Lithium Oil of the 21st Century
PALM BEACH, Florida, June 7, 2018 /PRNewswire/ --
MarketNewsUpdates.com News Commentary
Oil has created historical wars. Why? The king of energy has long been the driver of geopolitical and economic power. Now, the smart money is taking notice of a new energy king of the 21st century…. whose demand is set to rise 20% in 2018. In fact, Tesla's Model 3 and Powerwall models will double the demand for this metal alone- and that doesn't include the billions of smartphones, laptops, and tablets that will also be thirsting for this metal. As such, junior explorers Lithium Chile (TSX-V: LITH) (OTC: LTMCF), NRG Metals (TSX-V: NGZ) (OTC: NRGMF), Millennial Lithium (TSX.V: ML) (OTC: MLNLF), and Global X Lithium & Battery Tech ETF (NYSE: LIT) have placed major bets on meeting the surging lithium demand of industry giants like Tesla (NASDAQ: TSLA).
Fossil Fuels Will Be Supplanted By the So-Called Energy Metals Within This Century
This movement away from fuel-based vehicles to electric vehicles is as big a deal as when mankind put its horses out to pasture, did away with carriages and got behind the wheel of a car. This forever removed hay and straw from the fuel supply and firmly entrenched carbon as the new way forward.
The world is once again at the beginning of a new era, with a massive shift in the global energy mix expected; a move away from traditional carbon-based fuels towards a cleaner, lighter, lithium-propelled world. The market has grasped this fact, with the value of lithium increasing 45% year-on-year since the start of 2018 to peak at $16,500/tonne.
The fact that the current prices have support from Tesla Inc. is a great sign for 2018. The company negotiated additional supplies from top global producer SQM in January, putting Chilean lithium assets firmly back on the map and reassuring investors that lithium remains far from its peak.
Naturally, development of Chile's lithium-rich brines has accelerated, with more capital finding its way into salt flats than ever before. Lithium Chile (TSX.V: LITH.V) (OTCQB: LTMCF) , for instance, has fortuitously acquired over 152,900 hectares of Chilean salar, with much of it adjacent to projects operated by none other than SQM. To put the size of into perspective, Lithium Chile has the largest lithium exploration property outside of the Chilean government.
Decades Have Been Spent In Search For a New Fuel
Arguably, the Western World has sought an alternative to oil since the formation of OPEC in 1960. Originally founded by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, OPEC forever broke the stranglehold of the Seven Sisters, shifting control of the globe's most precious commodity to the Middle East and igniting a substitution race that continues to this day.
With relations between the Middle East and the USA once again strained, people have begun to fear a repeat of the 1973 oil crisis. Add this to the overarching megatrend towards cleaner, more efficient energy generation, and one can understand why oil has never been so unpopular in the West.
As more and more countries scramble to avoid fossil fuels, lithium is looking like the most promising emergent commodity in history. From any perspective, Chile is the obvious monarch in this scenario since it holds the largest volume of brine at the highest grade with the lowest production costs.
Plenty of Room at the Table
Chile was dubbed "The Saudi Arabia of Lithium" by a number of industry leaders almost a decade ago. In terms
of reserves, Chile accounts for 47% of the world's known lithium reserves or 7.5MT. However from a production perspective, Chile
only accounts for a third of global production- 74,730 tonnes LCE. As such, one can understand that substantial capacity remains to be exploited, and the abovementioned Lithium Chile (TSX.V: LITH) (OTCQB: LTMCF) is already feeling the positive impact of having one of the largest Chilean portfolios, with
16% added to the company's share price since the beginning of April.
For decades, the Chilean Government granted production contracts entirely to SQM and Albermarle, but Government has since woken up to the urgency that more mines are needed in earnest, not just more explorers. Recently, the nation installed a new policy framework that finally allowed private investors to obtain exploitation and export rights, meaning that explorers such as Lithium Chile are in the enviable position of being in the right place at the right time, with some of Chile's most desirable lithium assets.