Dear Reader,
In the post lithium-bubble era, the most fundamental question out there is: What is a fair price?
$80,000 per ton was clearly too much when that milestone was achieved at the end of 2022, and $13,400 per ton, where we bottomed out at the end of this February, was clearly too little.
But where in between should the fair market price lie?
An answer may be on the way.
Next week, Albemarle (NYSE:ALB), the world’s biggest lithium producer — headquartered in Charlotte, North Carolina — will begin a series of auctions to help establish exactly where that point of balance may lie.
The first ‘bidding event’ is scheduled to start on March 26 and will auction off 10,000 metric tons of spodumene ore — a lithium-rich mineral typically containing 6-8% lithium-oxide and currently trading at around $900/ton.
A natural question is: ‘why now?’. The answer may be a simple one.
Current market prices, while still 75% or more off the highs, have stabilized over the last several weeks, even showing some signs of life with a 10% bounce. Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
The Weak Hands Have Left The Lithium Market
I of course cannot speak for Albemarle, but anybody in its position may be taking recent lithium market stability as a sign that the panic is truly over.
For better or worse, we will find out next Tuesday.
Albemarle isn’t the only firm out there sticking its neck out a bit for the preeminent energy medium of the 21st century.
The world’s second biggest lithium producer, Sociedad Química y Minera de Chile S.A. (NYSE:SQM) has earmarked $1.4B, more than 10% of its current valuation, to increase lithium production in its home country of Chile — with 210,000 tons expected this year.
SQM is plowing forward with the investment despite a 48% drop in revenue between the end of 2022 and 2023.
For those who’ve been waiting for more good news before throwing their hat back into the ring, this may just be the thing, as it will send a signal to the rest of the skittish field that the dust has finally settled.
What’s next? A decade and a half of accelerating growth in demand. Nothing less.
Investments are set to ride the trend from the depths of the post-bubble lows all the way to new highs as the market catches up with rising lithium demand, and they’ll ideally follow two criterias.
North America Is Lithium’s Future Growth Market
One of them is that the firm be North American, both in corporate location, as well as the location of its principle asset(s).
The reason there is simple. Currently, despite having huge dormant resources, the US produces less than 2% of the world’s lithium.
That means this market is a growth market like no other, and it also helps that being located close to home makes the risk of political turmoil or corporate thievery close to zero.
The second criteria is that the principle property must be fundamentally unique, offering benefits disproportionate to the costs either through accessibility, natural properties or both.
Right now, there is a company that fits both those requirements right off the bat and in spectacular fashion.
Based in British Columbia and operating on a property close to the Oregon-Nevada border, this company is sitting on the largest known lithium deposit in the world.
Up To 120 Million Tons Of Lithium Stuck In An Ancient Volcano Remnant
That’s no exaggeration. The inferred lithium present on this one piece of very unusual geology contains up to 6 times as much lithium as the world’s next biggest lithium resource.
The deposit has been deemed so important that just last week, the Biden Administration approved a multi-billion dollar loan from the Department of Energy to develop the property.
It could end up being the resource story of the century when all is said and done — with implications big enough to be concerning on the other side of the world in Beijing, where lithium refinement has become a strategic weapon to lord over the consumerist west.
Whatever you decide, getting informed is the first step.
For the benefit of my premium subscribers, I put together this video presentation that lays it all out.
From the incredible history of geological formation (if you’re interested in Earth science, this story is for you), all the way to the future of the lithium market itself, it’s all in there in a quick and easy to digest format.
Want to check it out? Start the video by clicking here. Fortune favors the bold, Alex Koyfman His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.
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