AVB (ASX) The ineviatble

7 Commodity Winners In Electric Car Revolution

By Dimitra DeFotis

As Tesla (TSLA) ramps up U.S, production of lithium batteries for electric cars and expands into emerging markets, the ridership revolution will have a profound impact on commodities.
An AB team of market experts headed by metals Analyst Paul Gait ranks the commodities that ought to benefit the most: 1. Copper, 2. Nickel, 3. Cobalt, 4. Graphite, and then behind: 5. Lithium, 6. Manganese, 7. Aluminium. But they add that current commodity prices don’t support the required demand for copper. They write:
” … innovation in batteries is enabling an electric revolution that has massive ramifications. … It took 120 years to build the modern copper industry. The electric vehicles revolution could require the supply base of copper to double again, but this time in only 20 years. This will be a prodigious feat and is simply unachievable at today’s commodity prices. … the total requirement is 35.8 million tonnes of copper equivalent production within the next twenty years…. the real issue is how the supply side moves to accommodate [demand] and what the price elasticity of supply is. Where commodities are economically scarce, any increase in demand growth beyond current levels will be very hard to meet.
Assuming that the transition to EVs [electric vehicles] does take place, the global mining industry will need a capital increase of between US$350 to US$750 billion. But … the capital increase is highly concentrated in … copper, nickel and cobalt. … Lithium is an abundant commodity where very little new capital is required to deliver all the supply that we will need to enable the EV transition.
Which equities could offer the appropriate exposure? Being long electric vehicles further down the value chain comes down, for investors, to answer the question as to which player will emerge as the winner in this revolution – the risk being to back the wrong horse. However, by gaining exposure through raw materials, one can eliminate that risk: all producers of the key commodities identified above should benefit through the appreciation of commodity prices.
Equities AB thinks will benefit include a mix of Canada, Australian and United Kingdom companies that trade over the counter in the United States: Ivanhoe Mines (IVPAF) (copper), which also trades in Canada and Germany; mining and commodity-trading play Glencore (GLNCY) (copper, cobalt & nickel); First Quantum Minerals (FQVLF) (copper, nickel); Clean TeQ Holdings (CTEQF) (non-covered, nickel & cobalt) and Syrah Resources (SYAAF) (non-covered, graphite).

http://blogs.barrons.com/emergingma...commodity-winners-in-electric-car-revolution/