AF bros all the talk lately has been about the EV boom. With a lot of folks predicting 20-30% penetration in 10 years.
EV (cars, busses, trucks) batteries require a boatload of these elements but supply is forecasted to be severely limited in the future due to lack of mines.
do any of you BSD bros own any of these mining stocks? they are mostly small cap but a few are Large Cap.
So personally I’m staying away, this looks like a classic mining demand narrative -> supply surge -> bust. Supply is not severely limited, there are major capacity ramps in place would precede with caution.
don’t forget hydrogen cell powered cars. lots of start ups in this area and the data itself is very similar if not better than that of e cars in terms of efficiency, cleanliness, cost, safety, etc.
Although, I do believe in and root for Tesla and musk. After all musk is the first person to actually put the vision and dream into reality - develop a sound plan, gather investors, put dream to work. I respect and admire him for that. Guys like Musk is what makes us - USA - so great right? never afraid. Venture the unventured. genius enough to put things to work.
Nowadays, you got NIO from china coming up with EV with its internals and designs very similar to that of Tesla. Where did they get the tech from? haha
i follow lithium Joe on twitter, some say he is a top expert. he is very bullish
LOL. Igor. C’mon man.
Anyhow, I’ve sat on probably dozens of these calls and been through the S/D outlooks. The issue is as I stated earlier this is a clone of every major mining bust. Because this is new, most of the analysts are underestimating the pipeline of supply coming on and there’s a lot of hubris around everyone assuming everyone else’s capacity will be delayed while focusing on current market prices. The demand forecasts are also in large part back of the envelop efforts at best. There’s just a lot of uncertainty and in my mind looking at it there’s more probability and room for downside than upside. This is a several year old narrative that is likely going to end terribly. Additionally, if you experience any form of macro pull back and demand stalls or has the rug pulled out from under it (don’t forget these are high end autos we’re talking about and supply is targeting demand estimates formed in the out years) you’re going to see a huge supply mismatch that will see producers get whipsawed. This is just an extremely speculative play and you may win but you’re basically going blindly into a crypto-currency type of play.
This happens every few years in the mining industry where someone builds a compelling demand narrative around some theme and everyone scrambles to rush in just to get crushed because people made the same stupid assumptions about supply and were looking too far out.
this does remind me of the rare earth bubble few years back.
a lot of battery mfgrs/ev producers are shying away from DRC which is a plus
Lithium is so 2010.
completely agree. lithium supply is basically unlimited and researchers are actively finding ways to significantly reduce cobalt content in batteries or remove cobalt from batteries completely.
plus nobody prices in the political risks associated with most mines sitting in peru, bolivia, argentina, drc and various other extremely high risk and completely undeveloped areas. investors are basically equating bolivia to canada or the us right now.
Australia has some decent projects
^ i guess i’m looking more at the development stage companies that would provide more juice if the story plays out. australia is your bread and butter producers. don’t know enough about australian production to comment on mine life or the economics of the plays.
If I was playing lithium I’d personally stick to the majors like ALB and SQM for downside protection, but personally it’s just too speculative for me. It could be a homerun but you’re basically winging it on some back of the envelop estimates of EV usage, a hope of no macro pullback and unknown supply ramp. Also be aware that there appears to be a pivot from lithium carbonate to hydroxide underway and the next year or two looks likely to be surplus. At some point it will be a story but right now I just think it’s too late for the initial narrative excitement and too early for it to be a sound long term investment.
What do you know about the markets expectation that makes your forecast more accurate? I see no edge here Igor. . . you are fired!
BS, MLA; what who would you recommend then for battery exposure? I’ve been looking at making an allocation to clean energy overall as a 10-20 year hold. It would include some clean energy infra stocks to those that develop the supporting tech (electric vehicles and such would also be apart of that). Only issue I have is that I’ve heard many clean energy related assets are trading at rich multiples (like everything). Wind farms, solar, etc… are at mid/high-single digit IRRs, which isn’t very attractive in my mind.
umicore???
I don’t know. Maybe TSLA if you have a strong stomach, I think the valuation and asset strength are there and the recent news is distracting people from improving fundamentals. If you don’t like them then maybe Geely or BYD. Possibly Panasonic for their lithium battery orientation. It’s not a very attractive space in my mind because valuations are overcrowded by these thematic buyers that just want exposure and believe a narrative without really considering long term profitability. Sector growth doesn’t always equate to profitable growth, up until 2010 the US airline industry had cumulative profits of zero dollars since inception following waves of bankruptcies. Yet going back to the early years there was a strong narrative in favor of airlines and they clearly served a real need. Similarly, I think most clean energy applications we see today are largely commoditized and low margin. There’s no margin in wind or solar despite them being high growth areas and there likely will never be. The theme I’ve seen with clean energy is that easy to mass produce technologies are replacing more complex technologies (compare windmill to gas turbine or EV powertrain to internal combustion) and not leaving much for investors to work with. Similarly the battery industry is terribly low margin and you might just be chasing the next fools game equivalent of flat screen TV’s. The technologies in battery are also evolving quickly and at any point a breakthrough in fusion could alter the landscape of clean tech. So for me it’s just something to avoid personally, the investor side just isn’t compelling to me and there are still strong value opportunities in old dirty tech in declining names that are throwing off major cash (example: thermal coal producers are seeing a major surge these days at ridiculous valuations because EM geographies are growing thermal usage and new mines aren’t being developed).
Igor, what is this noob sht? Miner stock prices lately: 60% trade war, 35% other random stuff, <5% EV demand. These stocks are all down 20% or something in the past few months due to Trump stuff. Unless you have a good way to hedge out all this unrelated exposure, you will not be able to realize your investment thesis.
i agree with bs on panasonic. seems like the purest play on batteries. if there is a major development that vastly improves the performance and/or cost of a battery, they will likely see the upside even if they are not the primary discoverer. if they hold the global patents, it could be incredibly significant. batteries have been in their wheelhouse for a very long time so i think they’ve got a good shot at it. plus, valuation without a breakthrough is acceptable (4-5x EV/EBITDA). big ups and downs with this one though. very long term hold is necessary.
that said, i choose panasonic because it is the only company that isn’t valued insanely that has this exposure. not sure i’d enter the trade at the present time. i’d love to see a recession and pick something like this up in the low singles.
obviously now is not the right time to get into them. also these are spec plays.
i looked at BYD before, they are all over the place and they were thinking about IPO the battery business,
but this was all before the marketing scandal
Long Uranium.