Yes Muppet I will not engage further with scrubs, as what you...

Yes Muppet I will not engage further with scrubs, as what you write is 100% correct.

I did engage on the topic of EVs and climate change with "an old friend" of mine starting September last year. It was someone who until then I thought was a reasonable person.

As an intellectual exercise, I thought I ought to try and understand his way of thinking and factual arguments - after all, if I can not defend my position, perhaps I ought to be man/woman enough to admit I was wrong and change my views.

Alas, in the end, what I got was a deluge of regurgitated misinformation and opinion pieces (prominently featuring one guy whose surname rhymes with "Volt"), which I responded to one falsehood at a time. However, I stopped this conversation, when it became clear that with it came a world view, where anyone left of Abbott and Bernadi was a socialist (I do not think he was able to differentiate nor understood the difference between a social democracy, socialism, and communism) and when this guy tried to steer the conversation to other issues involving his racist views and hatred against Muslims [as it happened, this was just a few weeks before the Christchurch shooting].


However, I do think it is important to point out the fact that climate change is a key driver of lithium demand and hence AJM's share price.

If you look at Tesla's mission statement and listen to what Elon Musk says, it/he is clearly driven by the concern about climate change. While Tesla/Musk has its/his critics {I declare being an investor], to me it/he was the circuit breaker that triggered the EV revolution. Without the pressure from Tesla, conventional car manufacturers would only have been too happy to kick along their EV initiatives slowly, without being serious about EVs for many more decades to come.

I also do believe Elon Musk, when he points out that there is an abundance of lithium on this planet and the reason I invest in companies like AJM is that I expect that only due to RAPID increase in demand - only at the very beginning of the EV revolution - will there be a supply and demand mismatch for lithium.

On the other hand, about a year ago, I went to a battery technology seminar, where a senior Australian representative of a large South Korean battery manufacturer stated that battery manufacturers had been "victims of their own success" and that the high lithium prices had actually served to slow the ramp up in production, as manufacturers are not willing to pay too high prices for lithium - and lithium prices have obviously come off significantly since then.

Add to that an observation of an former colleague of mine who had an exciting career working within the cutting edge of the global PV industry. He recalled how in the early days of his career his company did a study which suggested that if there was to be a massive adoption of PV technology, silver prices would constrain supply, as not enough silver production could be brought on-line to avoid a price escalation. Looking back, he was amazed how little impact the massive ramp-up in PV production had on the silver price. He said that mass production and economies of scale is an absolutely amazing phenomenon to experience due to the high level of efficiencies that are gained with mass production.

So, I firmly believe lithium is the future. I also firmly believe that the real investment opportunity in AJM only exists if both legs of my assumptions about EV technology hold - i.e.

1.) electric motor technology is technically superior to as well as cheaper than ICEs [if not already now, then it will be so very soon] AND
2.) the desire to counter the threat of climate change will accelerate the adoption of EVs.

Given my friend's observations, I am cautious about my third assumption, which is that:

3.) given 1.) & 2.) above, there will be a short-term demand/supply mismatch for lithium

Too often, I read excited posts on Hotcopper from people who project a massive ramp up in lithium demand and then apply high lithium prices to work out what this means for their lithium stock(s) investment(s). I am told you can't have your cake and eat it. Rapid adoption will only happen, if lithium prices stay low, while high lithium prices imply a more pedestrian production ramp.

I hope that AJM will be able to compete against other low-cost producers as global battery production accelerates.