A New Lithium War Is About To Begin
It’s the modern gold rush. Around the world, the most sought-after mineral isn’t a precious metal, nor is it oil and gas…it’s lithium.
Lithium, or “white petroleum” as some call it, has become a crucial element in today’s high-tech economy.
Demand for lithium is soaring, and producers are frantically searching for new sources of supply. Prices have doubled in the last two years, rising as high as $16,500 per ton.
The biggest reason for the surge? The immense demand for lithium-ion batteries needed to power electric vehicles (EV), cell phone and wind turbines.
As the Wall Street Journal reported, the surge in demand has pushed lithium miners to new areas in search of rich deposits.
Traditional production of lithium and lithium-ion batteries is concentrated in a few key areas, but with demand set to increase dramatically in the coming years, investors are searching for creative new ways to increase global supply.
The fact that China is trying to corner the market has made the search for new deposits even more intense, as U.S. and European firms try to get around Chinese domination.
For the last five years, the commodities world has focused on the epic showdown between OPEC and U.S. shale drillers for oil market share. But it’s the war over “white petroleum” that will dominate the next decade.
One Door Closes, Another Opens
A trade war has broken out between China and the United States. While that’s bad news for some industries that rely on Chinese imports, its good news for North American lithium miners.
In early April, the U.S. government slapped a big tariff on imported Chinese lithium batteries, part of a tariff on Chinese goods worth $50 billion. That means that lithium miners will see a bigger market for their products—and a surge of investment into North American mining, which has the lowest risk factor in the world.
China may be cornering the market on South American lithium in order to feed its battery factories and churn out electric cars, but protectionist policies by the U.S. and aggressive expansion into European lithium production may cut the Chinese out of the global battery market.
Booming demand for lithium could be fed by the lithium mines of Canada & USA —turning junior miners into major players virtually overnight.
Just as the world of oil has seen intense competition between OPEC and U.S. shale, the lithium world may be defined by its own war: China vs. Everyone Else.
