Jekyll Island Series – Mike Beck: Nickel, Cobalt, and Lithium to Benefit From Generational Demand Shift in Commodities
Mike discusses the electric vehicle market and how the consensus view is that they are getting close to parity in price with combustion engine vehicles. The E.U., USA, Japan, and China markets will all reach price parity within six years and possibly sooner. Many governments are pushing regulations requiring electric vehicles within the next few years.
Manufacturing plants for electric vehicles are cheaper to build and require less floor space than combustion vehicles. Only half the capital and factory footprint are needed, and these plants are also 30% cheaper in terms of labor. Car companies are seeing the economic advantages and are moving toward phasing out combustion engines. The passenger vehicle market will move towards 15%-20% of all vehicles sales by 2025.
Mike and his team have focused on three metals that go into the battery packs. These are lithium, cobalt, and nickel. Electric vehicles require lithium for their battery packs. If you assume that 25% of passenger vehicles move to electric the world will need some six times current lithium and cobalt mine supply and three times current class one nickel supply. A lot of capital will need to be allocated to this space, and it’s quite unclear where the world will get much of the quantity of these metals.
He discusses three companies that provide opportunity in each of the metal spaces. LSC Lithium (VSE:LSC.CA), Cobalt 27 (CVE:KBLT) and Gigametals (TSX.V:GIGA).
Talking Points From This Week’s Episode
• Electric vehicles are cheaper to construct in terms of manufacturing and labor.
• E.V. price parity with gasoline vehicles is getting very close.
• Mike believes battery metals companies will make excellent investments.
• Supply shortages of battery metals are almost certain.
Mike Beck is the founder and Managing Director of Regent Advisors LLC, a corporate finance advisory and investment firm. He has advised on equity and debt financings for private and public companies in the natural resources sector, including Signet Petroleum Limited, West African Minerals Corporation, Polo Resources Limited, Direct Petroleum Exploration Inc., Titanium Resources Group, Copper Development Corporation, UraMin Inc., Diamond Fields International Ltd., Weda Bay Minerals Inc., Regent Pacific Group Limited and CCEC Ltd.
Mr. Beck was a Managing Director at N M Rothschild & Sons with responsibility for the firm’s mining, oil and gas advisory and investment activities. Prior thereto, Mr. Beck was the founder and President of Librion Group Inc., a corporate finance boutique. He also was with the International Finance Corporation of the World Bank Group, where he oversaw the structuring and financing of a large number of natural resource projects in Africa. Mr. Beck has also been a founder or co-founder of a number of companies listed on the Canadian, Australian and London stock exchanges. He has an M.S. in Engineering from Princeton University and a B.S. (High Honors) in Engineering from Rutgers University.