What do all electric vehicles have in common?
They run on lithium-ion batteries.
Sure, there are ongoing efforts to turn those lithium-ion batteries into lithium solid-state batteries, because going from liquid battery chemistry to solid-state battery chemistry could be the key to making a million-mile electric car one day.
But… note the consistent use of lithium.
Regardless of what EV batteries look like in the future — liquid batteries or solid-state batteries — they will be built using lithium.
Of course, that means that as the EV megatrend disrupts the global auto market over the next decade, demand for lithium will explode higher.
Indeed, as EVs project to scale from around 2% global auto market penetration in 2019 to 70%-plus penetration by 2040, global lithium demand is expected to rise by over 20% per year for the next 20 years, according to Benchmark Mineral Intelligence.
That means lithium demand is projected to soar nearly 4,500% over the next two decades.
Needless to say, then, some of the best picks-and-shovels plays on the EV megatrend will turn out to be lithium mining stocks.
These stocks could very easily be 1,000%-plus winners as EVs become globally ubiquitous throughout the 2020s and 2030s.
Today, we will tell you all about the single best lithium mining stock in the market — a tiny U.S.-based lithium stock that is producing the best type of lithium concentrate today, and which just signed a major deal with Tesla.
The Best-of-the-Best in the Burgeoning Lithium Market
When it comes to the lithium mining market, Piedmont Lithium (NASDAQ:PLL) represents the cream of the crop.
Up until recently, Piedmont Lithium was a relatively obscure mining company with a promising yet largely unknown lithium project in North Carolina focused on hard-rock (or spodumene) mining.
Then, in late September, Piedmont signed a major agreement with Tesla, in which Piedmont will supply roughly 50,000 tons of spodumene concentrate to the EV giant for the next five years, with an option to extend the agreement for additional five years thereafter.
Of course, that’s a huge deal.
Tesla is king of the EV space, and will be the primary driver of burgeoning lithium demand for the next several years. Piedmont signing a five- to ten-year deal with Tesla secures the miner huge revenue streams for the foreseeable future.
Piedmont stock more than tripled overnight.
But… when it comes to the Piedmont growth narrative… the Tesla deal is really just the tip of the iceberg… and Piedmont stock tripling in late September could be just the beginning of a much bigger, longer rally in which the stock rises 10X.
Here’s the deal.
There are two major shifts happening in the lithium market today, and Piedmont finds itself on the right side of both of these shifts.
First, we are seeing a big push towards more U.S. production of lithium.
The U.S. currently accounts for less than 2% of global lithium supply. Most of the world’s lithium supply comes from the so-called “Lithium Triangle,” which comprises Chile, Bolivia, and Argentina.
This Lithium Triangle is a geopolitically volatile area, and therefore, subject to significant and prolonged lithium supply chain disruptions. Those disruptions are becoming increasingly unacceptable as EV makers require a more steady and robust supply of lithium.
So… we are seeing a big shift towards domestic lithium mining… and Piedmont’s lithium project is based in North Carolina, in the heart of the U.S. Auto Valley and within driving distance of many of America’s largest manufacturing plants.
Second, we are also seeing a big push towards hard-rock mining over lithium brine production.
Lithium is sourced from either spodumene or brines. The principal difference is that spodumene can be converted directly into lithium hydroxide, while brines produce lithium carbonate, which can be subsequently converted into lithium hydroxide.
Thus, while brines are perfect for creating lithium carbonate, spodumene is more cost-effective and quicker when it comes to producing lithium hydroxide.
Right now, the market needs more lithium hydroxide, since EV makers — in a big push to increase battery energy density — are increasing the amount of nickel in their batteries, and high-nickel batteries require lithium hydroxide, not lithium carbonate.
So… we are seeing a big shift towards hard-rock lithium mining… and Piedmont’s lithium project is a hard-rock mining project which produces 160,000 tons of spodumene concentrate every year.
In other words, Tesla didn’t just pick Piedmont as its major lithium supplier because they drew the company’s name out of hat.
Tesla picked Piedmont because it is a U.S.-based, hard-rock miner that is perfectly suited to cost-effectively meet the growing lithium demand needs of the EV market.
To that end, you shouldn’t look at Piedmont as a one-hit-wonder with a major Tesla deal… but rather, as a best-in-breed player in the lithium mining market.
Does that mean this $340 million company could one day fetch a multi-billion-dollar valuation?
Considering the net present value of the company’s North Carolina project alone is over a billion dollars… then, yes, absolutely. Piedmont is well on its way to turning into a multi-billion-dollar lithium mining powerhouse, meaning that investors bullish on the EV megatrend should consider buying into Piedmont stock today.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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