Gerardo Del Real: Lithium Investments Are About to Pay Off

Back in November I explained that the electrification of everything remained as strong and real as it was when I first mentioned it in 2016.

I also told you that the better names in the lithium space had likely bottomed and that 2020 should provide relief for companies that managed to advance assets in a meaningful way.

Here’s a chart of Lithium Americas during the past three months:

lac 1month chart

Here’s a chart of Orocobre:

orocobre 1 month chart

Even tiny junior miners like Advantage Lithium are catching a bid from recent all-time lows:

advantage lithium 3 month chart

The rebound is a brief respite from a brutal 2019 that ended with Nemaska Lithium being forced to file for bankruptcy protection.

Nemaska wasn’t the only company that faced challenges.

SQM was dealt a blow when Chile’s environmental court upheld a complaint about the company’s use of water in the Atacama, raising doubts about the timeframe for its upcoming expansions in the region.

SQM had planned to increase its total chemical output to 65,000 tonnes by the end of 2020.

It didn’t help that prices for the lithium carbonate index and the hydroxide index were down 35.2% and 38.9% respectively, according to Benchmark Mineral Intelligence.

benchmark lithium price index

On the demand side, there are challenges but there are also green shoots.

Despite an underperforming 2019, China has renewed its commitment to reach 2 million electric vehicles in 2020.

Tesla — with stock reaching all-time highs — announced initial production from its Gigafactory 3 in December.

Tesla broke ground on its Gigafactory 3 in Shanghai in early 2019. Less than a year later, the company is producing sales-ready Tesla Model 3s.

Tesla’s success in China bodes well for its plans in Germany as it prepares for the construction phase of Gigafactory 4 in Berlin.

Jeep has announced plans to offer all-electric versions of its models in 2022 and Volkswagen’s target of 1 million electric cars is expected to be reached end of 2023, two years earlier than previously predicted.

The Volkswagen brand expects 1.5 million electric cars to be produced in 2025.

The company has also announced plans to develop, test, and produce battery cells. A battery cell factory with a capacity of 16 gigawatt-hours is to be developed in Salzgitter in 2020.

The start of production is planned for the end of 2023/beginning of 2024 and the company has entered into a joint venture with the Swedish battery manufacturer Northvolt.

Hyundai, which boasted a lineup that included 24 electric models in 2019, will expand to 13 hybrids, six plug-in hybrids, 23 battery electric vehicles, and two fuel-cell electric vehicles by 2025, for a total of up to 44 vehicles by 2025.

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