Mike discusses his trip to London where he took in the LME week which is a meeting held by the metals industry. There was quite a buzz around nickel and a recognition that E.V. batteries will require more. The theme throughout the conference was the battery metals and it reminded him of the start of the China-led supercycle. Lithium and cobalt have been well established as an investment theme over the last year with many junior companies are entering the space. Copper is also emerging as a story due to additional demand for use in electric vehicles.
In lithium, there is an unprecedented demand driven story combined with supply constraints. Currently, there are 200k tons of demand which is expected to increase to at least 800k by 2025. The market is constrained by long lead times to bring a mine online typically seven years.
Unlike many other metals, lithium has little in the way of price elasticity. Lithium is critical to battery applications nothing else that will substitute. He has never seen such a perfect storm in a metal.
Battery technology is moving toward more nickel and less cobalt. They are concerned about cobalt supply but also the fact that cobalt does not contribute to battery performance. It is used to mitigate thermal inefficiencies. Higher nickel should increase capacity and lower cost.
He sees continued price increases in lithium. It’s a very reactive element. You can’t purchase and store it in a warehouse. It’s is extremely difficult to source lithium right now where future supply will come from is a real head-scratcher. There is no doubt that prices are going much higher.
He discusses how to get a position in the lithium space.
Talking Points From This Week’s Episode
• Price in-elasticity will drive prices higher.
• Lithium mines typically take seven years to bring on-line.
• Battery manufacturing requires lithium there are no substitutes.
• The demand profile is unprecedented looks like a perfect storm.
Mike Beck is the founder and Managing Director of Regent Advisors LLC, a corporate finance advisory and investment firm. He has advised on equity and debt financings for private and public companies in the natural resources sector, including Signet Petroleum Limited, West African Minerals Corporation, Polo Resources Limited, Direct Petroleum Exploration Inc., Titanium Resources Group, Copper Development Corporation, UraMin Inc., Diamond Fields International Ltd., Weda Bay Minerals Inc., Regent Pacific Group Limited and CCEC Ltd.
Mr. Beck was a Managing Director at N M Rothschild & Sons with responsibility for the firm’s mining, oil and gas advisory and investment activities. Prior thereto, Mr. Beck was the founder and President of Librion Group Inc., a corporate finance boutique. He also was with the International Finance Corporation of the World Bank Group, where he oversaw the structuring and financing of a large number of natural resource projects in Africa. Mr. Beck has also been a founder or co-founder of a number of companies listed on the Canadian, Australian and London stock exchanges. He has an M.S. in Engineering from Princeton University and a B.S. (High Honors) in Engineering from Rutgers University.
By: Collin Kettell (November 06, 2017)
