In the current market landscape, lithium, the elemental metal, has become a red-hot commodity. Its pivotal role in battery production has led to a surge in optimism among investors, fueled by the growing sales of electric vehicles (EVs) and the companies involved in mining and refining this fundamental resource.
Interestingly, while lithium is a fairly common element, its prices witnessed a staggering ascent of approximately 1,000% from 2021 to the close of 2022, surpassing previous peak levels set in 2017.However, the narrative took a different turn in 2023, with inflationary pressures and prolonged pandemic-related lockdowns in China causing ripple effects. The lithium supply chain is expected to experience a temporary surplus, causing prices to plummet to levels reminiscent of 2021.
Despite this oversupply scenario, the surging demand for batteries, driven by EVs and energy storage solutions for grid distribution, has prompted estimates that project a doubling of lithium demand in the coming years. In the United States, significant government initiatives like the 2021 Infrastructure Investment and Jobs Act allocated $5 billion in federal funding for the development of EV charging stations.
More recently, the 2022 Inflation Reduction Act was implemented, offering incentives to consumers to support President Biden’s ambitious goal of making EVs account for over 50% of new automobile sales by 2030. With the backing of major automakers, the future appears promising for lithium demand. Here’s what you should consider before venturing into investments related to this essential component in battery technology.
Similar to any investment involving basic materials and metals, betting on lithium is not for the faint-hearted. The surge in demand for a material integral to product manufacturing doesn’t automatically translate into increased sales and profits for the companies in the sector. The balance between supply and demand also plays a pivotal role in determining the market price of this foundational material. When supply outstrips demand, prices decline, potentially impacting the sales of material producers, even in the face of overall demand expansion.
As is customary in the mining industry, launching new lithium projects can be a financially demanding endeavor. It often takes several years to reach full-scale production, absorbing substantial financial resources and liquidity in the process.Adding a twist to the situation, Chile has recently thrown a curveball into the mix. The South American nation’s president has expressed intentions to nationalize the lithium industry through state ownership, a move that could significantly affect the financial outcomes of companies operating in Chile and those with lithium mining ambitions in the region. The plan would necessitate approval from Chile’s National Congress before it can move forward. Chile presently stands as the world’s second-largest lithium producer, trailing only behind Australia.
In spite of the challenges and uncertainties, lithium stocks have exhibited resilience, with prices experiencing an upward trajectory over the past decade. One lithium related stock that we would like to draw your attention to is LiTHOS Energy Ltd (CSE: LITS) (OTCQB: LITSF).
In the last month they have made some significant announcement that could potentially impact the stock in a significant way. Aqueous Resources LLC (“Aqueous“), a wholly-owned subsidiary of the Company, received a US$1.3-million-dollar award to support its fully commissioned Denver Colorado pre-treatment and DLE processing facility over the next 18 months. (Source: https://finance.yahoo.com/news/lithos-wholly-owned-subsidiary-aqueous-130000893.html).
As per the press release:
$1.3 Million definitive funding award provides significant cash resources to Denver Lab to preform bench scale tests with brines sourced from Chile, Argentina, and the US.
Aqueous has pre-qualified and commenced application for up to US$30 Million follow-on award under area of interest 1B Phase II from the DOE funding opportunity announced on September 6, 2023.
Up to $150 million of grant funding was announced to support pilot scale facility development and construction of processing plants to produce and refine critical minerals and materials in the United States. This directly aligns with vision and goals of the previously announced Crimson Tide Facility.
The ‘Crimson Tide’ Hydroxide facility will selectively pre-treat raw continental brines, concentrate lithium chloride with DLE, and upgrade the concentrate into a final battery grade product of lithium hydroxide monohydrate.
Facility is strategically located next to Mercedes-Benz US International, Inc., Honda Manufacturing of Alabama, LLC, Hyundai Motor Manufacturing Alabama, LLC. The Alabama site is Hyundai’s first U.S. manufacturing plant and ranks as the state’s third-largest industrial employer tied with Mercedes-Benz.
In regional proximity to the Smackover brine reservoir and all major U.S automobile Manufacturers including Tesla, G.M, and Ford.
In addition, recent up listing to OTCQB allows LiTHOS with Improved accessibility and liquidity to a broad range of private and institutional U.S. investors. Further, this upgrade better aligns the Company with its assets in the United States providing a transparent trading platform for current and future U.S. investors. (Source: https://finance.yahoo.com/news/lithos-now-trades-otcqb-market-130000835.html?.tsrc=fin-srch)
Watch the video below to learn more about LiTHOS
Video Link: https://www.youtube.com/embed/BA1yWveYBYA
To read more about LiTHOS please Click HERE.
Other lithium mining stocks to place on top of radar include Albemarle Corporation (ALB), Sociedad Quimica y Minera de Chile (SQM), Mineral Resources Limited (MALRY), Livent Corporation (LTHM), Lithium Americas Corp. (LAC), Sigma Lithium Corporation (SGML), Ganfeng Lithium Group Co., Ltd. (GNENF), Pilbara Minerals Limited (PILBF)
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