The Coming Battery Supercycle: How to Profit from the Electric Vehicle Revolution in Copper, Nickel, and Lithium

The global transition to electric vehicles and renewable energy sources is driving massive demand growth for key battery metals like copper, nickel, and lithium. For investors, this creates enormous opportunities to profit from the explorers, developers and miners producing these essential commodities.

In a recent panel, three mining CEOs offered insights on developing and investing in copper, nickel, and lithium projects.

The panel included Hayden Locke, President and CEO of Marimaca Copper, Mark Selby, CEO of Canada Nickel, and Simon Clarke, CEO of American Lithium. Their companies are advancing major projects for copper, nickel, and lithium respectively.

Copper Outlook

Hayden Locke of Marimaca Copper provided a bullish long-term outlook on copper demand. He sees surging demand driven by global electrification and decarbonization initiatives.

The amount of copper required is "such astronomical amounts that it's hard not to be bullish," Locke stated. He believes new copper mines will be essential to meet demand as the world transitions to electric vehicles and renewable energy.

The copper market enters this period of strong demand growth with relatively constrained supply. After a decade of low prices and lackluster exploration spending, a significant supply gap is emerging.

Chile has historically been the world's largest copper producer but declining ore grades at aging mines threatens output. Locke noted that Marimaca is one of the only major new copper discoveries in Chile over the last 10 years. New projects will be needed to pick up the slack from depleting mines.

Investing in Copper

When investing in copper mining companies, Locke recommends looking for projects with large production potential that can achieve economies of scale. They must also have solid economics.

"It’s quite important in a mining context having enough scale to really amortize some of those fixed costs and therefore drive down your operating cost," he explained.

Large, low-cost copper projects with expansion potential stand to be very profitable in the years ahead. These mines will be best positioned to capitalize on surging copper demand from electric vehicles, renewable power, and energy storage.

Nickel's EV Boost

Mark Selby, CEO of Canada Nickel, also sees accelerating demand driving prices higher for nickel. While nickel has traditionally been used to make stainless steel, EV's are now giving it a major boost.

"Nickel is going to be in strong demand due to the electric vehicle thematic," Selby stated. He noted that larger electric trucks and SUVs will rely on nickel-rich batteries, unlike the LFP (lithium iron phosphate) batteries used in smaller vehicles.

The nickel market is tipped into deficit this year as demand surges. Like copper, prices collapsed in recent years discouraging investment in new nickel mines. With supply lagging, prices could strengthen considerably.

Investing in Nickel

When assessing nickel mining investments, Selby advises targeting size and quality. Look for sizable deposits that can support long-life, low-cost mines. These large-scale, high-grade assets will attract project financing more readily.

Selby also suggests focusing on North American jurisdictions which offer stability and relative speed in permitting new mines compared to many regions globally. This can greatly reduce risks associated with development timetables.

Lithium's Market Exuberance

No battery metal has quite matched the hysteria surrounding the lithium market. Simon Clarke, CEO of American Lithium, noted "Lithium is the latest battleground," pointing to its indispensable role in the EV battery revolution.

Lithium has attractive properties for batteries including very high energy density and lightweight. This has made it the first choice for EV batteries. Other proposed battery technologies are unlikely to displace lithium batteries in the foreseeable future.

The lithium market is expected to grow at over 20% per year through 2030 to meet surging battery demand. Despite a global rush to develop new supply, shortages and price spikes are widely anticipated during this period of "hockey stick" demand growth.

Investing in Lithium

Clarke recommends targeting lithium companies with assets in stable jurisdictions like North America. These projects avoid the permitting pitfalls present in some South American brine regions.

He also suggests focusing on companies with proven lithium extraction technologies. New direct lithium extraction technologies have boosted economics for previously uneconomic resources in claystones and brines.

As lithium demand accelerates in the coming years, lithium projects with scale, low costs, and advanced technologies will deliver substantial returns to investors.

Key Criteria for Battery Metal Investments

The ideal criteria for investing in battery metal miners include:

• Leverage to copper, nickel, or lithium - the essential battery metals seeing massive demand growth.
• Large, high-quality deposits that can support long-life, low-cost mines. Scale and grade are paramount.
• Reasonable permitting timelines in stable jurisdictions like North America.
• Expandable projects with exploration upside and ability to increase production.
• Proven extraction technologies and processes to ensure solid economics.
• Strong project economics that can deliver high margins at conservative commodity price assumptions.
• Management teams with proven experience permitting and financing mine developments.

Applying these criteria helps narrow down the countless mining companies to a select group well-positioned to capitalize on the coming commodity boom.

Due Diligence Is Key

While the outlook for battery metals is extremely bullish, investors must remember to conduct thorough due diligence before investing in mining companies.

Clarke cautions investors to evaluate management carefully: “You’ve got to believe that management can actually build a mine, not just find a resource and talk about it.” Many miners never successfully transition from exploration to production.

He also advises scrutinizing feasibility studies and costs assumptions in technical reports, looking for possible issues that could impact mine economics. Overly optimistic assumptions can make a marginal project appear far better on paper.

Patience Is Crucial

In mining, patience is an absolute must. Mine permitting and development takes years. Commodity prices can be volatile. Investors must ride out ups and downs. "Sometimes time is a great healer,” notes Clarke. “You have to be patient with commodity prices. You definitely have to be patient in certain jurisdictions.” Rather than trying to time the market perfectly, the CEOs suggest taking advantage of price weakness as opportunities to accumulate positions in quality assets. As Selby advised: "Have the courage of your convictions and buy a little bit more if you still believe in the project.”

Conclusion

With the world rapidly transitioning to electric vehicles, renewable power, and grid-scale energy storage, demand for copper, nickel, and lithium is headed dramatically higher over the next decade. Trillions of dollars will be invested electrifying transportation and modernizing electricity infrastructure globally.

For investors, this creates a once-in-a-generation opportunity. Battery metals present a compelling investment theme that should deliver outsized returns over an extended time frame.

By targeting well-managed mining companies advancing large, low-cost projects with proven economics, investors can position themselves to profit from the coming commodity supercycle. Conduct thorough due diligence, invest in quality projects, and exercise patience. The long-term upside for battery metals is simply too massive to ignore.

About American Lithium

American Lithium is developing large-scale lithium projects in Nevada and Peru as well as one of the world's biggest uranium projects, with the goal of playing a major role in the transition to sustainable energy. The company's core assets are the advanced-stage TLC lithium project in Nevada and Falchani lithium project in Peru, which have robust preliminary economic assessments. American Lithium also owns the Macusani uranium project in Peru, which has seen significant historical development. With assets at various stages of pre-feasibility and feasibility studies, American Lithium is positioned to be a major player in lithium and uranium mining.

‍About Canada Nickel

Canada Nickel is emerging as a major player in the nickel mining sector through its 100% owned Crawford Nickel Sulphide project in Timmins, Ontario. Crawford is the largest nickel discovery since the 1970s and is located in an established mining jurisdiction with good infrastructure. Through over 20 transactions, Canada Nickel has also consolidated a vast regional land package 50 times larger than Crawford with 20 additional targets, demonstrating the potential for further substantial discoveries and resource growth. With its significant existing resource, low carbon production potential and exploration upside across its district-scale land holdings, Canada Nickel is well positioned to become a leading nickel producer.

About Marimaca Copper

Marimaca Copper is a TSX-listed company with an exciting copper discovery - the Marimaca Copper Project in Chile's Antofagasta region. This is the only major new copper discovery globally in the past 5 years and is considered low risk with significant exploration potential. Marimaca's vision is to create value for shareholders by realizing the full potential of Marimaca, which could become one of the most significant recent copper-oxide discoveries, as well as exploring for other large-scale deposits in the region. The Marimaca deposit challenges accepted exploration wisdom as an intrusive-hosted system unlike the typical volcanic-hosted deposits nearby. Its prime coastal location near excellent infrastructure enables potentially low-cost development. As one of the most important new copper projects in Chile in the past decade, Marimaca is a high profile development opportunity in a country with limited new copper exploration success.