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Lit

Lithium is the resource to power our future and no one is outproducing Australia. We look at the EV inspired supply chain trade which is popular on Stake.

The lightest metal on earth, lithium is carrying a heavy load in building a sustainable future. Lithium is one of the most essential elements in electric vehicle batteries. For everyone to achieve the most popular 21st-century goal of owning a Tesla, the world is going to need a whole lot more Lithium. The growth in EV adoption pushed its price up 500% in 2021.

Lithium makes up 10% (8kg) of metal components in a Lithium-ion EV battery but its relative scarcity has driven the price up in response to new demand. Australia produces 55% of all Li in the world, massively outpacing Chile and China. Nickel, manganese and cobalt are the other components.

By 2035, it’s expected that half of all new cars sold will be battery powered. The question is, do we have the resources to cater for such projections? In the short term, yes. Bloomberg estimates we have large enough reserves to produce enough cars until around 2050. By then it is hoped a new method of EV battery production is discovered. Or we can rely on recycling. 97% of EV batteries are recyclable.

The understanding of lithium’s importance to an EV future has led to a “supply chain trade” as we like to call it. Investors are not only buying the finished product in Tesla, Rivian and Nio stocks but also gaining exposure to ASX listed lithium mines. Core Resources (CXO) and Liontown Resources (LTR) are consistently amongst the top 10 most traded stocks on the platform. That’s the beauty of markets, there are so many ways to invest in the trends you notice every day.

The world is very quickly switching from fuel reliant engines to material-intensive systems. This reminds us of the important role that mining plays in our future. While it may carry a poor reputation due to its relatively unclean history, it’s not just coal or iron being pulled out of the ground anymore.

The obvious question is what’s next? Which other resources can power our green future? You’re in luck. The World Bank published a report with the most vital metals for a low-carbon future. The report pinpoints every metal used in every power source from solar to nuclear.


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