Regarding electrification, there is talk of new technology, including other battery chemistries besides the dominant nickel-manganese-cobalt (NMC) combination, and other battery types like zinc-air and solid state, however the reality is that lithium-ion is the first mover in this space and the technology is not going away.
Consider: Toyota just announced it is going to spend $3.4 billion on US automotive batteries through 2030, including building a new battery plant by 2025. Would the world’s largest automaker make this kind of investment if it thought that current battery technology was on its way out? Clearly not.
The infrastructure including millions of charging stations is in place and growing, there are US$ billions worth of lithium-ion battery plants in the works not only in the US but in Europe and China. Lithium and graphite are both must-haves to build a lithium-ion battery, there are no substitutes. In my book this makes them long-term investable commodities. Graphite is lesser known to investors than copper and lithium but this only adds to its allure. Lithium is like the first mover in an area play, and graphite is similar to the next company on trend, the one you would want to invest in because that is the direction the money flows. Of course, not every graphite deposit will do. It must be large flake, spherical graphite, the kind used in the battery anode. To interest a major, the deposit should also be scalable and reasonably low-cost.
The best leverage to a rising commodity price is a quality junior resource company. Despite carrying a certain amount of risk, these investments can also deliver handsome rewards to patient and shrewd shareholders, which is why I continue to own shares in companies that are hunting for The Big Three Commodities of Electrification and Decarbonization.
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