Targeting the Two Hottest Commodities in the World As future...

Targeting the Two Hottest Commodities in the World
As future supplies of lithium and cobalt promises to fall well below soaring demand, the name of the game is stake out new potential lithium acreage and get an early foothold on cornering the market share for what is no less than an energy revolution.
The surge this year in lithium spot prices in China coupled with the ravaging hunger for lithium-ion batteries and power storage solutions has triggered fears that we are on the edge of a major supply problem—but it’s a euphoric problem for lithium exploration companies and it has opened up the playing field to new entrants.
It’s even more euphoric when you come across a company that is cornering new market share for both of these commodities because the line-up of supermajor companies that are going to be scrabbling for supply is impressive—even if we just consider those investing in electric vehicles. By 2020, it is estimated that one-fifth of cobalt demand will come from EVs.
According to Deutsche Bank, demand for lithium will rise from 209,000 tonnes in 2016 to 534,000 tonnes in 2025.
Tesla Motors is leading the market for now because competition is all about lithium-ion batteries, and it just flipped the switch on its gigafactory in Nevada. German and Chinese competitors are racing to the finish line as well, making this a very heated battle for market share. It will only be Tesla’s lack of battery supply that could give its competitors—like BMW (NASDAQ:BAMXF), Volkswagen (NASDAQ:VLKAF), and Daimler’s (NASDAQ: DDAIF) Mercedes-Benz—a chance to cut in.
By 2018, Tesla predicts it will churn out 35 gigawatts of batteries per year. It’s a massive amount that surpasses more than what the rest of the world combined produces. In other words, one of Elon Musk’s many claims to fame will be doubling global battery production capacity as early as 2018.
And while the mass production of Tesla’s Model 3 electric sedan is one of the more exciting and visible drivers of demand—with 370,000 vehicles already ordered—there are other major drivers, such as massive energy storage systems, that will push demand to exponentially higher.

Volkswagen (OTCPK:VLKAY) is sure that a whopping 25% of its car sales by 2025 will be EVs, and the World Energy Council expects 1 in 6 cars sold in 2020 will be EVs. By 2022, according to Bloomberg, EVs will be cheaper than traditional vehicles.


And with a mind-boggling 12 battery gigafactories on the books globally, we’re looking at a supply and demand equation that is overwhelming in favor of the new lithium miner. LG Chem (OTC:LGCEY, Foxconn, BYD (OCTPK:BYDDY) and Boston Power are all building new battery factories, too—among others. Imagine the manufacturing capacity here that requires monumental amounts of lithium and cobalt that we simply won’t have.
With both cobalt and lithium exploration projects—it’s hard to find a junior set-up that is more strategically positioned than LiCo Energy Metals to take advantage of the fundamental reality of this energy revolution.

By. James Burgess of Oilprice.com