How Far Can EVs Drive Lithium Prices?

Tesla will soon finish its gigafactory, where it will produce the batteries needed for the 500,000 electric vehicles that it plans on building in 2018. By 2020, Tesla plans on expanding its EV production line to as many as one million cars per year.

To build enough batteries for that many EVs, Tesla will swallow up the entire world’s lithium production capacity, something Elon Musk has repeatedly noted. And of course, Tesla is not the only EV manufacturer in need of lithium.

Although still in its early stages, the coming rush for EVs is creating the conditions for a very tight lithium market, a market into which several small miners are hoping to profit. One company is Lithium X, a pure-play lithium miner that has prime acreage in Argentina’s “Lithium Triangle.” Lithium X has a large interest in a pilot project in Argentina, which will produce 2,500 to 5,000 tons of lithium carbonate equivalent. But if all goes well, production could be expanded significantly.

Lithium X also has a presence in Nevada’s Clayton Valley, the only place in the U.S. where companies are mining lithium brine. It also happens to be close by to Tesla’s gigafactory.

While it will face stiff competition, Lithium X believes it has assembled a top management team to become a leading lithium producer for Tesla and others. Lithium X brought in Eduardo Morales, a veteran lithium producer in South America, as its new Chief Operating Officer. The executive chairman, Paul Matysek, has a long record of building and selling successful mining companies. So far things look promising. In the one year of the company’s existence, founder Brian Paes-Braga has managed to steer Lithium X into a company with a market cap of over $92 million. But he is aiming to turn Lithium X into a billion-dollar company.

The market for lithium is still small, but the rapid expansion of both EVs and renewable energy could transform the industry. Without ETFs or futures in lithium, small pure-play companies like Lithium X are one of the few opportunities in the sector for investors.

By. James Burgess of Oilprice.com

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