There are three good reasons the lithium story is probably about to go into overdrive.
For one, the bull market is only accelerating. By 2030, tens of millions of electric vehicles could be on the roads, especially with global governments pushing for them. Even major automakers are abandoning internal combustion engines for EVs.
Two, there’s a major supply-demand imbalance with lithium. In fact, every EV that rolls out needs about 22 pounds of lithium. Problem is, there’s just not enough supply to meet all the demand. That’s the reason why lithium prices are skyrocketing… and may not come down any time soon.
Even the International Energy Agency warned: “The supply of critical minerals crucial for technologies such as wind turbines and electric vehicles will have to be ramped up over the next decades if the planet’s climate targets are to be met.”
Three, the U.S. government could soon throw its weight—and money—behind lithium.
At the moment, there’s speculation President Biden could invoke a Cold War-era defense law this week to encourage domestic production of metals needed to make EV batteries.
According to a Bloomberg report, that law could allow the government to use a $750 million Title III fund to help increase domestic production of essential metals and minerals, including lithium. This could be extremely beneficial for several companies, but perhaps especially Lithium Americas (LAC), which is close to development with its Thacker Pass lithium project.
Results of a feasibility study on the first phase of Thacker Pass (for at least 30,000-35,000 tpa of lithium carbonate) are expected by the year’s end. Engineering is underway to consider a 20,000 tpa lithium hydroxide chemical conversion plant, to provide flexibility to meet potential customer and partner needs.
This explains why shares of Lithium Americas were up more than $5 a share on Wednesday.
With plenty of catalysts, we expect Lithium Americas and other lithium stocks to accelerate to higher highs.
And all this, as demand continues to massively outstrip supply.
