Lithium prices are down 24% from their peak last year, and they remain under pressure. Yet if you’re a lithium bull, like I am, there is news to warm your heart.
News that could help you build a small fortune.
For one thing, prices stopped going down last month. In fact, lithium prices rose in China. For another, demand for battery-grade lithium is booming. Exactly how much depends on who you ask and what time frame. But rising demand in the face of it points to another surge.
For example, Albemarle Corp. (NYSE: ALB), a major lithium producer, reported earnings last week. It said it expects global lithium demand to grow 21% annually. And Albemarle sees a tight market getting tighter.
Meanwhile, Benchmark Mineral Intelligence expects lithium demand will increase eightfold in the next decade.
Does that sound high? The fact is, forecasters, buyers and producers have consistently underestimated demand growth, over and over again. In other words, Benchmark’s price target for lithium may be too low.
Here’s a chart of raw material demand for “megafactories,” the huge factories that make batteries for electric vehicles (EVs) and other uses. Lithium is in yellow in the chart below.
Benchmark says there are now 70 lithium-ion battery megafactories under construction on four continents. The analysts expect this alternative energy tsunami to send demand for graphite, cobalt, nickel — and yes, lithium — soaring.
Related post: Gold is on the launch pad, too. Get my FREE report, along with a red-hot pick, here.
Speaking of those megafactories — 46 of them are under construction in China.
Here’s more news out of China that is quite bullish for lithium …
- Chinese companies now control nearly half the global lithium production. In South America alone, China has invested $4.2 billion in lithium deals.
- China also controls 60% of the electric battery production capacity.
- By 2030, Goldman Sachs predicts China could supply 60% of the world’s EVs.
Last week, I laid out a bullish case for lithium in my article, “Is ‘Sleeping Lion’ Lithium Ready to Wake Up and Roar?”
Now, let me show you the kind of stock you should look at as the next lithium rally moves down the food chain.
Piedmont Lithium (Nasdaq: PLL) is developing a new lithium project in the heart of North Carolina’s lithium belt, 25 miles away from Charlotte. Indeed, its project is down the road from two major lithium companies.
I recently had a chance to sit down for a chat with Piedmont’s CEO, Keith Phillips. You can watch that interview here:
Piedmont has a high-grade resource. It is drilling to expand that resource. It’s located just a few miles away from major producers. Plus, Piedmont is applying for permits, and should have a definitive feasibility study in a year.
North Carolina is a mining-friendly state, and the infrastructure is good.
Piedmont just raised cash, and that should keep it going for a while. It will have to raise more cash to complete the drilling, as well as build out the project, should it decide to go ahead.
This is not an official recommendation. This could be a volatile stock. You know your own risk profile.
But as the lithium market heats up, companies like Piedmont should get plenty of attention. Start making your own shopping list. The next surge is coming.
All the best,
Sean
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