Is lithium dead?
The once darling of the battery metals has experienced a huge collapse from its spectacular rally in late 2021 through 2022.
During that brief period, the price of the white metal soared from just under $15,000 per metric ton to over $80,000. The entire rally was driven by the EV boom that was coming out of China.
But then the boom cooled. And so did the price of lithium, landing back (actually below) where the whole thing started.
The saying goes that all good things must come to an end. But while the initial excitement over the prospects of lithium has met with reality, does that mean the end for lithium in general?
Hardly.
Booms and Busts
The truth is the future of lithium is likely just getting started.
As with any new technology — in this case we’re talking about the electrification of the country — there’s always an off-the-charts enthusiasm at the very beginning. Think back to the tech bubble of the 90s.
The internet was the next big thing and stocks for any company remotely attached to it were getting bought hand over fist.
Turns out not all of them were a good bet!
It was the same with lithium.
Lithium was viewed as the next big thing. And demand for the metal and every company that had anything to do with it got overdone.
But here’s the thing. After the irrational exuberance of the tech boom went pop, the industry finally consolidated. And a booming industry developed led by some companies that have become market leaders. The same thing will almost certainly happen with lithium.
But there will be one big difference…
Lithium for the Long Game
Don’t expect another 500% explosion in the next two years.
The next leg for lithium will likely be slower. The market has predictably grown much more cautious. For instance, Mining.com recently reported:
Battery-material giant Ganfeng Lithium Group Co. said it would delay spending on projects that do not generate “significant” near-term returns after posting a first-half loss, as the industry faces a boom-to-bust slump.
But that’s actually good news for investors. Because as the industry evolves and demand for lithium begins to rebound, it’s going to bring a lot of new opportunities with it. Here’s an example…
A number of companies are developing new methods for lithium mining and recovery known as DLE or direct lithium extraction.
Typical evaporation pond extraction requires vast amounts of water to pump the lithium out of the ground. Then it requires months or even years of evaporation time to extract the final brine.
DLE is a method of extracting lithium ions directly out of the water pumped from the ground. There are several methods already in use: sorption, ion exchange and solvent extraction. But all three have their drawbacks from large water requirements to chemicals with potentially serious environmental consequences.
Well, there’s a new DLE technology being developed today known as “membrane separation technology.” Very basically, it’s a membrane film with treated nanochannels that actually filter out lithium ions as water is passed through it.
Like other DLE methods, not only is this process much faster, it’s also much more environmentally friendly eliminating the need for large amounts of water or harmful chemicals. (“Charles McGill, chief executive officer of ElectraLith calls it “the holy grail of lithium extraction.”)
Overall, the technology is still in its nascent stages. And the drop in lithium prices has cooled research somewhat. But what’s been developed thus far has also shown massive promise.
Now is the time to look for exceptional opportunities related to the long game of lithium mining.
Membrane technology along with other emerging forms of DLE, and the companies that develop them, could be the place to start looking.
