Why China's Lithium War Is Far More Important Than Putin

Dear Reader,

For the last three weeks, the world has been captivated by Putin’s war.

It’s all we see in the news, and if it’s not images of Kyiv or Kharkiv being shelled, it’s video and sound bites of pundits and politicians talking about the ensuing economic calamity that the whole world, not just Russia, now faces as a result.

The rising cost of energy is the first domino. The cascading effect is extreme inflationary pressure, as anything and everything that requires energy to produce and transport will become more expensive no matter where you live.

Here are a few quick facts to put things into perspective. Average gas prices in the U.S. have risen 40% in the last 12 months, from $2.89 per gallon last March to over $4.00 today — the first time since 2008 that we’ve crossed that threshold.

In Europe, that figure stands closer to $6, and in Hong Kong, the world’s most expensive retail gasoline market, that figure is now approaching $11.

All of that sounds destabilizing, and it is. Because oil-derived fuel isn’t just what you use to take yourself to work or your kids to school. It’s what the transportation industry uses to bring in food supplies, raw materials, and everything else that makes our civilization run.

Don’t let the Super Bowl ads fool you. When it comes to taking things from one place to another in large quantities, diesel still rules the oceans, the railways, and the roads.

And now that the world’s third-biggest oil producer has essentially been reduced to an economic desert, we’re all feeling the pinch — even in the U.S., where Russian oil accounts for barely half of a percent of our daily consumption.

It’s a drop in the bucket comparatively, yet the effects have already been enough to heat up our own partisan conflicts, with blame being paddled back and forth across party lines like a ping pong ball.

All of what you’re seeing today, as annoying and potentially life-altering as it is, is only a smokescreen.

The Biggest Problems Are Always the Hardest to See… Until It’s Too Late

The real trouble looms in the shadows, just out of our line of sight.

You see, oil in all of its forms as a fuel is on the way out. We know this already, despite how determined some of us are to deny it.

Electric vehicles are the future. By 2030, more than half of the new cars produced globally will be battery-driven.

By 2035, sales of gas- and diesel-powered vehicles may be outlawed entirely in Europe.

Again, you probably already knew this, as you probably already know that the world’s biggest carmaker by market capitalization — by a factor of six — isn’t Ford or Toyota or GM but Tesla Motors (NASDAQ: TSLA).

So regardless of what happens in Russia, on a timeline measured in years, oil will be ushered out as the No. 1 source of energy for consumer and commercial transportation.

Which brings me to the problem…

Russia’s Small Potatoes

Not Russia but our other, much wealthier, much more influential adversary, China, is already hard at work becoming the world’s biggest energy supplier for the next 50 years.

At the heart of it all is the one element essential to current rechargeable battery production: lithium.

In 2021, Chinese mining and battery companies acquired 6.4 million tons of lithium reserves — the previous year, all acquisitions by all companies totaled just 6.8 million tons.

This includes five development-stage projects valued at $1.58 billion, according to an analysis by S&P Global Market Intelligence.

All the while, global lithium deficits are skyrocketing, with an increase of up to 60-fold expected by the end of the decade.

Seth Goldstein, a senior equity analyst at Morningstar, summarized the trend quite elegantly:

Chinese companies have done the math and realized how much lithium they’re going to need to meet either battery or EV growth plans and have decided to try to secure that by going after some of the most promising junior projects in development.

If today’s oncoming gas crisis has you worried, the above information should have you in a panic.

Lithium Is to the 21st Century What Oil Was to the 20th

Because, like gas, lithium-ion batteries won’t only be responsible for taking you to work or your kids to school.

These batteries are responsible for storing power on all levels, from the charge powering your phone, to the energy driving our biggest trains and ocean-going vessels, to the overflow production coming from our power stations.

Without a steady and growing supply of lithium, human civilization will grind to a halt just as quickly as it would if somebody switched off the oil spigots around the world.

And in the next decade or so, a majority of that production capacity will be in the hands of our most powerful enemy.

Make no mistake about it. This is nothing short of a hostage situation.

And our only way out will require an element that neither China nor Russia nor any of our other many political adversaries have a hold on.

A few years ago, we would have been cornered by this resource war, but today there is hope.

The World’s First 100% Conflict-Free Energy Storage Solution

Thanks to a new space-age material that won its developers the Nobel Prize in 2010, there is a brand-new generation of batteries on the way.

From a performance standpoint, these batteries are a leap ahead of anything else that came before.

I’m talking about a service life of two–three times that of traditional lithium-ion and a charge speed of up to 70 times faster than anything offered by current technology.

That’s not a misprint — a 70-fold improvement in charge time.

That’s such a major step forward that it could, for the first time ever, allow for full EV charging in less time than it takes to pump a tank full of gas — a Holy Grail-caliber achievement for the battery industry. 

But the biggest advantage is that these new batteries will use no lithium and no rare earth metals at all.

In other words, no raw material whose supply chain involves dealing with any of our political and ideological rivals.

Engineering: Our Most Potent Weapon

The reason this is all possible now is a single innovation, made by a company based in Australia, that allows for the mass production of the unique new material I mentioned earlier, using nothing more than electricity and natural gas.

With aluminum being the only other major component of these new batteries, a real potential for a cheap, reliable, highly superior rechargeable battery implemented on a mass scale is now within reach.

All the intellectual properties associated with this innovation and the novel production method for the chief ingredient are owned by a Queensland-based company currently valued at just under $200 million (USD).

The long-term value of this technology, however, will be measurable in the trillions of dollars.

That’s how important it is, not just to the future of global industry and commerce, but to global political stability as well.

Because without it, we will see a shift in the balance of power, to places where already far too much power is concentrated.

This small Australian company already trades publicly in two North American markets.

You can, if you want, acquire its stock on any online brokerage platform.

Before you make any decisions to buy, however, I recommend you get the full story, if for no other reason than to fully grasp the size of the problem — and the size of the opportunity.

My recently released presentation covers all of this and more.

Get instant access right here.

Fortune favors the bold,

Alex Koyfman

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His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.