Why Lithium Is Not Palladium
Similar stories with very different endings...
These two metals are different in a variety of very obvious ways, but you may want to keep some of their similarities in mind too...
For instance, they've both been touted as one of the most important metals in the energy sector.
Once upon a time, palladium was the key to the world of cars. It's used in catalytic converters to induce oxidation and reduce overall emissions.
When Ford Motors began using it in its cars in the late 1980's, demand took off.
And that wasn't all: at the time, there was said to be a shortage of the metal, which made the price skyrocket in just a few years.
Investors were thrilled to say the least.
Then there was the letdown: palladium wasn't rare. Russia was found to have a huge stockpile of it, and while it's still a valuable metal today, it lost a lot of those gains it made when it was thought to be in short supply.
Lithium has a similar story: its biggest gains are being made in cars, namely electric vehicles.
As the world pushes for cleaner energy sources all around, lithium batteries are becoming an essential part of almost every technology we use today.
And, like people once thought of palladium, lithium supplies are falling behind demand.
Only this time, it's actually true.
There's no backup supply of lithium, and in fact there are only a few working producers on the market.
The big names in lithium, Albemarle, SQM, and FMC won't be controlling the market for much longer.
New companies such as Chinese Jiangxi Ganfenc Lithium, British Rare Earth Minerals, and American Pure Energy Minerals are already targeting new lithium mines to bring the world's massive reserves to the surface.
It's an expensive process — one tonne of useable lithium can cost between $2,000 and $3,000 to produce from a brine deposit, and around $4,000 for hard-rock mining.
But for quick developers, it will be worth it.
No doubt, EV's are quickly breaking out of their niche and will soon be mainstream.
2020 seems to be the consensus estimate for when lithium supplies will no longer be able to cover demand, in large part because of the growing number of EV's coming out.
As the article states, it's a situation that “commodity bulls dream of.”
To continue reading about lithium's investment potential, simply click here to read the Bloomberg Gadfly article.
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.
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