Welcome to the Age of Lithium-Ion
Big Oil Turns to Lithium
“Welcome to the Lithium-ion age.”
Deutsche Bank recently released a report with this statement as the headline, which sounds a lot like everything else in the media today... only this time it's not just hype.
There should be no doubt anymore that the lithium age is happening right now, and even the world's largest investment banks are starting to support it.
Now, even though Deutsche Bank was the most recent addition to the lithium bandwagon, it certainly won't be the last.
And even though it's way past the time when individual investors should've started listening, that doesn't necessarily mean it's too late...
In fact, the buying opportunity may have just arrived.
Look, these major banks didn't just decide on a whim that the lithium sector is in a long-term bull market.
I know that given the current demand for lithium, there's enough of it on Earth to cover it for nearly 600 years.
There is, however, a little issue that comes into play... not all lithium supplies are created equal. Traditional hard rock mining for extracting lithium out of the ground is quickly giving way to a cheaper, more effective method using lithium brines. That also tends to give some lithium players a huge advantage over others.
And as Deutsche Bank warned, this could be a double-edged sword, with over-extracting lithium from brines leading to a possible supply glut.
But that, dear reader, is hardly a threat...
Understand, the lithium gold rush is just starting. Companies of all sizes are swarming to areas in Australia, Canada, and Nevada to get themselves a piece of the pie — but the vast majority of these projects are either still in the exploration phase or only recently producing.
And although the world's largest lithium companies are losing ground, they're far from out of the picture.
Deutsche Bank, however, also expects demand for lithium to surge to 535,000 tonnes by 2015 — a 190% increase over current consumption levels.
To put that in perspective, the world's top-producing countries last year came up with less than 35,000 tonnes of lithium between them.
In other words, there'll be no shortage of buyers anytime soon.
But if estimates from big banks aren't your cup of tea, keep in mind that they aren't the only ones drooling over the lithium revolution.
Big Oil Goes Lithium
Earlier this week, two companies made major moves into the lithium industry.
First, let's talk about Altura Mining.
This Australian company has historically brought in most of its income from iron ore and coal operations.
If you've been watching the markets, you'll know both of these industries are getting hit hard these days — especially coal.
So it's no surprise that Altura is looking for other sources of income. It turns out they chose lithium.
Altura has been developing its Pilgangoora Lithium project in Western Australia since 2011 but has only recently gone through the motions of getting approval for commercial mining.
The company's feasibility study was completed this April, and estimates find that the company could reach 215,000 tonnes of average annual production once it reaches capacity.
And even though that's a good amount, Altura isn't the most impressive move into lithium that we've seen lately.
Recently, French oil major Total S.A. announced its acquisition of Saft, a leading French lithium battery manufacturer. Saft's batteries can be found in small electronic devices as well as telecommunication infrastructures, military vehicles, and even satellites.
Watching a major oil company leap into the lithium battery market is quite interesting.
Do things get any more inevitable than that?
Saft's technology will be combined with the solar operations Total gained in its SunPower acquisition in 2011, which will give the traditionally fossil fuel–focused company a strong basis in renewable energies.
Is there even a question about the future of energy storage for renewables?
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.
What We Say
Even Deutsche Bank couldn't touch on the lithium revolution without mentioning the company behind the wheel: Tesla.
The bank expects that the growth of electric vehicles like Tesla's will be a “globally significant thematic” in the increasing use of lithium.
And there's no telling which companies will take the stage after Tesla, but it's safe to say that a company vying for the carmaker's business right now will be set for years to come.
And that's why we focused in on one particular company — with not only the aspiration but the real potential to be Tesla's first outside lithium supplier — in my latest report.
You'll want to know about this stock right now, before it gets out that the company is so close to achieving this goal. You can read the report right away by clicking here.
Until next time,
A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.
Energy Demand will Increase 58% Over the Next 25 Years
After getting your report, you’ll begin receiving the Energy and Capital e-Letter, delivered to your inbox daily.