While other commodities are floundering or completely collapsing in this
market, lithium -- the critical mineral in the emerging battery gigafactory
war -- is poised to explode, and going forward Nevada is emerging as the
front line in this pending American lithium boom.
Most of the world's lithium comes from Argentina, Chile, Bolivia,
Australia and China, but American resources being developed by new entrants
into this market have set up the state of Nevada to become the key venue and
proving ground for game-changing trade in this everyday mineral. Nevada is
about to get a boost first from Tesla's (NASDAQ:TSLA) upcoming battery
gigafactory, and then from all of its rivals.
For several years, experts have been predicting a lithium revolution, and
while investors were being coy at first, the reality of the battery
gigafactories is now clear, and nothing has hit this home more poignantly
than Tesla's recent supply agreements with lithium providers who will be the
first beneficiaries of this boom, followed by a second round of lithium brine
developers that are climbing quickly to the forefront.
As Jeb
Handwerger -- founder of Gold Stock Trades -- recently told the Resource
Investor: "This is just the beginning. We're in the early stages of
a revolution in powering transportation and homes. This really is disruptive
technology. Annual growth in the battery space could be around 20 percent,
which means that demand could double every five years. These batteries make
smartphones, laptops, tablets, electric cars and even solar energy
practical."
Tesla -- which will require large quantities of lithium at cheaper
prices--has already signed agreements to purchase lithium from Canadian Bacanora Minerals Ltd
and British Rare Earth Minerals Plc. in Mexico but has indicated that it is
looking closer to home, and particularly in Nevada, which is ground zero for
Tesla's battery units.
For Nevada, there can be no more significant validation than Tesla's
lithium supply agreements. Albemarle Corp. already has the producing Rockwood
mine, but Tesla and other gigafactory contenders are concerned about new
lithium resources.
And the newest entrant on this scene -- Dajin Resources Corp -
has two projects in Nevada, only a short distance from Albemarle's Rockwood
producing mine and in close proximity to Pure Energy Mineral's
lithium development project, which just signed a preliminary supply agreement
with Tesla.
Focused on the exploration of energy metal projects, Dajin has
strategically located targets in Nevada, including over 3,800 acres in Alkali Lake, which is only 12
kilometers from the producing Rockwood Lithium Mine. It also has the Teels Marsh project, which covers
over 3,000 acres in the Mineral County desert lake basin and is about 80
kilometers away from producing mines and new exploration targets that are all
on the site of a volcanic eruption that many believe could have contributed
lithium.
Where future supplies are concerned, investors will be looking closely at
Dajin, which is 100% self-owned and operated. If it can post similar success
in terms of exploring lithium brine, it could easily pop up as a favorite
stock on investors' radar.
And the brine is the place to be, putting Nevada at the front line of the
North American lithium revolution at a time when other minerals are
collapsing. The lithium, found in salty water, or brines, is the most
cost-effective on the market; it's cheap and easy to extract, giving
competing battery gigafactories new, affordable American lithium resources
that will be a global game-changer.
At the end of the day, Nevada has enough lithium brine to earn it a place
among the key global venues -- a list that for now includes the "Lithium
Triangle" of Bolivia, Argentina and Chile, as well as China.
When it comes to lithium, "it's all just talk if you don't have an
aquifer and a closed deep basin containing lithium," says Dajin CEO
Brian Findlay. "There aren't many American properties out there like
ours."
Without lithium, there will be no battery gigafactories. In fact, one of
these factories alone will need 15,000
tons of lithium carbonate a year just to get started -- and the first is
slated to come online as soon as next year.
Construction has already started on Tesla's battery factory, where the
assembly lines are expected to churn out enough lithium-ion batteries for
500,000 electric cars, according to Fortune
magazine, and it should be operating at full capacity by 2020.
And the Tesla gigafactory is just the tip of this overall iceberg.
According to a report
from the Centre for Solar Energy and Hydrogen
Research, more than one million electric vehicles will be on the road
globally by the end of this year -- that means a spike in lithium demand,
which Roskill
consulting and research predicts will more than double from 2012 to 2017.
Even more than hybrid cars, grid storage and the 'powerwall' will drive
lithium demand through the roof. In
an interview with Reuters, General Electric said it expected this sector
to quadruple to $6 billion by 2020 thanks to rising demand for industrial
battery systems driven by increasing reliance on intermittent energy sources,
such as wind and solar power, as well as the potential to add energy to the
grid quickly when power needs spike.
Now the game is all about new resources -- and specifically, American
resources, with all eyes on the brine. Tesla knows this, and so do its
competitors. Investors who know this will get in on the game before these new
entrants start producing.
