Lithium Americas Corp.: Value Pick In The Growing Lithium Space

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Written by SmallCapPower.com

Lithium Americas Corp. (LACDF) is a Canada-based resource company focused on the advancement of two significant lithium projects: the Cauchari-Olaroz project, located in Jujuy Province of Argentina, and the Lithium Nevada project, located in north-western Nevada, USA and on the manufacturing and sales of organoclay products from its plant located in Fernley, Nevada. The demand for lithium is substantial, and Lithium Americas can be a value pick in the lithium space as the demand for electronic vehicles is rising worldwide, in turn driving demand for lithium, a key component in electric car batteries.

Investment Thesis

Surging demand for lithium

Demand for lithium has been surging consistently and is expected to grow 15% per year by 2025. Demand will remain strong on the back of automakers using lithium for electric vehicles. Additionally, the demand for lithium is outweighing the supply, which is an advantage for lithium mining companies. Today the lithium market is 182k tonnes, which is expected to increase to 3.1 million tonnes in 20 years.

Strong lithium prices owing to supply scarcity

Lithium prices are expected to stay strong and increase going forward as the demand outweighs the supply currently. Lithium prices have surged about 300% in China, with contract prices rising to over US$12,000/t LCE in 2016. Electric Vehicle penetration should increase by 14% by 2025 globally and 30% in Europe as the cost parity with conventional fuel vehicles will be reached in the next few years. Additionally, the barriers to entry in the lithium industry remain high, further supporting prices going forward.