Lithium is now a critical metal for Europe. In September 2020, the EU added lithium to its Critical Raw Materials (CRMs) list, warning of the need for a continuous flow of lithium supply for zero-emission mobility. Mentioned in today’s commentary includes: Enphase Energy (NASDAQ: ENPH), NextEra Energy (NYSE: NEE), FMC Corp. (NYSE: FMC), Celestica (NYSE: CLS) (TSX:CLS), Lithium Americas Corp. (NYSE: LAC) (TSX:LAC)
They are investing billions, including…$3.9 billion approved in December 2019 for the EU’s first battery subsidies with seven countries to catch up to Asian competitors…$3.5 billion in its second battery-related “European Battery Innovation” project approved by the European Commission in 2021…and $9.2 billion in EU structural funds to support innovative battery projects under the Smart Specialisation Platform.
A Game Changer For The European Lithium Market
The Bergby Project is a property with recently discovered Lithium mineralization in central Sweden, near to the world-famous Woxna graphite mine and the new Northvolt lithium battery gigafactory. This is already a mineralization discovery. That is expected to grow.
Now, United Lithium (ULTH; ULTHF) is about to further define the discovery at a critical moment for the lithium market. But still, it gets better than this: Bergby may benefit from cost-effective surface and near-surface extraction. In other words, it might turn out to be lithium that’s not only parked right next to the best infrastructure in the world for batteries, but it should also be cheap to get at.
The Bergby project includes three exploration licenses covering 1,903 hectares of prime EU market-bound lithium potential. Now United Lithium (ULTH; ULTHF) will be buying it, on terms and conditions that have been made public.
In Q4 2016, the Bergby discovery showed lithium mineralization in three outcrop areas. In Q4 2017, the first drill program was completed with 28 of the 33 drill holes intersecting lithium mineralization. They’ve found three types of lithium mineralization in Bergby’s boulders and outcrops—all of which are highly promising for the extensive development of lithium. All the lithium minerals are contained in coarse pegmatite, some of which have spodumene crystals up to 30 centimeters in length.
So, it already has a mineralization discovery and a ground magnetic survey appears to show the thickest part of the pegmatite, which was then identified by drilling as well.
Assay results from 41 boulders showed the potential for high-quality lithium. Li2O (lithium oxide) averaged 1.06% and ranged from 0.03% to 4.56%, which is getting close to the theoretical maximum. But even with all the pegmatite showings in these boulders and outcrops, there are still more areas that have never been tested for lithium mineralization.
A tiny, $32-million miner is expected to soon close on a lithium property that they will soon be working at defining the size of its mineralization discovery. This is the moment when junior miners tell the world what they have found.
One of the reasons the EU is throwing billions at the EV market is because they are now importing from Argentina and China. They’re starting a Gigafactory war, even, hoping to create intense competition to push things forward.
They’re offering billions of euros of co-funding to companies willing to build giant battery factories; beyond Tesla. And they want lithium independence. They need lithium independence.
This is the critical moment that makes United Lithium’s lithium exploration project right in Europe’s backyard a premium setup. This lithium could be sold nearby to a Who’s Who of European Lithium Battery Manufacturers companies.
All of them are within a one-day ship ride, including:
- Samsung, which supplies BMW, VW, and Volvo Trucks
- Sk Innovation, supplying Hyundai
- LG Chem (Porsche, Volvo, Audi, Renault, Jaguar)
- Daimler/Mercedes
- And of course, Tesla
PLUS, once the Northvolt lithium battery Gigafactory goes online in Sweden; it will get even better.
Will Europe Replicate The U.S. Lithium Boom?
The world has known for some time that there would eventually be a lithium supply squeeze. All the hype around lithium a few years ago was … premature. Or forward-thinking, depending on how the markets want to look at it.
Some investors jumped the gun and went all in expecting a supply squeeze that never came. Now, that supply squeeze is here, and the proof is in the EV and EV tie-in stocks.
Tesla has gained 420% in just 12 months and is, as always, unstoppable.
Blink Charging Co. which owns, operates, and provides EV charging equipment and networked EV charging services in the United States, has seen 52-week gains of over 2,000%.
Chinese EV maker NIO is up a stunning 1,450% in a year. And the list goes on … because the market is all about the energy transition …And EVs are the most important immediate element of that.
They all need tons of lithium, so that’s one place the big money is looking. BNEF has revealed that a broad measure of global energy transition investments in 2020 clocked in at a record $501.3 billion, good for 9% Y/Y growth.
Battery storage, smart grid, and energy efficiency companies managed to bring in over $8 billion last year; which’s up from $3.8 billion in 2019. Battery storage also saw a huge boost in corporate funding, with 54 deals in 2020 worth $6.6 billion. And VC is starving for all of this. Globally, venture capital funding for our energy transition was 12% higher in 2020, raising $2.6 billion.
There’s no better place to be RIGHT NOW than Europe—the most desperate to gain lithium independence, and the most willing to throw billions of dollars at it. A mineralization discovery already made and now being defined is geographically perfectly positioned to take advantage of new energy policies and funding that will render lithium one of the most strategic metals in the world.
Satisfying Europe’s EV Appetite
Everyone needs lithium. Tesla, Mercedes, Porsche, Volvo, BMW, and more. And now, when the timing couldn’t be better, United Lithium is moving fast to buy a property right in Europe’s back yard … a lithium discovery that if commercialized, can go directly to market and is surrounded not only by other mines and tons of infrastructure but in close proximity to a battery Gigafactory that will come online soon.
A $32-million market cap company buying a project with this much potential is the kind of project that has a high risk/ reward ratio for investors. United Lithium (ULTH; ULTHF) signed an agreement for this project last fall, keeping a close eye on the energy transition winds and the rapidly growing EV appetite—especially in Europe.
The Lithium Boom Is Expected To Accelerate Globally
Renewable energy providers are some of the driver factors in the lithium demand boom, as well. That’s why lithium companies are scrambling to snag deals with companies like Enphase Energy (ENPH). Enphase is a Fremont, California-based company that designs and manufactures software-driven home energy solutions used in solar generation, home energy storage, and web-based monitoring and control.
Despite the tough first half of 2020, however, Enphase has remained a favorite on Wall Street. Since January of last year, Enphase has seen its share price rise by a massive 472%, and it’s only just getting started. As the renewable push kicks into high gear, and with the United States expected to spend over $1.7 trillion on green energy initiatives over the next decade, Enphase might just emerge as one of the biggest winners.
NextEra Energy (NEE) is another shining star in the renewable world. NextEra is the world’s leading producer of wind and solar energy, so it’s no surprise that it has received some love from the ‘millennial dollar.’
Though it’s price movement hasn’t been as exciting as Enphase, it has remained on a consistent upward trajectory. In fact, long-term investors who bought in just 5 years ago would be sitting pretty on 300% returns. And the icing on the cake? It pays dividends.
FMC Corp. (FMC) was founded in 1883, and has been around the block and back. FMC has a long history stretching between many different industries, but within all of them, FMC has remained a leader in innovation.
FMC’s involvement in the lithium industry is particularly notable. The company is one of the top three in lithium and associated technologies. It is one of the largest suppliers into electric vehicle applications using lithium hydroxide.
Celestica (CLS, TSX:CLS) is a key company in the lithium boom due to is role as one of the top manufacturers of electronics in the Americas. Celestica’s wide range of products includes but is not limited to communications solutions, enterprise and cloud services, aerospace and defense products, renewable energy and enough health technology.
Like the rest of the market, Celestica fell victim to the massive selloff sparked by the global COVID-19 pandemic, seeing its share price fall into the $2 range in March 2020. Since then, however, the stock price has soared by nearly 400% to its current trading price of $8.31. As the world races towards a greener future, however, the upside potential for Celestica could be even higher.
Lithium Americas Corp. (LAC, TSX:LAC) is one of North America’s most important and successful pure-play lithium companies. With two world-class lithium projects in Argentina and Nevada, Lithium Americas is well-positioned to ride the wave of growing lithium demand in the years to come. It’s already raised nearly a billion dollars in equity and debt, showing that investors have a ton of interest in the company’s ambitious plans, and it will likely continue its promising growth and expansion for years to come.
Lithium Americas’ efforts have paid off in the market, as well. While many companies across multiple industries struggled last year, Lithium Americas’ stock soared. In February last year, the company’s stock price was sitting at just $5.26, while today it is at $21.12, representing a 300% return for investors who bought in just a year ago.
