Biden’s Electric Vehicle Plan: An Opportunity for Silver Exploration and Development Companies

拜登的电动汽车计划
Published on: April 27, 2021
Author: Caroline Kong

Biden unveiled the details of his $2.3 trillion infrastructure plan on Wednesday, and with $174 billion of that earmarked to help boost adaption of electric vehicles in the US, there could be some unlikely winners in the EV sector.

The environment, of course, will benefit, as will EV manufacturers and EV battery makers, but so could companies who produce raw materials used in these sectors.

Silver is generally regarded as a precious metal and a store of value. And while both cases are true, it is also widely used in manufacturing. From medical supplies and keyboards to clothing and electronics, silver is in thousands of the products we use every day.

Silver also happens to be extensively used in the automotive sector, including in the production of electric vehicles and EV-related technologies.

Could companies specializing in mineral resource exploration, like Golden Tag Resources Ltd. (TSXV: GOG), profit as the demand for silver increases? Some market watchers seem to think so, with Forbes declaring ‘2021 could be another win for silver’.

Biden’s Plan: 500,000 EV Chargers

To address consumer hesitancy in purchasing an electric car, Biden’s plan includes provisions to help increase the stock of charging stations from 100,000 today to 500,000 by 2030.

Increasing the availability of EV charging stations will be key to widespread adoption, particularly in dense urban areas where most residents don’t have access to garages or driveways required for home charging.

Widely available charging stations has been fundamental to electric vehicles adoption in countries like China, where EV sales have increased over 15% in the last year, and the Netherlands, which currently has more electric vehicles and charging stations per capita than any other country and saw one year EV sales increase 33%. By comparison, growth in the US EV market was 4%.

Silver’s Growing Role in Electric Vehicles

The push toward electric cars and the extensive deployment of chargers should lead to a dramatic escalation in silver consumption.

Due to its superior conductivity and corrosion resistance, silver is extensively used in many electronics, and that extends to electric vehicles. From battery management systems and power windows to sunroofs and wireless charging, virtually every electrical connection in an EV uses silver.

Silver has long been a crucial if underappreciated material in the automotive sector. Over 55 million ounces of the metal was used in vehicle production in 2020, and that amount is expected to increase to over 90 million ounces by 2025.

The average combustible engine vehicle uses between 18-25 grams of silver, compared to the typical EV, which requires up to 50 grams of silver per vehicle.

As the production of EVs ramps up to meet with growing demand, so too will the need for silver. By 2027 the global market for electric vehicles could double, from $121 billion in 2020 to over $236 billion.

An Opportunity for Silver Stock

More popularly thought of as a precious metal, silver is also an industrial metal that will be essential as we move towards cleaner energy sources. Its eco-friendly applications extend beyond electric vehicles; silver is also a crucial element in other green technologies, particularly solar energy.

According to a recent report, solar power production is expected to nearly double to 1,053 terawatt-hours (TWh) by 2025 and demand for silver used in the production of photo-voltaic solar panels over the next decade could reach 888 million ounces.

Silver is expected to experience strong growth in 2021, with some analysts predicting prices could hit $30 an ounce.

However, investing in bullion isn’t the only way to gain exposure to silver. Other options include investing in silver mining or mineral exploration companies.

Exploration companies like Golden Tag create opportunities for investors to earn significant returns in exchange for a higher risk profile. As silver prices rise, mineral exploration companies not only tend to perform well, but they often outperform the underlying commodity, rewarding investors for the increased volatility.

Golden Tag Resources Ltd. (TSXV: GOG) is a Toronto-based junior exploration company searching for high-grade silver deposits. The company currently holds a 100% interest, subject to a 2% NSR, in a property located in San Diego, Durango State, Mexico. The property is within the well-known Velardeña Mining District, which has been home to several metal-producing mines over the past century, including silver, zinc, lead, and gold.

Last week, the company announced that exploration of their San Diego property had successfully identified broad zones of mineralization near the surface of the Fernandez Zone. The discovery led to expanding the existing zone 40 metres up-dip and 20 metres south and opened the potential for a new site to be developed above the Fernandez Zone.

Electric Cars Industrial Metals Investment Mining Precious Metals Silver