1

Which Metals will benefit from the EV Boom in 2022 and after?

2021 has been a triumphant year for electric vehicle (EV) metal miner stocks. This is because EV sales are on track to grow ~100% on 2020 sales, which has led to surging demand for the EV metals lithium, cobalt, graphite, nickel, neodymium-praseodymium (NdPr), and dysprosium (Dy).

China lithium carbonate prices led the way rising from CNY 43,750 (US$6,859/t) to CNY 232,500 (US$36,452/t) in 2021, for a 5.3x gain. Cobalt prices have risen from US$14.51/lb to US$31.42/lb in 2021, for a 2.2x gain.

All of this demand for EV metals has also led to a surge in takeovers and strategic buy-ins in 2021. The Chinese have again led the charge leaving the Western world asleep at the wheel, as I discuss below.

China lithium carbonate prices have risen 5.3x so far in 2021

Source: Trading Economics

China leads the lithium takeover charge as the Western world is left asleep at the wheel

The same theme of the past several years continued in 2021. While the West talked about acting, China and even Russia acted, with China making some big moves.

Take a look at the lithium takeovers and buy-ins during 2021 summarized below.

  • Bacanora Lithium PLC (AIM: BCN) – Taken over recently by China’s Ganfeng Lithium.
  • International Lithium Corp. (TSXV: ILC) – Mariana Project final project share buyout by China’s Ganfeng Lithium.
  • Ioneer Ltd (ASX: INR) – South Africa’s Sibanye-Stillwater invested US$490 million for a 50% interest in the Rhyolite Ridge Lithium-Boron Project.
  • Millennial Lithium Corp. (TSXV: ML | OTCQX: MLNLF) – Bidding war (Ganfeng, CATL, LAC) eventually won by Canada’s Lithium Americas Corp. (TSX: LAC | NYSE: LAC) with a 100% company buyout offer for C$4.70 per share.
  • Neo Lithium Corp. (TSXV: NLC | OTCQX: NTTHF) – 100% company buyout by China’s Zijin Mining at C$6.50 per share.
  • Arena Minerals Inc. (TSXV: AN) – China’s Ganfeng Lithium project and equity stake, Lithium Americas initially equity stake then increased equity stake.
  • North America Lithium Inc. (“NAL”) – Australia’s Sayona Mining (ASX: SYA) (75%) & Piedmont Lithium Inc. (Nasdaq: PLL | ASX: PLL) (25%) acquire NAL.
  • AVZ Minerals Limited (ASX: AVZ) – Sold 24% of the Manono lithium and tin project JV to China’s Suzhou CATH Energy Technologies (jointly owned by Chinese battery maker CATL) for US240 million.
  • Global Lithium Resources (ASX: GL1) – China’s Yibin Tianyi (owned by CATL, the world’s largest battery manufacturer) to invest $6.2 million for a 9.9% equity interest in Global Lithium Resources.
  • Alpha Lithium Corporation (TSX.V: ALLI) – Russia State backed Uranium One (TSX: UUU) agrees to buy 15% of the Tollilar salar for US$30 million, option/right to buy a further 35% for US$185 million.

Of the ten mentioned above, six of the ten buyers are Chinese companies, one is Russian, one is South African, one is Canadian, and one is Australian. What is also interesting is that with the Alpha Lithium Tolillar salar deal the buyer is a Russian ‘state backed’ company with significant plans to acquire more global lithium assets.

2022 will see Tesla dramatically ramp up production and require significantly more EV metals

In 2022 Tesla is likely to exceed 1.5 million electric car sales, up from around what should be about 900,000 in 2021 (a 2/3rds production increase estimate for 2022). Tesla has their Texas gigafactory and their Berlin gigafactory about to open and officially start production, will be expanding giga Shanghai, and will see huge sales of Model Y, some Tesla Semis, and finally the start of production of their Cybertruck in late 2022. All of this will require a dramatic increase in EV metals demand from Tesla in 2022, potentially about a 66% increase based only on the 2/3rds increase in production forecast.

Chinese EV companies such as leader BYD Co with their own huge expansion plans, look set to chase Tesla again in 2022. They will also require significant additional volumes of lithium in 2022.

Global electric car sales look set to rise from 3.24 million in 2020 to exceed 6 million in 2021. My forecast for 2022 is 10 million.

Tesla is set for a huge increase in production in 2022 (Texas gigafactory as of August 31, 2021, set to open very soon)

Source: iStockphoto

Closing remarks

2021 saw the world wake up to the fact that electric vehicles are taking off and will largely replace conventional cars this decade, at least in most parts of the world. The ~100% surge in electric car sales during 2021 has caused an immediate impact on the EV metals supply chain, with a resulting huge 5.3x price increase in lithium, and large increases also in cobalt, nickel and NdPr prices. Graphite looks likely to follow next.

Meanwhile, the Chinese pounced yet again, buying up or into 6 of the 10 major lithium acquisitions in 2021. The other four were made up with one each from Russia, South Africa, Canada, and Australia. Sadly again the Americans were absent!

Will 2022, under Biden’s lead, finally see the US awaken. I think it is possible, after all Tesla is massively ramping up their production in 2022.

I hope 2022 will be the year the US wakes up and starts to secure their EV metals supply chain. Because if they don’t, the Chinese will continue to dominate EV supply chains globally leaving the US auto industry at their mercy.




Global Energy Metals working to develop a domestic American critical battery metals’ supply chain

2021 is a landmark year for electric vehicles (EVs).  Sales of EVs are on track to double 2020 levels and reach about 6 million+ (up from 3.1 million in 2020),  around 7% market share. Electric car sales could potentially increase as much as 10x this decade (limited only by critical EV metals availability), meaning we are still only at the beginning of the EV boom.  Just last month, in September, China’s electric car sales reached 355,000, or 20% market share, with YoY sales up 2.7x. Europe has been achieving an even higher market share with recent results at 22% share.

Surging EV demand is leading to very strong demand for the critical EV/battery metals, causing a dramatic price increase for those critical EV metals, most notably, for lithium, where prices have risen from lows of ~US$7,000/t to ~US$26,000/t (US$26/kg) in 2021.

Looking ahead this decade forecasts for critical EV metals demand give a guide of what may be yet to come. The Bloomberg forecast below is based ‘only’ on the increase in ‘battery demand’, not the overall market demand.

BloombergNEF demand forecasts 2018 to 2030 for battery metals

Source: GEMC courtesy BloombergNEF

When looking at overall market demand for the critical EV metals, those with the smallest market have by far the biggest impact, such as cobalt and lithium. For example, the UBS forecast sees “lithium demand to lift 11-fold from ~400kt in 2021 through to 2030”, which is in line with my own 10x forecast. Many forecasts are for about a 2-3x increase in cobalt demand this decade.

The 2021 International Energy Agency (“IEA”) forecast is for a 6x to 21x increase in cobalt demand from 2020 to 2040. For nickel the IEA forecast is a 7x to 19x increase and for copper a 2x to 3x, from 2020 to 2040.

With all this potential critical EV metals demand ahead, investors are searching for well-valued EV critical metals’ miners for exposure to critical EV metals and ideally in a safe jurisdiction.

One standout junior miner has a pipeline of 6 EV critical metal projects (including a royalty deal not yet completed), all located in safe countries.

The company is Global Energy Metals Corporation (TSXV: GEMC | OTCQB: GBLEF) (“GEMC”). GEMC has a total of 6 combined battery and precious metals projects (subject to deals finalizing) in Australia, the USA, Canada, and Norway; covering cobalt, copper, nickel, PGMs, silver and gold. GEMC works as a project generator and  works  with some JV project partners.

GEMC’s pipeline of projects in safe jurisdictions

Source: GEMC company presentation

Note: Recent drill results, as reported by project JV partner (earn-in up to 80%), Metal Bank Limited, at its Millennium Cobalt Project in Australia, have identified significant shallow oxide copper intercepts as sulphides to 1.5%.

I discussed these 6 projects in a previous article, so today I will touch on some of GEMC’s other related investments and collaborations.

GEMC collaboration with American Battery Technology Company (“ABTC”) (name change in process from American Battery Metals Corp. )

ABTC is an American-owned lithium-ion battery recycling technology and advanced battery metal extraction company with mineral resources in Nevada. GEMC has a collaboration with ABTC to develop solutions to manufacture nickel and cobalt battery metals domestically in addition to its existing work on domestic lithium product manufacturing. On October 18, GEMC announced that drilling has commenced at the Lovelock Cobalt-Nickel-Copper project in Nevada, USA. GEMC recently supplied raw material from its Lovelock and Treasure Box projects in Nevada for ABTC’s to use in its in-house procedures of developing new, first-of-kind processes, for producing battery cathode grade nickel and cobalt metal products.

Tesla’s gigafactory is in Nevada, so that the above collaboration is very well located. It is essentially on Tesla’s doorstep.

President & CEO of Global Energy Metals Corp., Mitchell Smith, stated:

“The combination of ABTC’s leading-edge extraction technology development processes with Global Energy’s portfolio of nickel and cobalt projects creates mutually beneficial opportunities that could bolster and secure a much needed supply of minerals deemed “critical” by the Canadian and US governments.”

ABTC’s CEO and CTO, Ryan Melsert, stated:

“Our partnership between American Battery Technology Company and Global Energy Metals Corporation represents a complementary and actionable effort towards establishing a North American supply of critical and strategic materials that will fuel the global transition towards an electrified and domestic closed-loop circular economy.”

GEMC’s Råna Project 1% NSR royalty in Norway

GEMC recently signed a Letter of Intent (“LOI”) to purchase a 1% NSR, Net Smelter Royalty,on the Råna (Nickel) Project. The LOI is between Electric Royalties Ltd. and Scandinavian Resource Holdings to create a new 1% Net Smelter Royalty (“NSR”) on four exploration licenses totaling 25 square kilometers in the Råna mafic-ultramafic intrusion in Northern Norway, and it includes the past producing Bruvann Nickel mine (the “Råna Project”).

The Råna Project is a drill-ready, low CapEx, Class-1 nickel sulphide project with strong exploration upside. Global Energy Metals intends to work alongside the Vendor, to attract strategic partners to fund project development at the Råna Nickel Project while leveraging its interest to create shareholder value through exploration success.

If the Project is successfully brought into production then GEMC potentially stands to earn a nice 1% NSR  revenue stream.

GEMC’s 3 pillar growth strategy – Acquisitions, exploration & development, peer collaboration

Source: GEMC company presentation

Closing remarks

GEMC has 6 EV metal related projects with a focus on cobalt, copper and nickel. GEMC is also now collaborating with ABTC to help build a U.S battery metals supply chain, initially using ore from GEMC’s Lovelock and Treasure Box projects in Nevada, and drilling at Lovelock is currently underway.

GEMC trades on a super low market cap of C$6.7 million. Stay tuned.

Disclosure: The author is long Global Energy Metals Corporation (TSXV: GEMC).




Did H2O Innovation just sign a deal with Tesla?

Did H2O Innovation Inc. (TSXV: HEO | OTCQX: HEOFF) just sign a deal with Tesla?

The company provided a corporate update this morning, announcing it has signed $3.2 million in new industrial and wastewater contracts. Highlighting this update was the announcement that the company was awarded the engineering contract on a capital equipment project for the largest electric vehicle manufacturer in the US.

The company has secured the engineering contract to design two identical reverse osmosis (RO) trains, each rated at 2,200 m3/day, for an electric vehicle manufacturing plant located in Texas. Upon successful completion of the engineering work, a purchase order for construction and delivery of the equipment is expected to be issued.

It is public knowledge that Tesla is building a new plant in Texas (the Texas Gigafactory) and construction is well underway. The logical conclusion….

This could be a distraction in the company’s share trading as the market comes to understand the deal, but note that this is only one of the new contracts signed that have increased the company’s Water Technologies & Services sales backlog to $37.1 million.

The company is a technical innovator in the water handling business and the market has (finally) recognized this. On September 1, 2020, the company’s share price closed at C$1.09. At market close on January 15, 2021, the company’s share price had more than doubled to C$2.57, with a market capitalization of $199 million.

Recall that H2O Innovation does business around the world, but mostly in North America with almost 20% of business coming from other global sales. The company has three main business segments – Operating and Maintenance is the largest at approximately 48% of revenues, Specialty Products is the next largest at approximately 30%, with Water Technologies & Services (WT&S) accounting for the remaining 22%. The announced new contracts are the WT&S segment.

The new other new contracts include:

  • conversion of a conventional activated sludge plant to a membrane bioreactor (MBR) facility with biological phosphorus removal, also in Texas,
  • a redesign and replacement of a failing MBR system at a school in the State of Maryland, which will include repairs and improved durability of the wastewater system using ceramic membranes,
  • an exciting first for H2O Innovation, the award of a demonstration pilot for its novel SILO technology at an industrial customer in the Midwest US, and
  • a contract in Southern California for the supply of two RO demonstration units at the Hyperion Water Reclamation facility. This project reinforces the Corporation’s presence and experience in the critical water reuse market.

According to President and CEO of H2O Innovation, Frédéric Dugré, Texas is a strategic market for the company and “the projects we execute often also lead to opportunities for our other business units down the line”. The company continues put efforts into capturing more wastewater, water reuse, and industrial opportunities, which are characterized by higher gross profit margins.

The company continues to have a strong balance sheet, excellent customer retention and a market leading reputation for quality, innovation and service. With a growing backlog of orders, the company has no shortage of future business which should be good news for investors looking forward to the potential for future growth in a world that relies on clean water. Doing business with a company the size of Tesla also could have future business implications.




Battery metals influencer Mitchell Smith on lithium-ion batteries, Tesla’s GigaFactory and GEMC

In a recent InvestorIntel interview, Peter Clausi speaks with Mitchell Smith, President, CEO and Director of Global Energy Metals Corp. (TSXV: GEMC | OTCQB: GBLEF) (‘GEMC’), about the acquisition of an 85% interest in the Lovelock Mine and Treasure Box Projects located on the doorstep of the world’s largest lithium-ion battery production plant, the Gigafactory One that Tesla Motors Ltd. and partner Panasonic Corp. have built in Nevada, USA.

In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Mitchell started by saying that the COVID-19 pandemic “has highlighted the importance to regionalize supply and localization of new supply chain of critical minerals.” Mitchell, who was recently ranked as one of the top influencers in the battery minerals sector, continued by saying that the projects have very high grades of nickel, cobalt and copper deposit and have historically produced materials grading 14% cobalt and 12% nickel. He added, “because of fragmented ownership the projects were never explored using modern technique.”

To watch the full interview, click here

Global Energy Metals Corp.

Global Energy Metals is focused on offering investment exposure to the raw materials deemed critical for the growing rechargeable battery market, by building a diversified global portfolio of battery mineral assets including project stakes and sector specific equity positions. GEMC anticipates growing its business through the acquisition and development of battery mineral projects alongside key strategic partners. The Company holds 100% of the Millennium Cobalt Project and two neighbouring discovery stage exploration-stage cobalt assets in Mount Isa, Australia positioning it as a leading cobalt-copper explorer and developer in the famed mining district in Queensland, Australia. The Company has acquired 85% interest in two battery mineral projects, the Lovelock Cobalt Mine and Treasure Box Project. Additionally, the Company holds a 70% interest in the past-producing Werner Lake Cobalt Mine project in Ontario, Canada.

To learn more about Global Energy Metals Corp., click here

Disclaimer: Global Energy Metals Corp. is an advertorial member of InvestorIntel Corp.




Focused on feeding the EV boom with battery metals, Global Energy Metals understands the value of their Nevada location

Without doubt one of the biggest disruptions this decade will be the rapid move to electric vehicles (EV). As reported here, UBS recently forecasted US$100kWh batteries by 2022, EV/ICE (Internal Combustion Engine) parity by 2024 and that “there are not many reasons left to buy an ICE car after 2025”. Three of the key metals in demand to feed the EV boom will be cobalt, nickel, and copper. Today I discuss a company that has all three as well as some gold potential. The Company still has a very low market cap and has 3 combined projects in safe countries. These include a recently purchased project (Lovelock Mine & Treasure Box) in Nevada only 150 kilometers from Tesla’s gigafactory.

That company is Global Energy Metals Corp. (TSXV: GEMC | OTCQB: GBLEF) (‘GEMC’). Their focus is to build a portfolio of battery metal assets across key locations such as the USA, Canada, and Australia.

GEMC’s 3 projects are:

  • Lovelock Mine & Treasure Box Projects – Nevada, USA (85%)
  • Werner Lake Cobalt Project – Ontario, Canada (70%)
  • Millennium Cobalt Project (flagship) and Mount Isa Cobalt-Copper-Gold Projects – Queensland, Australia (100%)

GEMC’s 3 combined battery metal projects – USA (Lovelock Mine & Treasure Box), Canada (Werner Lake), and Australia (Millennium & Mount Isa)

Source

The Lovelock Mine & Treasure Box Projects in Nevada USA (85%)

In a very exciting and strategic move recently announced, GEMC has issued shares and made a cash payment as consideration for its acquisition of an 85% interest in the Lovelock Mine and Treasure Box Projects. The properties will be held in GEMC’s newly established U.S. Battery Metals Corp., a new U.S. listed vehicle and wholly owned subsidiary of GEMC.

The Lovelock Mine and property consists of approximately 1,400 acres (567 hectares) in the Stillwater Range of Nevada, USA. It was discovered by George Lovelock and Charles Bell in about 1880 and saw limited production of nickel, copper and cobalt beginning in 1883. GEMC reported that “the general average of the 200 tons shipped in 1886 averaged 14% cobalt and 12% nickel“, which is extremely high grades. After intermittent production no further production from the Lovelock Mine is known for well over a century. Several of the rock samples collected in 2017 showed strong enrichment in cobalt, nickel and copper.

The Treasure Box Project hosts mine workings from limited copper production, which occurred until early into the 20th century. A reverse circulation hole drilled on the Treasure Box in 1976 returned 1.55% copper over 12.2 metres from a depth of 25.9 to 38.1 metres.

Both projects are at the very early stage but appear to have good exploration potential based on their history. A bonus is their location in mining friendly Nevada, USA, and just 150 kilometers from the Tesla Gigafactory.

The Lovelock Mine & Treasure Box Projects are located effectively on the doorstep of Tesla’s Gigafactory in Nevada just 150kms away

Source

Werner Lake Cobalt Project in Ontario, Canada (70%)

The Werner Lake Cobalt Project has an Updated NI 43-101 (2018) Indicated Mineral Resource of 79,400 tonnes at 0.43% Co not including the 2018 drill program. This is an excellent grade for a western located project. There is also exploration potential for copper and gold.

Millennium Cobalt Project and Mount Isa Cobalt-Copper-Gold Projects – Queensland, Australia (100%)

The Millennium Project is a significant cobalt-copper deposit which remains open for further expansion. There is a historical JORC (2012) Inferred Resource estimate which showed grades of 0.14% Co, 0.35% Cu and 0.12g/t Au (using CuEq cutoff of 1.0%). This historical resource estimate is not yet NI43-101 compliant. GEMC intends to upgrade this resource to a current NI43-101 complaint resource.

The Mount Isa Projects include Mount Dorothy and Cobalt Ridge. Early stage drilling results included 7m @ 0.14% Co, 2.55% Cu, and 2m @ 0.12% Co, 0.13% Cu at Mount Dorothy, and exploration rock chip sampling results of 0.31% Co, 3.63% Cu, 1.25g/t Au at Cobalt Ridge.

Closing remarks

GEMC has a current market cap of just C$2.8m. Perhaps the reason the market cap is so low is that the company has had to endure the past 2.5 year cobalt bear market, and has only recently made the USA acquisition.

Recently, companies with USA EV metal assets have done very well as we saw with Piedmont Lithium, Lithium Americas, Westwater Resources, and many others. For investors that are positive on the outlook for EVs and the key EV metals (cobalt, copper, nickel) then GEMC should definitely be on your radar. Plus there is always the chance of GEMC finding gold.




Dominating global electric car sales – can anyone catch Tesla?

When looking at 2019 electric car sales there can be no doubt that Tesla (NASDAQ: TSLA) is dominating global sales. Tesla is number 1 in global electric car sales, number 1 in US sales, and number 1 in Europe. Model 3 sales are almost triple the next model, and in the US Tesla sales make up a massive 75–85% market share. In this article, I take a look if anyone can catch up with Tesla as we head into the 2020s.

Tesla is number 1 globally with 16% market share, and Tesla Model 3 sales are almost triple the nearest competitor (2019 YTD, as of end of October)

Why is Tesla dominating?

  • Brand, style, performance and quality – Model S won the best car ever, and Tesla is now famous for stunning looking cars with top tier performance.
  • Range and efficiency – Tesla’s cars achieve more range per kWh than any of their competitors. They just won an award for the most efficient global electric car ever.
  • Charging network – Tesla has by far the world’s most expansive charging network.

To summarize the above, Tesla is dominating as they are at least 5 years ahead of their competition. Only the Chinese BYD Co., BAIC, SAIC, Geely pose a challenge. The ICE manufacturers have been asleep at the wheel in past years making compliance cars. Volkswagen, BMW, Renault/Nissan, and Hyundai/Kia are making better progress in recent years, but will still take some years to try and catch up with Tesla.

Tesla Model 3 – Recently rated the most efficient electric car ever

Tesla in 2020

By early 2020 we will see Tesla’s Shanghai China gigafactory start ramping up production of Model 3. Tesla began Model 3 sales in China in October 2019, with some early production models released in November 2019. Production capacity at the Shanghai factory is set to rise to 250,000 initially, with a capacity of 500,000 cars a year.

This has the potential to boost Tesla’s global dominance even further. By the end of 2020, Tesla will also be selling (or soon to start producing) Model Y SUV. Tesla state: “Model Y production is expected to begin in late 2020 for North America, and in early 2021 for Europe and China.”

Tesla in 2021

By the end of 2021, Tesla should be producing the Tesla Cybertruck pickup. Also, Tesla should be starting to produce some small volumes of the Tesla Semi and Roadster 2. The latter two may be delayed into 2022, we will see.

Tesla models to come – Model Y, Roadster 2, Cybertruck, and Semi

Tesla is already leading the pack by a significant margin (5% ahead of BYD co). As we head into 2020 that lead may increase with Model 3 sales starting in China. Once Model Y production starts sales should surge again, then again with the cyber pickup truck, Roadster 2, and Semi.

Add in Tesla’s growing energy storage business with Powerwall, Powerpack, and Megapack and it is hard not to see Tesla continuing to dominate electric vehicles (EVs) and Energy Storage (ES) for the next decade ahead.

Valuation is hard to assess given the accumulating debt, small profit at this stage, and large CapEx ahead. But one thing looks certain – Tesla is set to be the most popular electric vehicle company for the next decade as all its competitors scramble to catch up.

What do you think? Can anyone catch up with Tesla?

Note: The author is long Tesla (TSLA).