RE: One for MO7 Feb 2022 07:30
Vis - a hell of a lot to unpack from that article.
I'm off to work but will try and keep it short and there will be gaps.
The price of a ton is to me as an investor largely not of that much interest. Why would I say that ?
Well as the article points out 2 things will happen -
1 - more lithium supply of poorer quality OR more expense will be pushed in to the market. China is famed for its carp lith carb grades and debatable quality of production or those who have difficult or small deposits will rush to grab the higher prices and go bust as the price softens. As seen in 2019.
2 - IF the prices stays this high or higher miners will take profits BUT to the battery makers cost. Where do you think that cost is clawed back ? Either against the end manufacturer or the customer. As lithium batteries are around a third of the weight of a car and the metal is tightly stored there is a lot of cost to 1/3 rd of a car. These also need replacing every 'x' amounts of cycle depending on type , size and grade.
3 - I mentioned at the very start of last week Li- Cycle.
I strongly mention it again. The reply to my suggestion was it was a start up and not worth the value. Possibly true , as can be said of most start ups.
However, just read this article and its the clear way to go. As an investment linked to one of THE 5 main players at the moment ( 24m may have some disrupter potential here along with its partners VW FREYR USA ) but Li are working with LG Energy supplier to Tesla amongst many others. They have some huge supply of recycle material coming their way in the next few years as old batteries get replaced and year by year as EV take up grows so will their model. This is the low point. Buy low sell high is the basics to making money ?
4 - If the lithium market cannot get prices lower and more sustainable to growth or long term 5-10 year supply contracts, then the market could slow.
Only one sector will benefit strongly from this - FCEV hydrogen tank fuel cells with fill up only taking 5 mins. Not much longer than a standard petrol fill.
Nel hydrogen are world leaders and want something like $1.00 per unit or close to fossil costs now.
Got to go now but there are so many points in this article its a great read and ny views are only that. I could have written 3/4 other possible views that differ.
At the moment they are struggling to fill the lithium demand. This may open doors for the strongest miners OR another type of fuel supply. Everything to fight for is on the table.
CEO if NEL hydrogen said to me last week. "It is a battle out there to win against so much competition".
Nel could go for every contract but cannot physically supply. No matter how big a lithium mine, it cannot supply for ever with 20 contracts requests for limited metal. Same for CUSN and all the others.
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