New Energy Narrative presents: MAJOR PREDICTIONS for renewable energy, electric vehicles, batteries, and more, courtesy of investor Cory Groshek
My name is Cory Groshek. I am the founder of New Energy Narrative and undoubtedly one of the most passionate new energy and battery metals investors on the planet, and today, I’m here to give you my predictions for where I see the battery metals and new-energy-related markets going in both the near and mid-to-long-term future. Without further ado, let’s get started!
- The IPO of FMC Corp’s lithium spin-off, Livent Corp, in Q4 of 2018 will be wildly successful, as the new, publicly-traded company will provide both retail and institutional investors the only exposure they can get, in the near-term, to the an already-producing, pure-play lithium firm.
- Following Livent Corp’s successful IPO, Albemarle Corp will attempt a hostile takeover of its much smaller American neighbor, at a price which greatly undervalues Livent, which will, in turn, spark a bidding war over Livent, which will see Ganfeng Lithium, Tianqi Lithium, SQM, and even some surprise bids from lithium “juniors” come flooding in.
- Morgan Stanley will be found to have been exceedingly incorrect with regards to its claims that a lithium oversupply scenario will soon be upon us as the lithium majors they have pinned these claims to, namely Albemarle and SQM, as well as their smaller competition, fail to meet one lithium production related target after another between now and 2022, and the world quickly moves into a major under-supply situation.
- Advanced lithium extraction technologies, such as those utilized by the likes of MGX Minerals, Tenova Advanced Technologies, and Lilac Solutions, will put traditional brine-pond-based lithium businesses either completely out of business or into a position where they will either need to “adapt or die”; in other words, to adopt the advanced technology themselves or experience a very long, slow, and painful death, for not only environmental reasons, but purely economic ones as well.
- The success of advanced lithium extraction technologies will be, in large part, a result of two things: 1) Environmentalist concerns worldwide about the effect that brine ponds have on local water reserves, especially in arid areas like Argentina, Chile, and Bolivia, and 2) the U.S. government investing heavily in technologies intended to reduce the United States’ dependence upon foreign (and especially hostile) entities, such as China, for its supplies of the 35 minerals/metals it has deemed critical to its national security (including lithium).
- For many of the same reasons advanced lithium extraction technology will succeed, hard rock/spodumene-based sources of lithium will also succeed, and ultimately triumph, by 2023, over their brine-based counterparts that refuse to let go out outdated and environmentally-unfriendly brine-pond-based business models.
- By 2025, the global lithium story will have changed, and rather than Argentina and Chile being considered by most talking heads/investment analysts to be the leaders in lithium production, Australia will be considered the undisputed king of all things lithium, including not only the mining of it, but also the production of high-quality lithium hydroxide, which is needed by battery manufacturers seeking both high performance and long range in their electric vehicle batteries.
- By 2025, and due to the battery industry’s preference (and in some cases, government-mandated need) for high-quality lithium hydroxide versus lower-quality lithium carbonate, lithium carbonate will become nothing more than glorified feedstock for lithium hydroxide producers, save for in situations where carbonate use may still make sense, such as for the production of LFP (lithium-iron-phosphate) batteries for slower-moving, lower-performance electric buses, construction, farming, and mining equipment, etc.
- Any lithium juniors that are not in production by 2020 will either go out of business, file for bankruptcy, or be bought out by bigger players that are already generating revenue.
- Whether or not it is successful in buying out Livent Corp, Albemarle will eventually spin off its own lithium division into a separate, publicly-traded company, but as with most things Albemarle does, it will do this far too late in the game and miss out on the golden opportunity it has to do this prior to 2020.
- Nemaska Lithium will become one of the most successful, globally significant suppliers in the world, and by 2025, it will be considered one of the “Big 5” of the lithium industry, alongside Albemarle, SQM, Ganfeng Lithium, and Tianqi Lithium. Pilbara Minerals, assuming it becomes a vertically-integrated producer of lithium hydroxide chemicals, and not simply a mine pit for its Asian spodumene concentrate customers, will become the 6th largest lithium producer in the world, after potentially buying out its Pilbara-based neighbors Altura Mining and Sayona Mining (which share the same management), and Lithium Americas, assuming it can get its project in Argentina on track and its clay-based lithium project in Nevada off the ground, will become the 7th largest, after potentially buying out its clay-based competition, including Pure Energy Minerals and Bacanora Minerals.
- Major lithium extraction specialists like MGX Minerals and Lilac Solutions will eventually merge and be bought out by a lithium major which badly needs their technology to compete with China, and more likely than not, it will be Albemarle and/or SQM doing the buy-out.
- Bolivia will never become a major producer of lithium, as its government has completely missed the boat in this regard by moving far too slowly in general, partnering (out of apparent panic) with a German company that has no experience with lithium, and attempting to make India, which has no battery or electric vehicle industry to speak of yet, as the cornerstone of its plan to secure lithium-related investment.
- Glencore and/or its affiliates will be sanctioned by the US government over human rights abuses and corruption before the end of 2019, which will cause the company’s stock to plummet and its businesses, including its cobalt and copping mining operations, to suffer big-time.
- Cobalt will never be cut completely out of traditional lithium-ion batteries, no matter what Tesla, Panasonic, and/or other proponents of “cobalt thrifting” may say, as to cut it out of such batteries completely are unsafe, as South Korean battery makers LG Chem and SK Innovation have recently realized, hence they have decided to kick their low-cobalt battery ambitions down the road for another couple years, while their Chinese counterpart, CATL, continues to delude itself into thinking that low-cobalt will actually be a thing by 2020.
- The London Metal Exchange (LME) will create a contract for cobalt and battery-grade cobalt sulphate in 2019, which, on top of the LME’s plans to do ethics-based audits of its cobalt suppliers, will put even more pressure on cobalt producers around the world to steer clear of child labor and other human rights abuses, not to mention corrupt business dealings, as well as bring much-needed legitimacy and market transparency to a critical battery metal that has been sorely lacking in this area for decades.
- Producers of battery cathode material, battery manufacturers, and electronics, EV, and energy storage producers worldwide will stop doing business with the Congo completely, as soon as it is possible for them to do so, regardless of whether child labor is using in the mining of the metal, due to how corrupt the Congolese government is in general. Similar decisions will be made with regards to other African countries which are becoming more objectively corrupt every day, such as that of South Africa.
- The Idaho Cobalt Belt, combined with the area of Missouri surrounding the old Madison Mine complex, will shock the world and see the United States give the Congo a major run for its money in terms of cobalt production by 2025, due in large part to the backing of the US government, which, as mentioned earlier, is very keen to see the United States become a major, independent producer of its own cobalt.
- In addition to major, as yet undiscovered cobalt deposits in the United States, major deposits of the grayish battery metal will also be unearthed in Ontario (Canada), Finland, Sweden, and eastern Australia, which will put further pressure on Western companies to completely cut ties with the Congo/Africa when it comes to cobalt, and to switch to doing business with far friendlier jurisdictions which are far easier (and less risky) to work with.
- Chinese lithium chemical giant Ganfeng Lithium will shock the world when sometimes between now and the end of 2019, it announces that it is diversifying by moving into the cobalt and/or nickel sulphate market. This announcement will coincide with it making a major and direct investment in cobalt and/or nickel, most likely via a company it already owns over 15% of, Explorex Resources, based out of Canada, which has previously assisted it with locating lithium assets in both Argentina and Ireland and which it has already signed a Letter of Intent with to do 100% offtake with, with regards to any cobalt or lithium Explorex may find.
- The London Metal Exchange (LME) will aid in the much-needed bifurcation of the nickel market, by creating a contract for battery-grade nickel sulphate in 2019, which is wholly separate from its other nickel-related contract(s), thus enabling battery-grade nickel products to be priced at the premium they deserve, which will see them being valued at a 100-200% premium to ferronickel and/or nickel pig iron supplies.
- The above-mentioned nickel sulphate contract created by the LME will cause the value of companies that can produce battery-grade nickel sulfate or even the precursors to it to skyrocket, resulting in a wave of investment pouring into the nickel mining sector, especially for so-called “Class I” sulphide deposits in safe jurisdictions such as Australia and Canada, followed by another wave of major mergers and acquisitions by big-name nickel players.
- Nickel projects in safe jurisdictions, such as Australia and Canada, which can produce battery-grade nickel sulphate and/or the precursors for this chemical will be priced at a premium by a market which, up to this point, has shown absolutely no respect so such projects, as they have been heretofore unfairly lumped in with low-quality ferronickel and nickel pig iron producers.
- Copper prices will jump by 300-400% between now and 2020, as the world catches on to the fact that without copper there will be no EV charging infrastructure, which means there will be no EVs, which means that we will be stuck burning fossil fuels for our transportation needs forever, causing one of the most amazing short squeezes in the history of the metals markets and minting countless new millionaires and billionaires almost overnight.
- With much higher (and more appropriate) copper prices, investors will flood into the copper exploration and mining space (the early signs of this happening can already be seen, with major copper players like Glencore and BHP striking small-scale deals to expand their asset bases), sending the price of copper even higher and virtually guaranteeing humanity’s switch from fossil-fuel-based to fully-electric transportation within the next twenty years or so.
- Vanadium miners will be successful, and early investors in the vanadium story will be rewarded, not so much because of the future use of the metal in vanadium flow batteries, which will make up a very small percentage of batteries in the flow battery market going forward, but because of the military applications for it, especially within the United States, which has recently designated vanadium as on of the 35 minerals/metals critical to its national security.
- The much-discussed 811 battery cathode chemistry (which utilizes material that is 80% nickel, 10% manganese, and 10% cobalt) will never be adopted en masse in electric vehicles due to thermal instability issues (an issue which, if not addressed properly, can and will result in EVs spontaneously combusting and/or bursting into flames in even small-scale accidents).
- Solid-state lithium batteries will become the industry standard by 2028, and possibly as early as 2025, as European auto makers desperately seek an advantage over the Asian battery manufacturers they have thus far found themselves dependent upon for their battery supplies. Vanadium flow batteries will make up a very small percentage of industrial and grid scale battery storage systems, as cheaper alternatives like zinc flow batteries take most of the market share.
- Major lithium-ion battery factories will be built inside the United States, Europe, and Australia, with the assistance/partnership of Japanese and South Korean giants like Panasonic, LG Chem, Samsung SDI, and SK Innovation, and they will give China a run for their money, as Western companies will prefer to do business with Western battery makers, as opposed to their exceedingly non-transparency (and, in some cases, super seedy) Chinese counterparts.
- All Chinese makers of lithium-ion batteries for electric vehicles besides CATL and BYD will go out of business, go bankrupt, or be bought out by their larger, more financially-stable, and far more successful competition, due to Chinese subsidy cuts and emphasis on higher-performance and longer-range EV batteries becoming industry standard, and do in even larger part to the fact that there are simply too many fly-by-night battery makers in China right now. By 2025, only the fittest will have survived.
- By 2025, there will be only nine major EV battery makers on Earth, and they will take approximately 95% of the market share in their sector. These companies will be Tesla, Panasonic, LG Chem, Samsung SDI, SK Innovation, CATL, BYD, Northvolt, and Imperium 3. Any players remaining will quickly go out of business or be bought out by these other nine.
- Lithium-ion battery recyclers (a.k.a. urban miners) such as American Manganese and Neometals, with patented or patent-pending, hydrometallurgical recycling technologies, will dominate the battery recycling space by 2025, when it becomes obvious that dirty, inefficient, and wasteful Chinese smelters just cannot compete with them. These companies, which can recover valuable cathode materials, such as cobalt, nickel, and manganese, as well as lithium, from spent electric vehicle batteries, thereby allowing the metals to re-enter the battery manufacturing process, don’t just help battery producers keep their costs down, they also aid them in becoming more environmentally-friendly, by helping them keep their extremely explosive and toxic batteries out of landfills. This will make them very popular not only with said battery producers, but also with environmentalists and governments around the world that are seeking to reduce our impact on our planet and to score bonus point with Climate-Change-minded constituents.
- With regards to flow batteries (that is, batteries that make use of large, liquid-filled tanks, as opposed to the electrolytes used in typical lithium-ion batteries), the big winner, in terms of market share, will be whichever companies can produce the most cost-effective energy storage systems, and unfortunately for fans of vanadium, these will not be manufacturers of vanadium flow batteries, but rather manufacturers of batteries that use much less expensive metals, such as zinc.
- Similar to how Herbert Hoover once said that Americans would have “a chicken in every pot and a car in every garage” if he were to become President of the United States, I am saying that by 2030, we will have a battery storage system within every home in the Western world, much like how we now all have smartphones in our pockets and purses, and by 2035, every such system will be connected a personal solar array and/or local microgrid, which will feature larger battery storage set-ups connected either to solar arrays, wind turbines, hydro-electric dams, or a combination of these things.
- By 2025, half of Western businesses will be utilizing some form of wind-or-solar-plus-grid storage/battery-storage in their places of businesses for some, if not all, of their electrical needs, and by 2030, all businesses in the Western world will make use of such set-ups, because by then, it will make perfect logical and economic sense to do so. Any business which still uses coal or diesel-generated power after 2030 will be considered a dinosaur and subject to public ridicule, if not regulatory action/fines for failing to clean up their act in a timely fashion.
- 2020 will be the point in time when electric vehicle adoption in the Western world goes parabolic, and if an auto maker wanting to get into the EV game doesn’t already have at least two to three EV models on the market by then, it will be “game over” for them and the start of a very slow, painful descent into bankruptcy. The likeliest victims of this scenario will be stragglers, such as Ford Motor Company and General Motors, which have heretofore not taken electric vehicles seriously at all, despite their claims to the contrary, and conflicted auto companies, such as Toyota, which can’t seem to let go of the fact that hydrogen-powered vehicles will never succeed versus EVs, or which refuse to make the 100% switch from hybrids to fully-electric vehicles by no later than 2023.
- Any auto company that is still wasting its money on plug-in hybrids, hydrogen-powered personal passenger vehicles, or diesel/petrol-powered vehicles beyond 2023 will go bankrupt within a year or two, as the entire world makes its preference for fully-electric vehicles abundantly clear by voting with their wallets and their stock portfolios.
- While Tesla may lose market share between now and 2025 to its electric vehicle competition, namely big-name European automakers such as BMW, Volkswagen, and Daimler, it will never go out of business and will, in fact, become more popular over time, as Apple has in the consumer electronics industry. This will be due in large part to Tesla’s brand superiority and name recognition in the EV sector, which no other auto maker can compete with—something which Tesla bears don’t seem to want to take into consideration at all.
- All Chinese EV makers besides Warren-Buffett-backed BYD, BAIC, Geely, and perhaps Great Wall Motors and Byton, will eventually go out of business, go bankrupt, or be bought out by their larger, more financially-stable, and vastly more successful competition, by no later than 2025.
- By 2025, all electric vehicle makers will have agreed to use identical charging technology, in cooperation with EV charging companies, which will have agreed to do the same, to make it easier for drivers to charge their EVs…with the exception of Tesla, which will continue to build out its own charging infrastructure for the foreseeable future, in an attempt to differentiate and separate itself from its competition, much as Apple has done in the consumer electronics sector.
- By 2030, all public transport (think buses, taxis, etc.) in developed countries will be 100% electric, by 2035, so, too, will be all commercial vehicles (think short and medium-to-long-range trucks), and by 2040, so, too, will be all passenger vehicles (think sedans/cars, pick-up trucks, mini-vans, SUVs, etc.), at which point electrification of vehicles will be mandated by law, and not simply based on consumer preference, as the world will recognize that not only are EVs more environmentally-friendly than their Internal-Combustion-Engine-powered counterparts, but that they are infinitely more efficient and cost-effective as well. By 2050, every vehicle on Earth that was once powered by fossil fuels will be powered by electricity, and this will include vehicles previously thought impossible to be powered in this way, such as jumbo jets, cruise ships, and even military vehicles like tanks and submarines.
- By 2040, the United States and the rest of the Western world will have legislated any vehicles that are not fully-electric off of their roads entirely, and the roads that we have by then will have all been outfitted with inductive technology that will give electric vehicles a cordless charge as they move.
- Autonomous vehicles won’t become widely accepted until at least 2035, due to major missteps made recently by the manufacturers and proponents of the technology, who have pushed it way too hard and way too fast onto a public which is becoming increasingly distrusting of it, following the reports of unnecessary deaths and accidents caused by it.
- Between now and 2025, a major debate over the loss of personal freedom and autonomous that will accompany our adoption of autonomous vehicles will begin, and many parallels will be drawn between this and our current, ongoing debate over whether its advisable, let alone safe, for us, as humans, to invent “general AI” (artificial intelligence) that could potentially kill us all (a la the plot of the movie Terminator 2). This debate will ultimately result in our adoption of such vehicles en masse to be pushed back for at least another ten to fifteen years.
- Until 2035-2040, fully autonomous vehicles will be relegated to very specific jobs, such as ferrying people around from one place to another place only a few miles away and commercial trucking/shipping operations.
- Individual drivers, leery of giving up their ability to immediately come and go from anywhere as they please, will never accept a complete phase-out of human-driven vehicles in favor of autonomous ones, and it won’t be until children who have grown up with autonomous vehicles as a part of their everyday lives, and who’ve never actually driven a vehicle themselves, reach “driving age” that human-driven vehicles will slowly but surely begin to disappear from our streets.
- With mass adoption of autonomous vehicles will come new concerns which, by the time we recognize them, will be too late to resolve, such as, for example, “What if corrupt law enforcement and/or tyrannical governmental entities wish to take control of or nationalize our transportation system, to the point where we can no longer come and go as we please?”, “What if a very intelligent hacker were to hijack an autonomous vehicle while I and/or my family are inside of it? Could they drive it into the water, off a cliff, or into a brick wall? And if so, would I be completely powerless to stop this?”, and “Who’s responsible if an autonomous vehicle kills me or one of my loved ones, or even just injures us in some way?” As with Congressional hearings currently being held in the U.S. over Google, Facebook, and Twitter-related privacy and free speech concerns are happening about ten years too late, humanity will have a conversation about the dangers of giving up human-driven vehicles only after we’ve given up our freedom to move about our respective countries freely and once it’s, as they say, “too late to turn around now.”
- Lithium and copper will be the two biggest winners out of all the so-called battery metals, because no matter what battery chemists and manufacturers do, they will never eliminate the use of lithium, because there is no metal on earth that is lighter or more energy dense than lithium, and because both EVs and their charging infrastructure are entirely dependent upon copper.
- The electric charging infrastructure business, while guaranteed to be successful in the mid- to long-term, will not be highly profitable for investors, because any investors wanting exposure to it will need to buy into the big oil and utilities players who are quickly snapping up EV charging companies (think Shell, BP, etc.), and because the charging infrastructure segment of said businesses will be exceedingly small in proportion to their other assets. Furthermore, there will be nothing innovative about what one charging company does versus another, which means they will have no “moat”, as Warren Buffett would call it, which means there is nothing to stop them from losing market share to competition that has essentially the exact same technology.
- The United States government, as part of Donald Trump’s “America First” agenda, will shock the world with how quickly it moves following Donald Trump’s receipt of a report/recommendations from the U.S. Department of the Interior this month (September 2018) on 35 minerals/metals critical to U.S. national security. Following his receipt of the report, and in consultation with appropriate advisors and industry experts, Donald Trump will sign an executive order (or series of executive orders) which will cut regulations, streamline the U.S. mining code to more closely resemble that of Canada’s, provide tax and other incentives to companies interested in helping the U.S. produce the aforementioned critical minerals/metals and related products/chemicals domestically, and take other protective measures to ensure that the United States will never be held hostage, when it comes to critical minerals/metals supplies, by hostile countries such as Russia and China, for in the event of war. These moves will energize the American mining and exploration sector, create thousands upon thousands of both temporary and permanent jobs, emphasize America’s close partnerships with its allies, Canada and Australia in particular (both of which have a massive amount of experience in mining and exploration), and send the stocks of any miners of critical minerals/metals operating inside the U.S. (whether foreign or domestic) skyrocketing.
Disclosure: I am long PILBF, ALTAF, DMNXF, NMKEF, MGXMF, AMYZF, EXPXF, and URNXF (which is a 1/3 member of the Imperium 3 consortium).
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from/through New Energy Narrative, which I am the founder and owner of).
Please note: This article discusses small-cap stocks trading at less than US $1 per share and/or with less than a US $100 million market cap. Please be aware of the risks associated with these stocks.