We do think these worries over critical minerals are overblown

There’s a certain hype over supplies of critical minerals out there. The EV revolution will require much more of this and that and t’other and dearie us, where will it all come from? As we’ve pointed out at book (even if short book and free) length there is no shortage of the elements themselves. Whatever shortage there is remains limited to active producers.

Take lithium, one of those oft talked about metals required. What gets missed is the sheer scale of activity already going on. The London Stock Exchange alone has half a dozen companies. That’s just those with lithium in their names. Another one, Bacanora, was just bought out. We can think of another half dozen at least that are listed, are looking for or even producing, and yet they just don’t use lithium in their corporate title. New York has more than another handful and the Toronto Exchange, long a rival to London for mining exploration companies, has a positive rash of them. All before we even get to the still private companies.

This is before we even get into the technological changes going on. Traditionally lithium has been provided either by the mining of spodumene (which is “hard rock” mining, which means just what you think it does) or the evaporation of brines. Neither of which is in short supply at all. Investment in Chilean brines has been held back by a strange quirk of that country’s mining law (as lithium can be used in hydrogen bombs it’s necessary to gain a licence to mine it from the nuclear ministry, they’ve never granted one, only grandfathered licences have been allowed) and over the border in Bolivia they have been insisting that not just the batteries, but the cars themselves, must be made up on the altiplano if the lithium is to be extracted. This has been limiting the enthusiasm to mine there, of course.

It is true that China has something of a lock on the processing of that spodumene (actually, the concentrate from it) into usable lithium salts. A position that it maintains by trying to buy into every new spodumene deposit that folk think of exploiting. Which is a terrific source of capital for those with a spodumene deposit.

But the frenzy for the metal has led to a distinct investment in alternative sources as well. The zinnwaldite (a mica) of the Ore Mountains has been proven as a resource - at current lithium prices it certainly is. Various companies are showing that Li in geothermal waters is extractable - we know at least three and know of another half a dozen. We’ve seen a claim - one that we don’t believe even at current inflated prices but it is a claim that has been made - that the Red Sea contains a high enough concentration for modern membrane technologies to extract. Desalination plants - technically feasible to extract from, economically, well, possibly.

Then there’re the clay deposits that abound.

Our point is not that nothing needed to be done. It is that what needed to be done has been done. The temptations of those predictions of higher use combined with free market capitalism have done it. Free markets mean that anyone with an idea may try it. Capitalism that those who have a good idea gain riches and hot and cold running Ferraris from having done so. The combination means that the world is awash with lithium production plans. More mines using the old tech, new techs to exploit previously unthought of sources.

That is, it’s all already done. Just through that system we’ve got of channelling greed. No plans nor bureaucracy desired - or perhaps less of both like that Chilean nuclear ministry or the Bolivian car factories.

Bolstering us in these beliefs is that the last time everyone got excited by lithium, back in 2012/3, a number of projects got financed. One of which built a perfectly good spodumene mine and has also recently gone bust. Because there was so much new material flooding the market that expectations were dashed.

The TL:DR version of this is that sure, lithium, important stuff, we need a plan, a system, to extract more of it. Good, we’ve got one, free market capitalism. The joy of this plan is that it actually works. Further, while every bureaucrat in the world is typing up plans for the national lithium industry that free market capitalism has already solved the problem.

This is not investment advice, we hope you understand, but our prediction is that there’s going to be a glut of lithium in about 5 years. Simply because that terribly simple system of freedom and incentives does in fact work.