Clean Energy – Electric Vehicles Preparing for Liftoff (July 6, 2017)

by FI Fighter on July 6, 2017

in Clean Energy, Lithium, Lithium Updates

When it comes to clean energy, I’m about as bullish as you could possibly be. Sure, I hear all the critics who are quick to dismiss this impeding paradigm shift in transportation to 100% electric vehicles (EVs) as nothing more than hot air hype. The detractors of EVs argue that:

  • The range sucks…
  • Charging time takes forever and a day.
  • The cars are too expensive.
  • These car manufacturers can’t make money and need to rely on subsidies just to break even, at best.
  • There’s not enough infrastructure support for charging.
  • Gas is now really cheap, so why bother going “green”?
  • Etc.

Sure, it’s always a good idea to play devil’s advocate, but I would counter to anyone asking those type of questions to consider past technological revolutions such as the internet and smartphone and all the innovations/breakthroughs that happened to those industries as they strived relentlessly to reach tipping point.

Does nobody out there remember what it was like to fire up a browser back in the mid 1990s? I’m talking about trying to connect to AOL using a 56k modem and praying to God that nobody in your household tried to pick up the landline, otherwise you would get disconnected in a heartbeat… and yelled at by your parents for scaring the bejeezus out of them with that horrid sound that emanated from the speakerphone…

Yeah, I’m betting most new-age millennials have no idea what I’m rambling about here…

Sign of the times, I’m seriously getting old…

Anyway, it used to take me like 5 minutes to load a webpage that contained hardly any images on it… and I used to consider it a triumph if I could successfully download a 3 megabyte MP3 song to completion without being interfered with (as discussed above) and having to start all over again due to yet another disconnection.

As for smartphones? Once upon a time I owned a BlackBerry Storm… I paid like $40/month to NOT be able to browse the web efficiently because the formatting was horrendous, the load times were way too long, and yeah, it was a BlackBerry product… They were awesome when it came to things like email, but outside of that…

We’ve come a long, long ways, that’s for sure!

Straight up — Things got progressively better over time, that’s how technology works!

In regards to EVs, c’mon man, we haven’t even started the ballgame yet! At best, we are like at the bottom of the 1st inning. Dude, just take a look of all the cover photos of my clean energy posts… They are almost ALWAYS pictures of a Model S (that’s still like the only EV I ever really ever come across on the road)!

Please, at least give the home team a crack at the bat before you go on insinuating why the next major revolution of our lifetime will go down in flames.

Moving on…

The markets were hit with a wave of major news items this week which I thought I would share with you all here.

When it comes to technology and where we are headed, I’m a strong believer in following where the BIG MONEY is moving to next…

From Electrek.

The trend is yo friend… More and more Gigafactories are popping up and even more will be planned over the next decade, you can be certain of that.

Now, even the French have jumped onboard and announced a ban on new petro and diesel cars going forward…

From Electrek.

Yeah, I hear you… 2040 is a looooooong time away… but if I’ve learned anything with technology, those timelines will most likely be pulled in as mass adoption exceeds everyone’s wildest imagination by a country mile… Just the mere fact that these type of discussions are being held by governments and nations across the globe is a very bullish sign for the clean energy/EV movement, most important of all.

It ain’t all about Tesla! Everyone thinks it is, for some strange reason… but once you start seeing the likes of titans such as: Daimler, BMW, Volkswagen, and now Volvo committing to electric vehicles, how can you not be a bloody optimist?

From Bloomberg.

 

In Volvo’s case, 2019 is just around the corner!

And as readers are well aware, to hitch a ride on the clean energy/EV train, I’m placing my speculative bets on the companies that will be mining these New Age Clean Energy Minerals.

Yup, we’re talking about mining stocks associated with: lithium, cobalt, graphite, copper, nickel, etc.

Since the battery technology of choice at the moment (and for at least the next decade) is the lithium-ion battery, we might as well start with the namesake material itself!

There is no spot market for lithium, so if you’re going to invest/speculate in the lithium mining world, you have to go with the companies who have secured binding offtake agreements (BOA) with the end users who will be purchasing up all the goodies.

And right now, the contract pricing being agreed upon is encouragingly robust, suggesting that the environment of elevated lithium prices will persist at least through 2017… and I’m confident into 2018, 2019, 2020 as well (as the world ramps up production furiously to reach tipping point).

Where is tipping point? Well, here’s how everything played out for US smartphone penetration.

Screen-Shot-2014-04-07-at-7.55.13-AM

I personally think that the upcoming Model 3 launch will coincide with the iPhone launch… But your guess is probably better than mine… It’s up to you to decide where we are currently at and where you think we could be heading next.

Back to contract pricing.

Mineral Resources (MIN.AX/MALRF) and their partner Neometals (NMT.AX) have an agreement with Ganfeng Lithium to sell them 6% spodumene concentrate at $841/t, an increase of 12%.

From Mineral Resources.

Next, we have Galaxy Resource (GXY.AX/GALXF). Their contract terms for 2017 are also a very robust $860/t for 6% spodumene concentrate.

From Galaxy Resources.

These updates ride on the heels of the Tawana Resources (TAW.AX) announcement made earlier this spring for contract pricing between March 2018 through to December 2019 at $880/t for 6% spodumene concentrate.

From Tawana Resources.

So, across the board, we are seeing contract prices for 6% spodumene concentrate being agreed to at $840/t and above.

This bodes well for many of these companies, particularly the junior developers who have yet to enter commercial production, but will be joining the fray soon enough.

Less anyone forgets, Pilbara Minerals (PLS.AX/PILBF) completed a Definitive Feasibility Study (DFS) last September, and they used a very “conservative” sales price of just $537/t for 6% spodumene concentrate… and their economics still looked plenty good enough (IRR of 38.1%) to put the Pilgangoora project into production!

From Pilbara Minerals.

This is all very encouraging news for lithium investors/speculators…

 

And don’t even get me started on cobalt… which is setting new highs seemingly every week.

 

The future is bright, fellas…

 

Let the games begin!

{ 2 comments… read them below or add one }

1 CarlitosNo Gravatar July 7, 2017 at 12:37 pm
2 alNo Gravatar July 11, 2017 at 1:58 am

“I hear all the critics who are quick to dismiss this impeding paradigm shift in transportation to 100% electric vehicles (EVs) as nothing more than hot air hype. it’s always a good idea to play devil’s advocate, but I would counter to anyone asking those type of questions to consider past technological revolutions such as the internet and smartphone and all the innovations/breakthroughs that happened to those industries as they strived relentlessly to reach tipping point.”

well, you clearly haven’t done your history job properly.

Electrical vehicles were there before the ICE engines were made available. Somewhere end 1800’s early 1900’s most “self propelled road vehicles” were battery charged types, alternatives being steam propelled ones.

Until a guy named Rockefeller came along (he mined oil, to turn it into USD), and another bunch of guys also came along (Mr Diesel, e.g.) and they decided to put something on the road that replaced horse shitting drag cars and electrical vehicles “in the blink of an eye”.

But since you are clearly brainwashed, I just read yesterday on the Wall Street Journal, that HongKong has cancelled all tax breaks to electrical vehicles in 2017 because they can’t afford them anymore, and since then your beloved TESLA has sold ZERO new vehicles in that specific area…

I just read yesterday on Seeking Alpha, that TESLA has sold only 6% more new EV’s in the USA in 2017, because GM’s Bolt has apparently taken over the expected 44% rest (something like 8000 Bolts EV’s were sold in the first 6 months of 2017 in the USA, each with a $7500 tax subsidy, compared to a few millions ICE cars).

Building a ton of Gigafactories won’t change a damn thing about the electro-chemical reactions in Lithium batteries, which means a lot of folks will discover to their amazement that somewhere down the road, their car battery driving range is unexpectedly decreasing after each loading cycle.

I had a contact who owned one of the early Nissan Leafs, driving range new ? 100 miles max. in summer, more like 80 miles in full winter. Today, 5 years later, he is down at 70 miles max ranges after a full reload in summer. Battery replacement costs ? $ 10 000 for a new battery pack, since half the car interior has to be dismantled to get there.

EV’s are solely gaining ground for two reasons : governement imposed maximum amount of emission levels for the overal sold new car park per year (requiring a certain amount of EV’s to be sold to get there, whatever their cost to consumers), and the huge tax breaks they receive from same governements because of those push regulations.

Since when can you trust a government to not change it’s rules down the road ? But I disgress, since you invest in cobalt, you should invest in the DR Congo, given that you clearly trust all govmints to remain reliable down the road…

Just my two cents, since you are FI, deciding to switch from a boring well paying engineer job in a fruit plant somewhere in CA, to now being a very busy travel blogger paying good $ and venture capitalist active in the very low risk junior mining business, to make even more $$$ …

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