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Time To Buy Some Lithium Miners


  • The lithium miners crashed in January and the fall look to be near the end.
  • The lithium miner fundamentals have been improving with several great announcements in the past 3 months, including the move towards electric trucks requiring massive amounts of lithium.
  • Adding to this, electric vehicle sales accelerated in 2017 finishing with a 58% increase, and energy storage is forecast to grow 6.8 fold in the next 7 years.
  • A summary of the lithium miners to consider buying now and my top 5 picks.

This article first appeared on Trend Investing on February 10, 2018; therefore all data is as of that date.

The lithium miners had a terrific run from September 2017 to early 2018, and then came the SQM (SQM) announcement, which started the lithium miner's crash. Many investors sold in panic wrongly thinking the market will be flooded with new SQM lithium supply, when the reality is new supply takes time, and most of the quota will most likely never be used (at least before SQM's Atacama lease expires in 2030).

The reason being SQM is unlikely to pay high taxes in Chile when they can be treated better in Argentina and Australia. Certainly, it is a very good reminder to investors that it is worth paying a premium to invest in miners in safer countries, as we saw last week in the DRC.

Then in February, the global stock market correction of around 10% further dragged down the lithium miners. This means the sector has had to absorb a double hit, and has on average fallen about 35-40% from its highs.

Lithium miner fundamentals have been improving

Some recent news includes:

  • Tesla semi planned for 2019. Each semi will require 16 times the lithium required for a 50kWh electric car.
  • Reuters - "Toyota to market over 10 battery EV models in early 2020s."
  • Roskill - "BAIC expects to phase out internal combustion engine [ICE] powered cars by 2025."
  • Green Car Reports - "BMW will have a combined total of 25 different battery-electric and plug-in hybrid vehicles in the market by 2025."
  • Bloomberg - "The number of electric buses will triple within seven years, and virtually all of them will be in China."
  • The Verge - "The South Australian Government deciding to use Tesla (

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The Trend Investing group includes qualified financial personnel with a Graduate Diploma in Applied Finance and Investment and well over 20 years of professional experience in financial markets. They search the globe for great investments with a focus on trending and emerging themes. The current focus is on electric vehicles, the EV metals supply chain, stationary energy storage and AI.

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Analyst’s Disclosure: I am/we are long NYSE:ALB, NYSE:SQM, ASX:ORE, ASX:GXY, ASX:PLS, TSX:LAC, ASX:AJM, TSXV:ILC, TSXV:NLC, ASX:AVZ, ASX:LPI, ASX:PLL, ASX:SYA., TSXV:AIS, TSXV:WML. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The information in this article is general in nature and should not be relied upon as personal financial advice.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (113)

Trend Investing profile picture
igor - Yes hopefully we will see some recovery in the EV metals sector after a tough 5 months. During those months we learnt global e-car sales grew a massive 58% in 2017, and more recently we learnt global e-car sales grew 59% in Q1 2018. Added to this are e-bus sales recovering, electric ships, semis and other vehicles all gaining in acceptance and popularity every month. Charging stations are being rapidly deployed especially in China and Europe. Legislation has mostly been positive - the UK is looking to ban ICE 10 years earlier (from 2040 to 2030), and China's ZEV credit system starts in just a few months (2019).
Cobalt prices are up dramatically in 2018, lithium prices remain strong, and graphite and nickel has also been rising. Meaning the current producers are highly profitable and the quality juniors have a large demand awaiting them.
All of this should lead to a very good H2, 2018 for the quality EV metal miners.
matt seems like small recovery last few days?
To those who may be concerned about lithium stocks as it relates to Tesla's future--I just saw this interesting graph and story regarding EV sales. Maybe the concern is undue.
Trend Investing profile picture
Thanks Bill...Yes the new Nissan leaf has been very popular. E-car sales continue to boom.
Sir V-i-val profile picture
you never listen ...I told you do not buy garbage Matt...buy quality...buy Umicore
just umicore?
The Lithium stocks (ALB, FMC, SQM, etc) are no longer doing well - they seem to be risky ! Thanks
Does sayona mining is a good stock
Dan Grant profile picture
I have written on Sayona several times. Please see my latest article.
Any graphite pics?
jjbine profile picture
I own SQM and FMC. It has been an ugly several weeks. What does the crystal ball say for the next few months? Any input would be appreciated as I haven't seen any news on LI stocks.
dgavrile profile picture
Seem that 2018 is poised to more M&A and off-take agreements, Li sector is still hot.
The Lithium Sector Surge Is Poised to Ignite a Bonanza for Deals
Avlit and orocf are working with Toyota in lithium production last I read,anyone have anymore input on this collaboration?
ScubaMike profile picture
What happened to Lithium X ?
"Also Lithium X [TSXV:LIX] (ROCEF) (OTCQB:LIXXF) as they are being taking over by NextView at a price of $C2.61".

Lithium X stock is down 90%
Dan Grant profile picture
See my comment above regarding Morgan Stanley's analysis.
”The electric-vehicle revolution is coming, but gradually. Morgan Stanley predicts 9% penetration of the global market in seven years, up from 1.6% today. That isn’t nearly enough lithium batteries to absorb supply increases from Chili and elsewhere, the bank concludes. Lithium will soon be in global surplus, and the price will tumble 45% by 2025.” - Barron’s March 12, 2018. Comments?
Matt Bohlsen.
what is your view on COBALT miners? Do you see more opportunities in the Lithium world vs the Cobalt? What would you consider as good plays in Cobalt? Thanks
Trend Investing profile picture
kalu0003 - Nowadays my views are reserved for my paying subscribers in Trend Investing.
One of the fundamental rules of investing:

If your initial assumption is wrong then everything that follows will be wrong.

So, If you assume that the "oversupply" pronouncements are correct, based on analysts, without knowing the dept of the usage research and supply needs to fill the segments going forward, then you could be making a very big mistake. Verify and drill down.

I never pay attention to analysts , EVER, because a lot of these people have MBA's and have never actually worked outside of the financial industry....NO front line business management experience. My financial adviser calls the reports "ass protectors" for fund managers.
Retired Securities Attorney profile picture

[I never pay attention to analysts...]

If analysts knew how to pick stocks, they's be investors rather than analysts.
also analysts are short term minded. quarter to quarter. investors are taking long term view
I knew Brenden Wood years ago and I spent an afternoon with him learning about how he rated to get his "All Stars"

I remember him telling me that hardly any of them had better than 3 years......spoke volumes about the numerical vomit being produced.
Hi Matt-Been reading your articles and bought some on your recommendation. Don't let the 1% ignorant take away the good part of you that 99% of the people follow your great works and truly appreciate with the highest regards.
Thank you!
Trend Investing profile picture
nhihaoan - Yes well said and thank you. I will do that. Cheers.
Another plus for Altura Mining--those of you who follow that stock may know that it was just announced that it's being added to the ASX 300, which will open it to more institutional investors on the Australian stock exchange.
Trend Investing profile picture
Jimmyjei - Thanks Jimmyjei. I like the Star wars thematic.
Jimmyjei profile picture
Keep posting Matt, dont let the dark side of the force influence what you feel you have to do. Good work.
Andu Potorac profile picture
NOT YET! DJI will crash to around 21000.
Can you elaborate? The market is heating. The jobs report was good. Faster than expected inflation and rate increases are already baked in. What drags the market down 17%?

I do think we will see big dips in volatility, but not dips that will drive us to 21k.
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