By James Hyerczyk
Record blizzards and “snowmageddons” cutting off heat and power, with millions of poor souls shivering under blankets in the dark.
Deadly wildfires popping up on multiple continents, incinerating everything in their path, including structures, animals, and humans.
More frequent and intense hurricanes, typhoons, and cyclones across the globe — leaving a trail of death and destruction in their wake.
It seems like the stuff of action movies, but these extreme weather conditions are real.
And they all signify one thing: a world in crisis.
However, as Albert Einstein once said…
“In the midst of every crisis, lies great opportunity.”
As most investors know, a crisis can present unique buying opportunities.
But please understand…
The crisis investing I’m discussing in this letter does not involve capitalizing on someone else’s loss.
Rather, it’s the opportunity to be part of the solution.
A “win-win” scenario, if you will…
Now, depending on your views, you may or may not agree that climate change is the major factor driving these extreme weather events.
But I think you’d agree that these events are happening. They are destructive and life-threatening.
Regardless of our personal views, U.S. and global policies are being developed under the assumption that climate change is real and must be addressed — in a huge and aggressive way.
And as I’ll explain in a moment, two key factors linked to this climate crisis both track back to our skyrocketing need for what has been called the “energy metal” — lithium.
That’s also why the timing could not be better for companies such as United Lithium (ULTHF), an exploration and development company focused on the global demand for lithium.
Newly elected U.S. President Joe Biden has signaled his intent to promote a massive stimulus package creating jobs rebuilding infrastructure designed to combat climate change.
That infrastructure includes our country’s failing power grid system. As you’ll see, the solution to this energy grid crisis is powered by lithium.
In January, the Biden administration also announced their plan calling for the complete elimination of carbon emissions from the U.S. electric power grid by 2035.
This zero-carbon plan, supported by a study from Princeton University researchers, requires adding around 50 million electric cars and 3 million public charging ports for vehicles.
As you probably know, electric vehicles contain batteries chock-full of lithium.
So it’s no wonder one energy insider predicts…
“the 21st century is paved in lithium.”
I’d have to agree. In fact, I call it Lithium 2.0.
Which is a key reason why the junior mining company United Lithium (ULTHF) is catching the eye of investors.
By the way, my name is James Hyerczyk.
I’m a technical analyst, trader, market researcher, and educator based in Florida (the hurricane state).
For the past xxxx years, I’ve been focused on market trends that all point to the growing global demand for lithium, whether it’s for energy storage, electric vehicles, military defense, or just our addiction to smart phones and laptop computers. Even doggone drones need lithium to operate!
Not long ago, I was paid to highlight Alpha Lithium (ALLIF), which saw its stock jump from .xx to a high of x.xx in just X short months. And while past performance is not a promise or guarantee, they significantly improved their cash position and attracted huge institutional ownership (a big plus for investors). I see similar potential and a bright future for United Lithium (ULTHF), based on some major factors you’ll read about in this report.
So let’s dig a bit deeper into these extreme weather events and their connection to lithium.
When a major winter storm paralyzed the Lone Star State recently, I felt a rush of sympathy.
Because that’s when over 4.5 million customers of the Texas grid operator ERCOT learned a painful lesson about the consequences of power grid failure.
The crippling storm and massive power blackouts caused over 100 people to lose their lives, primarily from hypothermia.
ERCOT, which manages about 90% of the electric load in Texas, took around 46,000 megawatts of power off the grid. This is enough to provide electricity to nine million Texas homes on a typical high-demand day.
With those frigid Arctic blasts, it’s no wonder residents pushed their electric heaters beyond grid capabilities. Gas-powered plants were knocked offline. Many energy-generating wind turbines in Texas also ceased functioning.
It was shocking to see how this rapid loss of power impacted over one third of the state’s available energy production, putting the whole system at risk of total collapse.
Compounding the problem, water treatment plants lost power, leaving millions of Texas residents with no safe drinking water.
What a mess!
While Texas bore the brunt of the power failures during that particular storm, other regional electric power grids in the Midwest and Southwest also faced severe strain.
This February crisis sounded a warning for power systems throughout the country, especially since it was not a one-off event.
Catastrophic weather events such as the recent Texas storm…
The raging California wildfires in 2019 that caused millions to suffer power outages…
And the increasingly strong hurricanes that cause 90% of major outages in the U.S.…
All add up to a LOUD wake-up call.
Because they’ve exposed the reality that our energy grids are woefully unprepared for the future.
According to Yale Climate Connections, “the U.S. electric grid is uniquely susceptible to power outages, a problem expected to get worse with climate change.”
Systems are designed to handle spikes in demand, but the wild and unpredictable weather linked to global warming will very likely push grids beyond their limits.
-New York Times, Feb. 16, 2021
However, the looming dangers of a changing climate also spell opportunity for certain investors.
In fact, as you’ll see below, United Lithium (ULTHF) has the potential to help solve this little-known critical infrastructure problem (and not only in the U.S.).
On the campaign trail, candidate Joe Biden included battery storage investments in his $2 trillion proposed plan to improve U.S. infrastructure.
Power companies are increasingly looking to giant lithium-containing battery packs and other innovative storage technologies to balance power generation and utilization.
These grid-level storage systems can span huge tracts of land, converting electricity into a storable form. One that can be converted back into electrical energy when necessary.
And this is not only beneficial during weather events and other natural disasters.
These power grid batteries can also help balance the output of renewable energy sources such as wind and solar.
After all, the sun doesn’t shine 24 hours a day.
The wind isn’t always blowing.
So these lithium-rich battery packs are ripe to tap as complementary energy sources. They can offer bursts of electricity at peak times and then charge themselves during times of low demand.
“Among various battery technologies, lithium-ion batteries (LIBs) have attracted significant interest as supporting devices in the grid because of their remarkable advantages… Given their high energy density, LIBs will be an ideal choice for integration with renewable energy sources in grid-level energy storage systems, in which LIBs store the generated electrical energy for use with a minimal cost to end consumers when demanded.
Now, to be clear…
As Tesla’s Big Battery keeps the lights on in fire-ravaged Australia, it may show the future of renewable power – Climate & Capital Media, April 2020
After a 2016 storm described as “apocalyptic,” South Australia experienced a near total blackout. Elon Musk bet that he could help stabilize their grid by building a battery backup system made of lithium-filled Tesla PowerPacks in 100 days. He won the bet by stabilizing the grid with time to spare, and saved Australians tens of millions of dollars in the process.
And what about Europe?
Bloomberg described January 8, 2021 as…
“The Day Europe’s Power Grid Came Close to a Massive Blackout”
A disruption in the European high-voltage power grid that day caused the German Association of the Industrial Energy and Power Industry to warn “not to lose sight of the issue of grid stability and security of supply.”
This European grid vulnerability is a big reason why opportunity-minded investors should keep their eyes on United Lithium (ULTHF) — for one very big reason you’ll see shortly.
In addition to a growing market for these huge grid-sized energy storage systems, consumers are increasingly buying their own home-sized versions.
For example, sonnenCore’s home energy storage system uses lithium iron phosphate (LFP) battery chemistry. Then there’s Tesla’s Powerwall, a rechargeable lithium-ion energy storage battery pack.
All indicators tell me lithium demand could soon skyrocket into ‘Lithium 2.0’ as we start facing the challenge of power grid failure around the world.
And that’s just one of the reasons why I’m looking at United Lithium (ULTHF) to help meet this challenge.
So far, you’ve seen how lithium can help us meet the threat to our power grids. But the second area where lithium is really set to shine is in the transportation sector.
The transportation sector is responsible for the biggest share of U.S. greenhouse gas emissions, running just ahead of power generation, according to the U.S. Environmental Protection Agency.
And according to Wedbush Securities analyst Dan Ives …
“The EV industry is entering a golden age”
As a metal, lithium’s light weight and high reactivity make it perfect for rechargeable batteries.
This puts lithium in the driver’s seat when it comes to the electric vehicle (EV) revolution.
And it may also place companies like United Lithium (ULTHF) in the driver’s seat as they become essential resources for lithium production — especially since lithium-ion batteries are the go-to product of choice for EV manufacturers.
The U.S. appetite for EVs is growing rapidly, particularly as the COVID-19 crisis, with its limited travel opportunities, is beginning to wind down.
One recent survey found that around 52% of car owners say they will probably or definitely buy an EV within the next 10 years, compared to 34% in 2018.
Here are some other positive indicators:
President Biden plans to replace the government’s fleet of cars and trucks with electric vehicles. Just for reference, the U.S. government owned 645,000 vehicles in 2019.
2021 will be a “pivotal year” for electric vehicles according to the online car-shopping site Edmunds. Consumers can expect to see 30 electric vehicles from 21 brands, significantly more than the 17 models seen in 2020.
Plus, luxury auto manufacturers (with their giant lithium batteries) are now jumping headfirst into the green revolution. Some of the luxury cars rated among the 17 best electric cars of 2021 by Luxe include the Porsche Taycan, the Jaguar I-Pace, and the BMW Electric i8 Roadster.
And in 2020, Amazon announced the purchase of 100,000 electric delivery vehicles as part of The Climate Pledge. Amazon committed to achieve net-zero carbon operations by 2040, a full decade ahead of the Paris Agreement.
With Amazon leading the way in this proliferation of electric vehicles, the timing is right to take a hard look at companies such as United Lithium (ULTHF).
But not to be outdone, Tesla has created their own Gigafactory in Nevada to produce battery packs.
In their scramble for lithium, Tesla nearly ran out of the metal in 2018. Elon Musk warned that Tesla expects “significant shortages in 2022 [and] beyond” of their lithium-filled battery cells.
By 2030, the demand for lithium is expected to hit 250,000 metric tons a year, up from less than 50,000 metric tons in 2017. Sanford C. Bernstein & Co. calculates that companies will need to spend from $350 billion to $750 billion in their quest to find and develop sufficient new lithium mines to support this escalating demand.
After all, as Keith Phillips, CEO of Piedmont Lithium puts it…
“You can’t have electric cars without batteries and you can’t have batteries without lithium.”
All this makes it obvious that new battery technology by Tesla and others will be based on lithium-ion for years into the future.
And it’s also clear to see why so many investors are wildly excited about the exploding market for EVs. Thinking investors will consider the supply chain and correctly identify lithium as a major investment opportunity. An excellent reason to put United Lithium (ULTHF) on your stock watch list.
To be clear, however, just as with the exploding global need for grid-level storage systems, the EV revolution is also not limited to the U.S.
The global electric vehicle market has taken a giant leap forward over the last ten years. And industry predictions suggest it has only just scratched the surface.
According to the International Energy Agency (IEA), electric cars sales reached 2.1 million globally in 2019, surpassing 2018 figures. This boosted the available stock to 7.2 million electric vehicles.
While the COVID-19 pandemic has and will continue to affect the global EV market, there is clear movement in a positive direction.
Bloomberg’s 2020 Electric Vehicle Outlook reports that 13 countries have announced plans to phase out sales of gas-powered vehicles, predicting that:
Of course, more electric vehicles translates to an increased need for lithium.
EV battery size is measured in kilowatt hours (kWh). This is a measure of energy used to run the vehicle for one hour. As a rule of thumb, larger batteries are desirable because they can power the car for longer periods of time.
The Nissan Leaf, with under a 200 mile range, comes in 40kWh and 60kWh models. On the other hand, The Tesla Model 3 with a 75 kWh battery pack has a range of over 300 miles.
The smallest EV runs on 20kWh batteries that require around 60 pounds of lithium. Large vehicles with 100kWh batteries contain about 300 pounds of lithium.
The moral of the story? Larger batteries need more lithium.
Bloomberg 2020 Electric Vehicle Outlook
“We expect global LIB production capacity to increase from 455 GWh in 2020 to 1,447 GWh in 2025, at a CAGR [compound annual growth rate] of 26%. China and Europe will be the largest contributors to LIB capacity increases, just as the two regions will also become the biggest drivers of global passenger PEV [plug-in electric vehicle] sales.”
– S&P Global Market Intelligence, Feb. 2021
According to Reuters, the EU aims to have at least 30 million zero-emission vehicles on its roads by 2030, as it steers member countries away from fossil fuel-based transportation.
And while China dominates battery production today, Europe clearly wants to break the Asian-U.S. stranglehold on lithium ion car batteries.
As part of Germany’s post-COVID stimulus package, Germany will spend $1.7 billion to support battery cell production in the country. This comes on top of the $1.1 billion it had already planned to spend on battery technology through 2023.
The Swedish battery company Northvolt, headed by former Tesla executives, is banking on the fact that Scandinavia has one of the world’s highest EV adoption rates.
In fact, in 2019 Norway already had 56% of its vehicles running on electricity.
However, Europe will need virgin materials such as lithium in high volumes. To avoid the cost and risks of shipping materials long distances, new mines in Europe aim to reduce these supply-chain risks.
And getting back to Sweden …
My pulse went up by a few beats when I learned that United Lithium (ULTHF) has now snagged what could be among the largest and most valuable of undeveloped European lithium resources.
Their Bergby Project is a newly discovered lithium deposit in east-central Sweden, secured by three exploration licenses covering 1,903 hectares (4,702 acres).
Of course, it’s also great news that Bergby is close to major mining and transportation infrastructure, workforce, and equipment. It also has an abundant supply of fresh water and low power costs for processing hard rock lithium-bearing minerals in a cost-effective manner.
And here’s another thing: The Bergby Project is near Sweden’s new Northvolt lithium battery Gigafactory.
Equally if not more impressive, though, are the numerous surface showings…
Historic mapping and sampling of the Bergby site located an extensive lithium-mineralized surface boulder field.
This allows for surface and near surface extraction, always a huge plus when it comes to mining hard rock lithium, since it keeps mining costs down.
And as a bonus, United Lithium Corporation geologists also found substantial gradings of tantalum at the Bergby Lithium Project. A rare transition metal, tantalum is used in the manufacture of alloys, electronics, and surgical and dental instruments.
You can see why investors are so excited about lithium and other rare minerals as an investment opportunity. This also shows why now is an ideal time to check out the stunning growth potential for United Lithium (ULTHF).
This company got its start with their North American asset, strategically located in Thunder Bay, Ontario, Canada on the Barbara Lake Lithium Property. This property comprises 56 mining claims covering approximately 33.5 square miles.
United Lithium’s Barbara Lake Lithium Property sits in proven lithium-rich resources, as evidenced by close proximity to Rock Teck Lithium’s Georgia Lake property.
As part of the Georgia Lake lithium pegmatite fields, this is a highly active lithium exploration area with several junior mining companies exploring for lithium and rare metal pegmatites.
Unless you’re a geologist, you are probably not familiar with pegmatite. Well, simply put, it’s a host rock for numerous rare mineral deposits. Lithium, tantalum, titanium, and many others.
Anyway, this Canadian property has readily available power, water, and a network of roads.
What’s more, the city of Thunder Bay is a major transportation hub for Canada, with the largest outbound port on the St. Lawrence Seaway system, railway lines, and an international airport.
Starting to see why we are looking at opportunities like United Lithium (ULTHF)?
After a blah 2019, many analysts became bearish on lithium.
But in 2020, investor enthusiasm about the outlook for electric vehicles and a climate change-friendly administration sent lithium stocks on a tear.
All this indicates that the lithium bull run could still be at the starting line, meaning it’s time to do your research and put United Lithium (ULTHF) on your stock watch list. Or, even better, consider getting some skin in the game of what I’m calling Lithium 2.0…
Get In On the Cusp of the 5th Commodity ‘Supercycle’
There have only been four prior ‘supercycles’ over the last 100 years — opportune periods when commodity prices experience an extended boom.
The next 3 decades are “likely to bring a supercycle in investments in clean energy infrastructure, clean transportation and everything else that is required to make the green transition possible.”
These projects will require large amounts of metals, especially lithium.
The current world lithium production falls far short of what will be required to meet the soaring demand, particularly in Europe. China controls the lion’s share of global lithium resources, but European battery manufacturers in particular want to break that stranglehold. To do this, they will be seeking reliable lithium resources as close to their factories as possible.
This could make United Lithium’s (ULTHF) Bergby hard rock lithium assets crucially important.
To recap, here are …
Analysts expect the lithium ion battery markets to hit $1 trillion by 2026.
As you’ve seen, massive quantities of lithium will be necessary to create batteries that will stabilize and complement our inadequate power grids. Lithium could also challenge petroleum as the predominant portable energy source of the future.
Remember: United Lithium’s (ULTHF) Bergby property in Sweden has several great advantages:
From what I’ve seen, lithium has the potential to become an investor’s dream. If you missed out on the first lithium bull market, don’t miss out on Lithium 2.0.
Crisis opportunities don’t stay hidden for long. That’s why the time to become part of the global energy solution is now.
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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 38 years.