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Clearly motorized and vehicles will be moving to EV technology. Big issue is finding the necessary materials and seems like an obvious investment opportunity if one can invest is the right miners. Is anyone investing in this sector? if so what is their strategy.

 

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I do own Tech Resources so I have some solid exposure to copper. I took a small stake in Albemarle [ ABL] and Lithium Americas. They are both plays on lithium . Cobalt seems to be a by product from refining copper ore so Tech should help on that front. Clearly the auto industry has decided to move toward EVs and they will need these elements. The lithium buys are speculative and that is why the positions is small[ 5k each] . In any event they will give me an eye on this developing story.

 

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I think for 90% of the car it's the same mix of steel, aluminium, copper, rubber, urethane, vinyl and so forth as for any other car.


While this is true, lithium Ion batteries contain hardly any actual lithium. They are mostly nickel, copper, aluminium and carbon by weight with a weird organic solvent electrolyte. The lithium is present dissolved in the electrolyte and the physical quantities are pretty small. Cobalt and nickel would be the potentially investable components.

Specialized materials in EVs are mostly in motors -- any permanent magnet motor is going to be using rare earth magnets, so neodymium, cerium, samarium. The main producers are in China.

Yes small but necessary and rare.

 

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Lithium? Not rare at all. Cheap like borscht, readily available all over the world and used in dozens of applications aside from batteries. Batteries is a high and growing proportion of use, but there is no particular bottleneck or limit in availability. Lithium primary (non rechargable) batteries use actual metallic lithium and use more material than the rechargeable Li Ion type.

interesting. The people that follow the development of EVs says securing adequate supplies of metals including lithium is a major challenge. GM just signed a deal with Glencore to supply it with lithium . Tesla has taken special steps to secure its supply of lithium. If the industry moves to manufacturing multi million EV vehicles per year there will certainly be demand pressure. For something that isn't rare its hard to explain why it price has exploded to extraordinary levels. Anyways as I said I just took a small position so I can keep an eye on this segment.

 

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IMO copper is a greater constraint than lithium. I found this which I kind of agree with:

The Abundance of Lithium | ARK Innovation Research

ARK believes global lithium reserves will continue to grow even as lithium production rises to meet EV demand with lithium mining companies benefiting.

ark-invest.com

Their main observation is that setting up new production is expensive and low-margin, so it creates breathing room for existing producers to enjoy high profitability until the price is sufficient to incentivise new producers.

Good point so the EV industry is stuck with the current producers until other costly projects can catch up. That sounds like supply problem. Sounds like a opportunity for a couple of years.

 

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It is definitely the best known name and is trading at a good valuation. I have it on my watchlist as well as Lundin Mining. Teck is probably the safer play and has about 3x the market cap and many more mines in operation. Last time I checked Lundin had a better ROE, lower debt, surplus cash and higher margins. If I do decide to buy in this space it would be a toss up between the two for me.

Teck has some copper sites under development and I believe they will be in production in 2023. It currently produces about 7 million tons of copper per year and the new mines will be upping that by a significant amount..

 

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Did some more research on this subject. Clearly the ramp up in green infrastructure and TVs means a big demand for copper and other metals. I bought about 10k of First Quantum . They have excellent copper production and assets. I bought about 7k of Finning International. The growth in mining development and production places a strong demand for heavy equipment. That is right down their alley. The number of EVs which will be produced over the next three years will in the many million . VW expects to produce 3 million for 2022 and 2023. Tesla is already producing over 2 million. GM , Ford,the Koreans and Europe are moving full bore into EV manufacturing. The trend is your friend.

 

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I think FTT is a great route to go with this theme by opting for the picks and shovels instead of the metals themselves. I had been eyeing CAT for sometime as a general mining and infrastructure play (Deere as well for an ag play).

Deere is in the heavy equipment business as well. Brandt Equipment distributes and sells their products in Western Canada.

 

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I added First Quantum based on this strategy . Other then some noise out of Argentina that shook up the market for one day this strategy seems to be working. Besides I put an order for an EV and I will stop resisting change.

 

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All battery materials are heading up. Sodium ion may be coming, but it will take a long time for them to scale to challenge Lithium ion.

what is the key raw materials for sodium ion ?