Goldman Sachs calls it “the new gasoline,” and while this quote has helped inflate something of a bubble in lithium stocks, it’s not all hype. There’s a lot of substance behind the enthusiasm for this commodity and conditions appear ripe for one of those rare commodity bull runs that create significant wealth. For those with an appetite for the higher risk, higher return ideas, I give you Lithium X Energy Corp., a junior explorer backed by proven people that’s already off to an aggressive start.
Lithium is the new gasoline because it appears that Tesla and other electric-car makers will gradually take market share away from Earth-destroying combustion engines. Goldman expects that share to rise seven-fold, to about 22 per cent, over the next decade. (Lithium is used in lithium-ion batteries in electric cars, as well as many other kinds of batteries, such as those in smart phones.)
Annual lithium carbonate equivalent demand is currently 160,000 tonnes. Goldman estimates that a 1-per-cent increase in electric-battery car penetration will increase demand by a staggering 45 per cent. That supply, meanwhile, is temporarily constrained by a variety of issues, including recent temporary mine shutdowns and the fact big players are buying up future production. As a result, prices have skyrocketed, rising 50 per cent in the first quarter alone after a stiff increase last year. Prices for lithium carbonate in China have risen from about $8,000 (U.S.) a tonne near the end of 2015 to just below $20,000 a tonne now, according to Citi Research…
Source: As lithium becomes ‘the new gasoline,’ this stock is worth a look – The Globe and Mail