VIDEO: Global Lithium LLC CEO Joe Lowry on the 2nd Lithium Wave
Joe Lowry’s never short of something to say about the state of the global lithium market and the participants therein, and in this most recent video, he doesn’t disappoint. Joe talks about the opportunities in the sector, and points to the recent announcements by automakers at the Frankfürt Auto Show by Mercedes, BMW and Volkswagen as evidence that demand will soon far outstrip supply.
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James West: Hey, welcome back to Midas Letter. My guest this segment is none other than the famous Joe Lowry, Mr. Lithium himself. He’s the CEO of Global Lithium LLC. Joe, thanks for joining us today.
Joe Lowry: James, thanks for having me again.
James West: Joe, I guess it was 2016 when we first met. You were describing SQM as the best investment in the lithium space just based on the fact that you were buying it, not as a recommendation, obviously. Now it’s $54. Let’s talk about the lithium space. Generally, what other opportunities might there be like SQM?
Joe Lowry: Well, I don’t think there is another SQM out there from just the breadth of their business and some of the acquisitions that they’ve made in the past 18 months. But there are going to be great opportunities in the junior space. I think we’ve seen a transition – some of the juniors, Lithium Americas, Pilbara, Altura, they’ve all gotten financing in the last, since the beginning of the year. So that’s kind of changed the nature of the game.
You’ve got Galaxy producing spodumene at Mount Caitlin, they have probably one of the two great next brine projects in Sal De Vida; we’re still waiting on the development timetable for that, but that also makes Galaxy, they have brine and they have hard rock, and they have geographic diversity, which I think makes them a future power, and I’ve said that publicly.
You’ve continued to have the, Orocobre has continued to struggle a little bit with the processing in the ponds, but they’re in production – and because of the price environment, they’re making money. And this is the greatest tailwind lithium producers have ever had, and the people who can get into production are going to take advantage of it, and I think you’ll see that in their share prices.
I think people are starting to see that because the demand is now a sieve. When I did expert calls 12 months ago, I still spent half the time talking about, is demand real? Will the EV thing really happen? At the Frankfurt Auto Show, you have BMW and Mercedes and German auto-makers throwing out huge numbers of their plans. Volvo has put out some exciting numbers. You know, how that plays out, nobody knows, but there doesn’t seem to be a doubt in as many investors’ mind about the future of lithium.
James West: All right. So in terms of that actually materializing demand, so that’s the certainty that is causing the run-up. Then on the supply side, we’ve seen the juniors struggle to meet their projections, their admittedly rosy projections. So is that going to continue to constrain the supply side as demand continues to build?
Joe Lowry: I was asked by a large consulting firm to do a projection to 2025. I don’t like to go that far out, but I did, and my number is, I would say, tepid compared to some others in the projection for lithium demand. But I have, even with a less than 5 percent EV penetration in 2025, the lithium market triples. Not just on the back of the EVs, but that component leads to a 3 X growth.
James West: Right. So companies making big announcements at the Frankfurt Auto Show, they’ve announced that they’ve got these great plans to morph their production into lithium ion battery-powered cars, but they don’t have the supply side set up or integrated into their process or their thinking, even, at this point. So I mean, to what extent is the actual manifestation of the demand when these guys do develop their supply side, what impact is that going to have on the price of lithium now?
Joe Lowry: Well, the price of lithium in China is back up over 20 for both lithium carbonate and lithium hydroxide, which three years ago, was selling for $5,000 or $6,000 a tonne.
James West: $20,000?
Joe Lowry: $20,000 a tonne. And if you want to put it in RMB terms, about 160,000 RMB. I mean, the interesting thing is, I just looked at the numbers, and the China imports are up significantly this year. But everybody thought that oh, with all that lithium, price is going to tank. Well, in fact, the price is back towards all-time highs.
James West: Sure. Okay, so is it safe to say that the opportunity for investors in the space is sort of moving into a second wave, where this demand has now catalyzed a new leg up in the market broadly?
Joe Lowry: I’d say you’re definitely, I mean, I’m not sure when you’d say the first wave was, but I would say at least, the second wave is here. And I think you’ve seen it with the financings we’ve seen. Lithium Americas, Pilbara, Altura, a lot of pieces in the puzzle, but it all sets up for a nice run for lithium. I don’t do the cobalt space, but somebody’s going to say ‘Hey, what about cobalt?’ I say yes, it’ll be good for cobalt too, and nickel.
James West: Okay, so where is the greatest opportunity in the industry now for investors?
Joe Lowry: Wow. There is not one good answer to that question, but I think what you want to look at is, the quality of the reserves you’re buying. I mean right now, I think there are 350 companies that call themselves lithium companies; there’s less than 10 that actually produce. So if you’re going to make a bet, I always say, and my social media is rife with it, buy high quality assets that have a top quartile cost of production, or at least in the lower half of production costs. Because in the short term, anybody that can bring product to the market will be able to sell it, because prices are high now. And with a long-term lithium boom, maybe that lasts a decade, maybe it lasts longer, I don’t know.
But if I’m investing, I want to have an SQM-like cost profile.
James West: Sure. Okay, finally, where can investors go to read more of your coverage of the industry?
Joe Lowry: I post very frequently on LinkedIn; it’s very easy to just go to my page, and you have access to everything I’ve put out there publicly. And then I’m on Twitter on a very regular basis, and that would be @GlobalLithium.
James West: Okay. Great, Joe, let’s leave it there for now. Thanks for joining me today.
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