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The Outlook for Lithium Production

Written By Brian Hicks

Posted November 17, 2009

 

UPDATED: “Visit our Lithium Production Companies page for updated information on investing in the lithium sector.”


 

The lithium buying mania has only just begun, as investors and governments scramble for a way to cash in. . .

That’s because even they know that lithium could soon replace billions of barrels of oil — or trillions of dollars in black gold revenue.

They also know that demand is expected to continue rising, as the lithium boom takes its cue from the demand for it in the electric car market. . .

We’re not talking “flash in the pan” here.

We’re talking about exposure to a lithium battery market that’s expected to hit $15 billion by 2010. . . and quite possibly $30 billion within a few short years.

Why would you pass this up?

Already, some of the world’s biggest players are wasting no time claiming their stake, including Warren Buffett, who recently stunned the market when he announced a $250 million investment in a Chinese electric car company — even though he knows nothing about electric cars.

Even China, Korea, Japan and the U.S. are pouring millions into lithium projects.

I could continue listing examples, but I think you get the point.

How can you not jump on this profit opportunity?

The Boom is Just Getting Underway

There’s simply not enough of the element to go around.

And demand is only going to get stronger with limited supply, as lithium batteries are on the cutting edge of powering the coming hybrid and electric car revolution.

Starting in 2010:

  • Mercedes will launch its hybrid sedan in early 2010.

  • Tesla Motors already delivered its Roadster.

  • Nissan will produce 150,000 electric cars.

  • Ford has plans to manufacture an electric Focus by 2011.

  • And General Motors is betting on the success the Chevy Volt, in 2010.

    And, according to Brian Hicks, if you’re skeptical or concerned that fuel efficiency alone is not enough to entice Americans to buy electric cars, consider the Silicon Valley company Tesla Motors. While their roadster is the first production automobile to use lithium-ion battery cells and travel more than 200 miles per charge, it is also capable of going from 0-60mph in less than four seconds.

    Not only will the Roadster leave most sports cars in the dust; the car recently set a distance record in April 2009 when it completed the 241-mile Rallye Monte Carlo d’Energies Alternatives with 36 miles left on the charge.

    At just over $100,000, the Roadster is probably too pricey for the average consumer. . . but Tesla has taken more than 1,000 reservations for the car and expects to begin production of an all-electric and more affordable sedan starting in late 2011.

    But just remember, the Tesla — as well as every other electric car — needs lithium. And demand for lithium is skyrocketing. . . and will continue to skyrocket.

    With limited supply and all this demand, what happens to the price?

    It’ll easily take off.

    And as more than four million electric cars could be sold in coming years, there’s not nearly enough supply. And it’s not nearly enough to meet these projections:

    • Deutsche Bank sees 70 new electric car models by 2011, for example;

    We’re talking big numbers — and a big demand that may not be met quickly. But it’s great news for any company involved in finding lithium.

    Here are some of the companies that should benefit. . .

    There’s always Western Lithium, which our own Brian Hicks recommends. It’s well-funded and debt-free, with $7.3 million cash on the books. They recently completed a $5.5 million private placement in May of this year and have a market cap of 70 million.

    And sure, the stock is up a lot this past year. . . but we believe the lithium bull market (one that could mirror the uranium-style bull market), is just getting started.

    While there are many more “must own” lithium stocks to pick up today — featured in the latest Pure Asset Trader special report — there’s another element “flying under the radar” that’ll change our lives forever. . .

    Vanadium Leading the Charge

    Sitting between titanium and chromium on the periodic table lies a little-known element that could make investors a small fortune — just as lithium could do.

    You may have never heard of it, but it’s all around you. It strengthens steel in offices and tools. . . and could soon play a big role in electrifying cars.

    Future growth for this element already looks very strong in the steel industry. In addition to the trillions in global stimulus spending, CIBC World Markets estimates that global infrastructure spending will hit $35 trillion over the next 20 years. These projects will focus on rail, highways, bridges, and airports. . . and all will require vanadium.

    But growth in energy storage will be a big boon, too. Subaru recently revealed its G4E car, powered by a high-capacity vanadium-lithium battery. That battery alone will be capable of storing two or three times more energy than standard batteries.

    We’re talking wild, explosive growth in a sector that just starting to take off.

    How can you pass this up?

    Stay Ahead of the Curve,

    Ian L. Cooper
    Wealth Daily