Musk says lithium refining a 'license to print money,' stock investors jump in

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Dimitrios Kambouris

Lithium miners (NYSEARCA:LIT) rallied in Thursday's trading, as stock investors apparently took to heart Elon Musk's exhortation for entrepreneurs to enter the lithium refining business, calling it "a license to print money."

Musk told Tesla's Q2 earnings conference call that constraints on availability of lithium that have pushed prices higher are not the result of scarcity of raw materials, but because of limited global capacity to deliver ultra-high purity battery-grade hydroxide and carbonate chemicals into battery supply chains.

"I'd like to once again urge entrepreneurs to enter the lithium refining business," Musk said. "The mining is relatively easy, the refining is much harder."

Thursday's lithium gainers were led by ioneer (IONR) +6.4%, which announced a five-year binding agreement to supply Ford Motor (NYSE:F) with 7K tons/year of lithium carbonate from ioneer's Rhyolite Ridge Lithium-Boron operation in Nevada.

Solid gains also were posted by (NYSE:LAC) +5.3%, (SQM) +3.6%, (PLL) +3.5%, (ALB) +2.7%, (LTHM) +2.3%, (LITM) +2.3%.

Ford (F) announced a lengthy list of deals for both lithium and nickel related to local processing of battery materials in North America in support of its electric vehicle plans, although only the ioneer (IONR) agreement was binding.

A non-binding deal with China's CATL would supply lithium iron phosphate battery packs for Ford's (F) North American Mustang Mach-E models next year and North American F-150 Lightnings in 2024.

Ford (F) signed a memorandum of understanding with Rio Tinto (RIO) for the supply of materials including lithium, low-carbon aluminum and copper, and agreed to "explore becoming the foundation customer" for Rio's Rincon lithium project in Argentina.

The automaker also signed an MoU with BHP (BHP) for nickel supply starting as early as 2025, possibly from the miner's Nickel West operation in Western Australia, and find ways to make battery supply chains more sustainable and efficient.

Compass Minerals (CMP) also will "explore " supplying Ford (F) with a battery-grade lithium product from its lithium brine development project at its Ogden, Utah, solar evaporation facility.

Separately, Lithium Americas (LAC) broke ground this week on its Reno, Nevada, lithium process testing facility.

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