Could This Be the End of Chinese Lithium?

Written By Alex Koyfman

Posted August 14, 2023

Dear Reader,

There is no way to overstate how important lithium is to today's and tomorrow’s global economy. 

In fact, just finding a historical parallel to just how all-encompassing lithium is, is hard enough. 

The closest analogue I can find is fossil fuel, but even that falls desperately short when it comes to illustrating lithium’s importance. 

Oil and gas drive the world of machinery, from the riding mower in your garage to the car in your driveway, all the way up to the biggest ships on the high seas. 

What fossil fuels don’t do is power all of the world’s smaller, more delicate machines. Things like your phone, your laptop, and your smartwatch — they're all just as dependent on lithium as any ICE car is on fossil fuel.

By 2025, there will be a projected 18.55 billion wireless devices in operation around the world, each and every one of them running on lithium-ion batteries. 

Oil 2.0 Is Here

By the end of the 2030s, however, lithium is also going to become a major, if not dominant segment in terms of vehicle power as well. 

With ICE bans going into effect in Europe starting in 2025 and here in the states as early as 2030, lithium is going to be the premier form of energy storage for all machines.

But there is a major problem here.

While lithium demand seems to be bottomless, lithium supply is anything but. 

In fact, starting this year there will be a bona fide lithium shortfall — a gap that’s expanding — between how much we need and how much we have. 

MI Black Lithium Image 13

This deficit has been building for a while, and lithium investors know this. 

The resulting investor speculation combined with the shortfall has reflected on lithium prices in a major way. 

MI Black Lithium Lift Chart 2

This may make lithium investors happy, but it does nothing to solve the world's biggest logistical problem.

We simply don’t have enough of it. 

It’s a crisis, and unless you’re living in China — which is hoarding lithium exploration, production, and refinement, as well as actual battery manufacturing — it’s a political crisis as well as a resource crisis. 

Lithium: A Chinese Obsession Since the Days of Deng Xiaoping

Now, I know that pointing the finger at the Chinese Communist Party is a bit of a cliché these days, but in this case, it actually applies, as the CCP has absolutely been working toward the goal of global lithium dominance since before Sony released the first lithium-ion batteries to consumers back in the early '90s. 

For the rest of the world, and certainly for those of us living in China’s No. 1 rival in the game of world influence, there is only one answer: more domestic production… a lot more of it. 

But that presents its own problem. Lithium needs to be found before it can be mined. That takes months or even years, even when you already know where to look. 

Then it needs to be mined and extracted, typically through evaporation in giant ponds like the kind pictured below, a process taking up to two years in its own right. 

MI Black Lithium Image 4

Meanwhile, the deficit grows. The gap widens. Lithium grows more and more expensive, as does every device that relies on it.

There is no simple way to solve this crisis — not if you’re doing things the traditional way. 

And that’s what I’m writing to you about today.

"Great Results Can Be Achieved With Small Forces" — Sun Tzu

Because right now, a newly formed company operating on a 671-square-mile property in northwest Alberta has found a very non-traditional way to do exactly that — solve the lithium deficit in one fell swoop. 

This company was founded just four years ago by a small group of petrochemical industry veterans. 

Now, why on Earth would a group of oil and gas pros want to start a lithium company? Simple. Because there is a massive lithium resource located on the property this company has contracted to develop, and it’s not in the ground… It’s sitting, dissolved, in hundreds of brine ponds currently being used by a fossil fuel company to produce oil and gas. 

Some 4.3 million tons of lithium — enough to supply global demand for the next three years — has been located, analyzed, and quantified.

There is no exploration to be done. No mining… The only trick is to separate the lithium from the rest of the brine, and for that task, there is no better candidate than an oil and gas expert

This company has revolutionized a process that can extract lithium from the solution at a cost of around $4,000 per ton. 

In a time when the market price of lithium is hovering at the $70,000/ton mark, the benefits aren't hard to add up

From Microcap to Midcap in Two Years?

As I mentioned earlier, this company is young, but because the methodology is already proven and is up to 10 times as fast as traditional lithium extraction, it’s already on pace to achieve commercial production within the next 12 months. 

Contracts with the oil company to filtrate the brine are in place. A pilot facility is already complete. 

In the next two–three years, this company, whose market capitalization as of this morning was less than $20 million, could be producing up to 20,000 tons of lithium annually. 

Subtract the overhead and that amounts to annual profits of over $1.4 billion.

Apply the standard multiplier and this company, a true microcap, could be worth in excess of $4 billion within just a few short years — that's 200 times its current value.

Of course, it will most likely never actually see those valuations in its present form. With this approach and this timeline, what’s far more likely is a buyout by a major energy company. 

Right now, this company is still flying under the radar, but it’s not doing a very good job of it. 

Investors Be Warned: End Users Are Already Calling

Inquiries are already being made by major EV-makers, all looking for sources of non-Chinese lithium for their battery packs.

Because yes, the problem is that pressing, and yes, this solution is that promising. 

I’ve been studying this company for weeks now. I made the decision to initiate my own open market position last month, despite it being the slowest time of the year for trading, during a year that’s been anything but kind to the microcap space. 

Tomorrow I’m releasing my in-depth research report to all of Angel Publishing’s free files, but today, I decided to offer Wealth Daily readers their exclusive first look at the document. 

It’s detailed and it tells the whole story, starting with the magnitude of the crisis. 

I urge you to take a look right now, before this goes out to the rest of our readership. It may be the most important document you open this year. 

Get immediate access right here.

Fortune favors the bold,

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Alex Koyfman

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His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.

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