Lithium, once a boring old element, is now one of the hottest commodities. Gold’s luster fell with a raging bull market, agricultural commodities are at all-time lows, and oil has not advanced much. Lithium on the other hand is boosting entire economies. The real question is why. German and France are part of many countries making mandates to push down petroleum powered cars and attractive subsidies are given to electric vehicles. Domestically, Tesla is one of the fastest growing companies dominating the attention of the automotive industry. The real power behind an electric vehicle is its battery, and just like the phone in your pocket chances are its lithium powered. Lithium’s demand is expected to grow 400% by 2025 and beyond these projections are still high growth numbers. The U.S., China, and the E.U. are rushing to create lithium manufacturing plants. Tesla’s Gigafactory is a prime example of this, one of the largest buildings in the world and with their projected number of selling 500,000 cars in 2018 they will need the annual supply of today’s lithium-ion batteries. Electric vehicles currently do not exceed the lithium demand of consumer applications such as electronic devices, but this will change by analyst’s predictions in 2022 and rapidly increase and perhaps double by 2030.
Lithium is mostly centered in three countries in South America including Argentina, Chile, and Bolivia. The Olaroz salt flats hold 54% of the world’s lithium supply, but today only produces 6% of the world’s output. Regulators in these countries are pushing to make their mining and transportation companies the king of lithium. Macri of Argentina rushed when elected to office in 2015 to deregulate the entire industry and hold the success of the booming industry and addition of jobs to his programs and policies. So far he has been successful. Chile and Argentina are leading right now, and Chile’s entire stock market in the Olaroz salt flats. SQM’s, or Sociedad Quimica y Minera de Chile, ADR is at over 50, with a low of $13.50 in 2015. That’s over 300% return in two years in a large cap company. The sustained momentum of the growth in these mining companies in South America are somewhat dependent on electric vehicles, but not entirely. Leaders in those countries are seeing that they can account for more of the world’s supply when they hold the majority supply. Outside investment into these operations are not quite large and there is still the issue of leadership with politicians in these countries constantly being probed on money laundering and fraud charges. Nevertheless, Argentina, Chile, and Bolivia can become the lithium superpowers of the world.