You see, while Argentina already produces about 12% of the world’s lithium, it’s still keen to attract international mineral explorers.
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.
This is a big reason to think that Alpha Lithium (ALLIF) could have one of the highest upsides in Argentina.
That’s because 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.
Still, whether investors flock to Albemarle, or to Alpha Lithium (ALLIF), or to Alpha’s other major Lithium Triangle neighbors… they are in the right place at the right time.
This CNBC headline, from July 29, 2019, tells you why.
“As electric vehicle production ramps up worldwide, a supply crunch for battery materials is looming”
Of course, it’s not hot news that electric vehicles are the headline makers that are driving the unrelenting demand for lithium.
But, it is sometimes daunting for investors to ponder just how big the trend is now and how massive it is poised to become.
That’s because EVs acceptance across the globe now is nothing compared to the future explosion.
Over the next three years, EVs are forecast to reach parity with internal combustion vehicles – in both price and performance.
Shortly after that happens, at least half the vehicle sales worldwide will be made up of electric vehicles powered by lithium batteries, according DNV GL, an energy consultancy.
And that’s why I want you to stay ahead of this megatrend… but to also understand the biggest and best trend is likely to be lithium… because the whole darn markets fails without it.
And that could put Alpha Lithium (ALLIF) center stage in the supply chain.
That’s why in just a minute I’ll show you how to get a FREE copy of my latest e-Book, Secret Corners of the Lithium Sector Where Soon-To-Be Giant Gains Hide.
It’s all due to a single fact, there’s no stopping the EV megatrend juggernaut now.
Even Amazon.com is on board.
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-commence company ordered 100,000 electric delivery vehicles from U.S. vehicle design and manufacturing startup Rivian Automotive LLC.
Amazon and Ford Motor Co. (NYSE: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 trend toward EV trucking fleets is just emerging. Anheuser-Busch has rolled out 21 EV trucks in California.
And, 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.
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.
When you can get truckers to go green, the trend is set.
But, some surprise twists have made the megatrend even bigger. And, in turn added extra stress to the lithium supply chain.
And, these supply chain surprises are big reason why a small company, with a huge lithium property, such as Alpha Lithium (ALLIF), merits your attention.
In fact, a supply/demand crisis could quickly transform Alpha Lithium (ALLIF) from a junior miner into a market moon shot.
Because, now, suddenly, you can stir serious luxury and high performance cars into the EV mix. That’s something lithium suppliers hadn’t really counted on.
The luxe brands, such as Porsche, have learned how to make technically advanced lithium ion batteries that can drive their EVs to speeds that will top 150 MPH.
But, the high performance batteries need to be huge – 95kWh and larger. Because it takes a lot of lithium to power a car from zero to 60 mph in three seconds or less.
By comparison, the average “underpowered” EV uses between a 10 kWh and 30 kWh Li-ion battery setup, depending on its range. Generally, 10 kWh translates to 100 miles.
And this is what is driving today’s sudden supply anxiety.
Because the smallest EV, the Nissan Leaf, uses 20 pounds of lithium in its battery, while a big EV, such as a Tesla uses more than 350 pounds of lithium… high performance cars even more.
As I’ve laid it all out my latest e-Book, Secret Corners of the Lithium Sector Where Giant Gains Hide… few analysts saw the luxury market explosion coming.
It wasn’t long ago that Porsche claimed all-electric powertrains didn’t offer enough performance to reach the level that their customers expect from the premium German brand.
Now, Porsche is rushing into the EV game as part of a major change of strategy. Its car is called the Taycan.
Its CEO, Oliver Blume, now says that he expects half of Porsche’s production to be electric by 2023 – just three years from now that the company’s Mission E pure EV is about to enter production.
Blume said the company has plans to make 20,00 Mission EVs this year, but since it’s received 30,000 pre-orders Porsche has doubled production to 40,000 units.
Porsche’s sister brand, Audi has launched an outrageous high-performance EV as well.
Called the E-Tron, Audi delivered the $75,000 rocket to the market in May of 2019.
Next up for Audi is the E-Tron GT, a sporty four-door car version that’s set to go on sale later this year, 2020. Audi’s electric lineup will also include the E-Tron Sportback, a sportier electric SUV.
Each of the Audis will be powered by a 95 kWh Li-ion battery pack.
While we’re drooling over luxury cars, we need to remember that nothing happens without lithium. It’s why Alpha Lithium (ALLIF) could become a major miner, thanks to its huge Lithium Triangle property.
And, it’s the massive tonnage of lithium to support the EV trend, compared to today’s output makes, that makes this a particularly important moment for investors.
It’s an age-old, proven moment too. Simply put: prices fly when demand outstrips supply.
In all, the number of electric vehicles on the road around the world should hit 125 million in the next 9 years, according to International Energy Agency forecasts.
And this the big factor that’s driving supply anxiety.
Remember, the Nissan Leaf, uses 20 pounds of lithium in its battery, while a big EV, such as a Tesla uses more than 350 pounds of lithium.
On the low end, demand for lithium for EVs alone could be 5 billion tons.
Tesla, though a big name in EV’s, will be a small player compared to General Motors, Volkswagen, Mercedes, and Ford—all of which see China and India as massive market opportunities.
GM needs to be the one of the most aggressive because it currently only has one EV, the Bolt. The company recently restructured its management in order to play catch up.
GM plans to introduce 20 EV models in China during the next 14 years. Estimates are that it will be making one million EVs a year by 2020 or 2021.
Ford plans to invest $11 billion over the next three years with a goal of making 16 fully electric vehicles by 2023.
Of course, Ford’s investment pales when compared to Volkswagen, which is dedicating $50 billion over the next five years to its EV line of vehicles.
VW’s massive investment should yield 70 all-battery EV models, which it will crank out at a rate of 2 million to 3 million vehicles a year, by 2025.
The world’s largest automaker has started to introduce its first wave of electric cars, including next year’s Porsche Taycan.
The rollout across its stable of 12 automotive brands is forecast to comprise about 15 million vehicles over the next five years as VW transforms into a maker of self-driving, electric cars.
That means in Argentina, where 54% of the world’s lithium is said to be, junior lithium explorers such as Alpha Lithium (ALLIF) and majors such as Albemarle (ALB), will likely be running three shifts of workers in order to meet soaring demand.
While Alpha Lithium’s potentially massive lithium deposit is mind-boggling, as you would expect, because it’s located in the renowned Lithium Triangle, Alpha has some impressive neighbors.
They include, POSCO (PKX) with a $6.9 billion market cap; Livent (LTHM), which has a $1.2 billion market cap;  Galaxy (GXY) with a $520 million market cap; and Millennial Lithium (MLNLF), which has a $82 million market cap.
POSCO spent $280 million to by a triangle property just across a valley from Alpha’s 68,000-acre holding.
All those ritzy neighbors also means there’s plenty of existing infrastructure to support Alpha’s project.
When it comes to a lithium brine operation, the most critical of all infrastructure could be the sun.
Ultimately, Alpha Lithium is one of three North American companies in Argentina that could be the big winners as demand for lithium explodes.
I go into them in much more depth in my latest e-Book, Secret Corners of the Lithium Sector Where Giant Gains Hide.
But, here are the three:
Albemarle Corp. (ALB) is a solid and diversified midcap. As the supply crush of 2017 eased, it shed about 50% of its market cap. ALB controls a diverse and high quality network of natural resources that are geographically situated in low-risk environments with good infrastructure. And, it looks like a classic undervalued play. Nothing has changed about the company except lithium supply and demand is currently balanced.
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.
Still, I believe Alpha Lithium (ALLIF) is the most exciting young North American lithium miner that I have seen in years. It has a super advantage of exploring the Lithium Triangle where 54% of the world’s lithium lays in wait. And it is licensed and permitted for an immediate startup.
Alpha Lithium (ALLIF) Can Jump Ahead of the Pack
Lithium investors did well playing the increased lithium demand thanks to laptops and cellphones. Then Tesla upped the game tenfold. Miners adjusted again.
Now, with the forecast for 125 million new EVs, and the fast expanding energy storage market, the miners will need to go into overdrive.
It’s why you need to get your hands on my new free e-Book, Secret Corners of the Lithium Sector Where Giant Gains Hide.
Because, there’s more going on with lithium that the massive EV megatrend.
In fact, one of the most exciting trends driving lithium demand – one that many investors aren’t aware of – is residential energy storage. These are compact units that store solar (rooftop) generated energy. They can power a home for three to four days if need be.
Most are similar to Tesla’s Powerwalls, which look to need nearly 100 pounds of lithium.
This market is exploding at a record-setting pace growing 9 fold between 2017 to 2018, according to Wood Mackenzie Power & Renewables, an energy consultancy.
So far, in 2019, 24 states and the District of Columbia have passed or started action to make it easier for homeowners to install storage units.
The three prominent lithium-ion based units on the market today are Tesla’s 13.5-kilowatt-hour (kWh) Powerwall 2.0, and LG’s 9.3 kWh Chem RESU battery.
They won’t have an exclusive market for long, because GE and Lockheed Martin are investing hundreds of millions of dollars in research, development, and commercialization of lithium-based energy storage.
This is why lithium could be one to the top investments for the foreseeable future. And it’s why a young company like Alpha Lithium should be on your radar now.
After all, Bloomberg New Energy Finance predicts that in the next 12 years, energy storage will mirror solar’s growth between 2010 and 2015, which was 700%.
Moreover, demand for lithium storage batteries is growing so quickly that supply cannot keep up.
Wood Mackenzie reported that “It has only taken a few years for the battery sector to become the largest demand driver for lithium. Lithium’s use in every lithium-ion battery type means it will have double-digit annual growth, making up over 80% of total lithium demand by 2030.”
As I’ve laid it out for you in my free e-Book, Secret Corners of the Lithium Sector Where Giant Gains Hide, energy supply looks destined to be a mega trend driven by how much supply lithium miners such as Argentina-based Alpha Lithium can deliver to the market.
The biggest winners among the newer companies could be the lithium miners such as Alpha that are who are ready to expand immediately.
That is why I see…
Most people think lithium miners are ready for all the new EVs, cell phones and laptops that will hit the market for the next few years. But you are now an investor knows differently.
Moreover, besides me, very few analysts follow the fast expanding lithium-based storage battery market. It’s a market that could grow 700% in five years.
It all adds up to the suggest the conservative forecast wrong about the doubling lithium demand.
It is far more likely that lithium demand will quadruple over the next 10 years.
Take your position now in Alpha Lithium (ALLIF) for a chance to put yourself among the earliest and biggest winners.
But before you do, make sure to show your investment advisor or broker a copy of my brand new sector report.
If he’s like you and me he’ll love this great high-potential story.
He should also remind you of this: most companies with great stories and unlimited upsides are young and have limited revenues.
That means they can carry a significant amounts of risk.
That’s why I urge you to always observe my three rules for accepting microcap investing risk:
With that in mind, I stand by my analysis that forecasts Alpha Lithium (ALLIF) as having a potentially huge upside.
You’ll find this vast profit opportunity with lithium laid out in detail my latest e-Book, Secret Corners of the Lithium Sector Where Soon-To-Be Giant Gains Hide.
It’s required reading on how to find the best investment opportunities in the worldwide lithium demand megatrend.
James Hyerczyk / InvestingTrends.com
 Assumes $15kg, which is the midpoint between the Jan 9, 2020 price of $10 to $20 a KG.
 Albemarle Q4-2018 Investor Presentation
 S&P Global Platts, “SQM expects lithium demand to grow 20% this year, prices to fall,” Apr 22, 2019
James Hyerczyk is a Florida-based technical analyst, market researcher, educator and trader. James began his career in Chicago in 1982 as a futures market analyst for floor traders at the Chicago Board of Trade and the Chicago Mercantile Exchange and numerous brokerage firms, and have been providing quality analysis for professional traders for 36 years.