As President Joe Biden makes moves to tackle climate change, investors should pay attention to the potential benefits new policies may have on lithium mining and exploration stocks.
Biden Investing $3 billion for US Lithium Ion Battery Production
In a move to fight climate change and bolster the US’s energy independence, President Joe Biden announced that he is committing $3 billion investment Monday aimed at boosting the US supply of lithium ion batteries through his bipartisan infrastructure package.
A senior adviser to Biden, Mitch Landrieu was quoted as saying, “To help make electric vehicles work, we need also to increase the production of lithium ion batteries and we need responsible and sustainable domestic sourcing of the critical materials used to make lithium ion batteries such as lithium, cobalt, nickel, and graphite.”
He added, “The bipartisan infrastructure law directs more than $7 billion to strengthen the US battery supply chain that will help us avoid disruptions, lower the cost and accelerate battery production in America to meet this demand. So today, the Department of Energy is announcing $3.16 billion to support battery manufacturing, processing, and recycling funded by the bipartisan infrastructure law.”
The funding will not only be used to support the battery supply chain and build capacity and improve US competition but also assist in national security, particularly with energy security and independence.
In a move that many believe is aimed at addressing the limited lithium supply, funding will be distributed through federal grants and will go toward producing and recycling critical minerals, without new extraction on mining or sourcing materials for domestic manufacturing.
Mexico and Chile Tightening Global Supply of Lithium
As covered in my last article, we saw that while global demand for lithium will likely increase due to green policies like what President Biden is proposing, supply of lithium will face hurdles. Two of the largest lithium containing countries are moving forward with nationalization of their lithium assets, potentially limiting the amount of future supply for the burgeoning lithium ion battery industry.
Battery makers have already looked to safer jurisdictions to secure critical lithium supply. Both Tesla (NASDAQ:TSLA) and LG Energy solutions have recently signed offtake agreements with lithium exploration and mining companies to secure their future supply.
Lithium Prices Surged 480% Last Year
Just like how the semiconductor supply shortage has affected car prices during the pandemic, lithium will become the next bottleneck in supplying the EV revolution. Lithium prices have shot up a staggering 438% above last year. The increase comes as the amount of lithium used has gone up almost 4 times over the last decade. But the process for extracting lithium, and a relative lack of investment in the sector, have yet to catch up with the rising demand.
The U.S. plans to increase domestic lithium production, but currently produces less than 2% of the world’s supply. Most lithium mines and reserves are located in South America and Australia, with China largely in control of global supply chains. With resource nationalism hitting South America and issues in the Pacific potentially limiting supply, who can supply the lithium demands of growing western markets?
With the growing demand for lithium, particularly in Western Europe, combined with politically motivated supply crunches in the Pacific and South America, investors who want to benefit from these macroeconomic trends should pay attention to United Lithium Corp.
The company’s flagship project, in Findland, the Kietyönmäki lithium project was discovered by the Finnish Geological Survey (“GTK”) in the mid-1980’s and was recently acquired by the company. According to United Lithium, “the Kietyönmäki Lithium property capitalizes on three key elements: cost effective surface and near surface extraction; well established mining and transportation infrastructure and rapid fulfillment of tariff free sales to potential EU lithium customers.”
The company’s second project, in Sweden, the Bergby Project is a newly discovered Lithium deposit in central Sweden, near to the world famous Woxna graphite mine, the new Northvolt lithium battery gigafactory, and close to major mining and transportation infrastructure, workforce and equipment.
Disclaimer: The company described in this article is a customer of NAI Interactive Ltd. This material is for informational purposes only and is not intended as a recommendation or offer or solicitation for the purchase or sale of any securities or financial instruments, or for transactions involving any financial instrument or trading strategy.