Saturday, November 13, 2010

Lithium producers prospering as price, and demand, increases globally.

General Electric is buying 25,000 electric vehicles, from a number of providers, including approx 12,000  Chevrolet Volts from GM.

General Electric wants to own a large chunk of the battery charging market, which is expected to grow expotentially, as the EV and the hybrid electric vehicle, becomes more ubiquitous over the next few years.

Owning an electric vehicle fleet is a high profile way of showing their support for the infant market in Electric Vehicle production.

The Nissan Leaf (all electric car) debuts next month and the initial run, a modest 40,000, is already pre-sold.
China (the country) announced two weeks ago that they are investing $15 Billion dollars in their electric vehicle industry. All around the world, lab rats are working on a better battery, and the common denominator in all of the research is the solf metal, lithiumLIthium ion, lithium air, lithium this and lithium that.

 Currently, it is the mobile web (cell phones, smart phones, laptops, tablet computers, glass, ceramics and even nuclear technology) That is propelling the price of lithium carbonate (used in battery production) to $6600 per ton. (It was $2200 per ton in 2004)
The reason is that, in comparison to other compounds, lithium holds triple the charge, with half the density as other compounds utilized in battery production. The good news for investors, is that the industry growing around the electrification of the transportation system, the mobile web system, and the energy storage needed for wind and solar energy, is focused around this  growing precious resource.
The electric vehicle market hasn't yet made a dent in lithium prices, simply because production is only ramping up this year. EV batteries have not yet been priced in, however, as that market grows, so grows the demand (and price) for lithium.

In this writers opinion, this is the investment opportunity of the next decade.

 It is why I have been writing so much about this industry in these pages, for a year now. It is why I am invested and have my money where my mouth is. It is also why these stocks are up between 25 and 400% this year.

Here is a list of the lithium companies, starting with the four largest suppliers currently in operation as well as a number of wanna be, juniors, with great properties and great potential for either development, takeovers or both.

I own 5 of these stocks. (one of the big four and 4 of the juniors) I am continuously looking at other plays in the sector as they develop.

Lithium Stocks:

There are four lithium companies currently producing lithium on the world market that can be labelled, essentially, the BIG FOUR.  They are:

 1. SQM de Chile S.A. (NYSE-SQM) 
2. Talison Lithium (TSE-TLH)*
3. Rockwood Holdings (Chemetell) (NYSE-ROC)
4. FMC Corp (NYSE-FMC)

Currently, these four companies produce 85% of the worlds lithium.

The other 15% is spread among smaller producers and junior miners.
Here is a list of most of those companies, in order, which may or may not be on your radar screen as investors in this sector, but should be.

5.Rodinia Lithium (formerly Rodinia minerals)  (TSX V:RM)
6.Western Lithium (TSX V:WLC)
7.TNR Gold Corp (TSX V:TNR)*
8.Galaxy Resources (ASX:GXY)
9.Orocobre (ASX:ORE)
10. Canada Lithium (TSX V:CLQ)
11. First Lithium (TSX V:MCI)*
12. Reed Resources (ASX:RDR)
13. Linear Metals (TSX:LRM
14. Electric Metal Inc (TSX.EMI)
15. Lomiko Metals Inc. (TSX.LMR)

You can guess which 5 of these stocks I own, or you can do your own due dilligence. These 15 stocks are a great place to start that.

I hope your Retirefund grows expotentially, like this market is already doing.


Previous articles:
*TSX listing helps Lithium Giant increase output - Financial Post*
Rodina Lithium Sept 2010 drill results
Largest supplier of lithium into China, goes public
China charges into Electric Vehicle market
Rodina Lithium to present alongside major auto and battery makers at U.S. conference
Lithium, gold and REEs in one penny stock
Lithium demand will increase four fold by 2017
New Nano Battery will have many uses

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David said...

Hi there,

I like your blog and love your coverage on lithium industry. You're one of the few sources covering lithium and seem to know your stuff. I have already made 12% on my lithium investments too.

I am just curious as to what is your preferred strategy? When you invest in lithium stocks, do you buy on dips and sell on spikes? or do you buy and hold for the longterm?

Look forward to feedback.

H. Pelham said...

Thanks David for the positive comments.

I am holding several stocks (such as Talison) for the long term as I see this industry in it's infancy, with huge upside where some companies have a big head start.

Having said that, I am also continously looking at the juniors, their stake in the game, the location of their reserves, local government pros/cons, and how far along they have brought their business so as to assess their potential for both development and/or takeovers.

We got into Talison by buying Salares Lithium, which Talison swallowed this summer, returning 100% on the first day of trading and 67% since that time, as an example. Talison is a long term hold for us because they are a market leader, just went public, and haven't been picked up ty ETF's or indexes yet (except for Byron Capital Markets, which is also a good source of information)

There are some dogs out there, so do your due dilligence before investing.

Hope this answers your question.

David said...

thanks for the feedback. I'm glad you share the same positive outlook at TLH.TO as I do. Its amazing how its still only priced at just over $5 a share for now. In the near future, it can be in the same league as SQM, FMC in terms of stock evaluation, esp. as electric cars and peak oil become relevant.

I also looking at Canada Lithium Corp. and Orocobre as the next line of potential producers/takeover firms. They have good properties and should come to production in 2012/early 2013.

David said...

Hi HP,

I been doing some research myself on CLQ.TO and ORL.TO. One is a very strategic hard rock LI play for North America and its close proximity to North american auto sector. Its probably the best available mine in North America. Onthe other hand, is a brine mine that will enjoy lower overhead costs and will be the next producer of LI ready in 2012 in Argentina. Both these players are expected to be in production in 2012 (CLQ later in the yr). How important is this timeline for them to produce in 2012 for them to grab some market share?

H. Pelham said...

Hello again David,

While I do not currently own shares in either company (considering both) I believe that the 2012 timeline is critical to both, and each one has it's pros and cons.

Brine producers will certainly have an edge in production costs, however the hard rock miners, like CLQ should be a little faster to market.
CLQ will also have an edge due to location. Northern Quebec is a strategic mining area, completely supported by the provincial government, with infrastructure in place. (I think I just convinced myself to buy some CLQ today)

Good luck.

City girl, Country Life said...

Hi there,
I like your Blog great site for everything Lithium.
I've been following and trading Lithium, batteries and EV's since 2008.
Back then there was still alot of skeptics saying that it would happen a full electric vehicle.
I bought shares in 'Build Your Dreams' (BYDDF)OTC
back in Dec 2008, and a few weeks later Warren Buffet bought a stake in the company.
BYD is the largest maker of batteries in China , maybe the world, can't recall.
I bought in a around $3.50.
I also have Canadian Lithium which has done well for me and I'll continue to hold and accumulate shares.
Another one I have is New World Resources which is a brine mine in Bolivia, pretty speculative ,and I thought i would bet on the closelogy to large players in Bolivia and Nevada.
I had a company called Electrovaya (EFL.TO) maker of batteries, about 6 months ago , buy it 's volatility drove me crazy .

Great site
glad i found you

H. Pelham said...

Thanks Donna. Sounds like youève done as well with your lithium investments as we have.

Your investment in BYD was a good call. Good luck with your Li investments.