Lithium: The Power Behind Decarbonization

by Tony Sagami
By Tony Sagami

My first introduction to lithium was in my 9th grade chemistry class.

At room temperature, lithium is soft, silvery-white in color and the lightest metal in the world.

Lithium on the periodic table.
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I still remember my surprise when I dropped a rock of lithium into a tank of water, and it started to fizz. Even more amazing was that the lithium floated.

Lithium has a high capacity to store energy, and this property is why it is used in the manufacturing of rechargeable batteries.

Lithium is called white gold because it can store large amounts of energy and is used not only to power cell phones, wireless headphones and laptop computers, but also to power the future of transportation: electric vehicles.

It took me 39 hours to travel 4,567 miles to reach the driest place on Earth: the Atacama Desert in northern Chile.

Map of the Atacama Desert.
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It was no holiday. I didn’t go there just to drink Malbec and eat ceviche, although I did a lot of both. My main goal while being there was to learn more about one of the stocks that members of my trading service, Disruptors & Dominators own.

You see, the Atacama Desert is the key to understanding the lithium industry, and I was there to visit the largest lithium mine in the world.

The Atacama is the oldest desert on Earth and receives almost no rainfall. It is sandwiched between the Andes mountains, which blocks the humid air from the Amazon, and the Chilean Coast Range, which blocks rain-laden clouds from the Pacific Ocean.

On average, the Atacama receives less than one millimeter of rainfall each year, and some of its riverbeds have been dry for 120,000 years. In fact, some areas have never seen rain at all.

Despite elevations between 8,000–12,000 feet, the Atacama Desert was previously at the bottom of the Pacific Ocean. How so? The tectonic rise of the ocean bottom happened millions of years ago.

The result is that the Atacama Desert is caked with vast, near-inexhaustible mineral fields, including 435 miles of salt deposits called ‘playas.’

These salt deposits are called playas — meaning beaches in Spanish — because the exposure of these underwater salt lakes basically creates a beach.

Pretty cool, huh? That’s just the tip of the iceberg …

Snap of me in the Atacama.
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The Atacama Desert: The Saudi Arabia of Lithium

An estimated 58% of the world's lithium deposits are located here, which is why the Atacama is called the Saudi Arabia of lithium.

The surface of the Atacama is desolate and dry as a bone. But beneath the surface are vast saltwater lakes that contain massive amounts of lithium.

A bulldozer at work in the mine.
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The salty, underwater lakes contain the greatest concentration of lithium ever discovered, as well as potassium, magnesium chloride and boric acid.

Here is the best part: These minerals can be extracted at an extremely low cost.

The reason for the low cost is that nature does all the work.

After pumping the underground brine into a network of holding ponds, the heat of the sun — with the help of strong desert winds — evaporates the liquid brine and leaves a mineral-rich white powder that can then be processed. How green is that!

Not only is the sun intense at high elevations, but it also shines almost year-round. A perfect combination for low-cost lithium production.

Get this … 78% of the energy required to produce ready-to-refine lithium is created by the sun and wind.

White Petroleum

It takes 18 months for the sun to work its evaporation magic and increase the lithium concentration from 0.2% to 6%. At that point, the lithium is converted into the raw materials that go into mobile phones and EV batteries.

The challenge — if you can call it that — is lithium producers have more business than they can handle.

“We’re fighting to keep up with demand,” said the CEO of a lithium production company.

That demand is only going to get stronger. The world needs massive amounts of lithium to support not only the electric vehicle revolution, but also the surge in stationary battery storage for the adoption of solar and wind energy.

Price chart for lithium carbonate.
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The price of lithium soared 100% year over year in August after an increase of 280% last year. Lithium producers are smiling all the way to the bank.

Vast lithium mine.
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Going forward, lithium will become one of the most valuable natural resources of the new electronic world, but it will also be unlike other commodities — like oil and natural gas — because there are no means to invest in the physical metal.

There are two exchange-traded funds — the Global X Lithium (LIT) andthe Amplify Lithium & Battery Technology ETF (BATT) — but they are not pure lithium plays because they also invest in battery makers, chemical companies and electronic component manufactures.

That’s why the best way to currently invest in lithium is to invest in lithium mining stocks, ESPECIALLY the mining company I visited in Chile.

Full disclosure: Members of my trading service, Disruptors & Dominators already own this stock and are sitting on a monster gain. If you’d like to learn more about my top lithium pick, consider a no-risk, money-back trial to Disruptors & Dominators.

I believe you will be very pleased with the results.

All the best,

Tony

About the Contributor

Even in the worst years for stocks, Tony was twice named “Portfolio Manager of the Year” by Thomson Financial. He was one of the first to introduce computer software for trading stocks. And in the early 2000s, he wrote “The Supernet,” providing a vision of the future internet that was far ahead of its time.

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