Tesla’s Piedmont Lithium Deal Stimulates More Investment
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Earlier this month, Tesla and Piedmont Lithium signed a five-year agreement. In this agreement, Tesla will purchase spodumene concentrate (SC6), which is vital for manufacturing lithium-ion batteries. Reuters reported that Piedmont will supply Tesla with around a third of the 160,000 tons of SC6 concentrate the company is planning to produce annually from mines in North Carolina. Piedmont’s announcement that it and Tesla secured a five-year deal came just after Tesla’s Battery Day event. In a statement, Piedmont said that the agreement marked the beginning of its first US domestic lithium supply chain order and that there are talks regarding other sales arrangements. Whether or not those talks are with Tesla, other companies, or both Tesla and other companies is not known.
“And when we think about the lithium-ion industry, which is really only in its third decade of high volume production, it has so far to go to achieve similar scale and simplicity.” —Drew Baglino, SVP of Powertrain and Energy Engineering, Tesla
Around a couple of weeks after this announcement, Piedmont Lithium issued new US shares due to Tesla driving interest. Piedmont Lithium, a Perth, Australia-based company, said that it will offer 1.5 million American Depositary Shares. Each share will represent 100 of its ordinary shares.
In its regulatory filing, the company noted, “Proceeds from the offering will be used to continue development of the Company’s Piedmont Lithium Project, including a definitive feasibility study, testwork, permitting, further exploration drilling and ongoing land consolidation, and for general corporate purposes.” This matches with what Elon Musk has been pushing for.
“So, it’s important to note that there is a massive amount of lithium on earth. So lithium is not like oil. There’s a massive amount of it, pretty much everywhere. In fact, there’s enough lithium in the United States to convert the entire United States fleet to electric, all the cars in the United States. Like 300 million or something like that. Every vehicle in the United States can be converted to electric using only lithium that is available in the United States.” —Elon Musk, at Tesla Battery Day event
Back in June, I wrote an article for CleanTechnica titled Tesla, Terafactories, and Lithium: Securing the Supply Chain. That article was actually based on an interview for the EV Stock Channel on YouTube in which its host, Ivan, interviewed RK Equity’s Howard Klein.
The interview touched upon Tesla, “terafactories,” and lithium. One key takeaway was Klein’s thoughts on Tesla and whether or not it might buy mine. He mentioned two stocks that would probably benefit, and noted that Tesla would probably secure a deal with one of those companies. Piedmont Lithium was his pick, but to be on the safe side, I bought two shares in each of the companies for around $5 each — and then forgot about them.
At the time, Klein thought Tesla really might purchase a mine. He mentioned was the Piedmont project in North Carolina and the Thacker Pass project in Nevada as possibilities. He also spoke of Tesla’s potential impact on the lithium markets.
In the interview, Klein noted that many shy away from unconventional projects when investing in lithium, and at the time, the markets weren’t doing so well. He spoke of Elon Musk’s reputation for being both unconventional and successful, and noted that interest from Tesla could impact the lithium industry in a positive way. For example, if Tesla was the first company to buy a lithium mine — or, at least, in the case of today’s topic, secure big deals related to regional lithium mines — it would inspire more investors and they could raise more funds. The funds would definitely be needed to produce the amount of lithium one terafactory would need.
The other day, I noticed that I couldn’t trade PLL (Piedmont). The graph was a flat line and the price was frozen. Today, that freeze has been lifted and its trading around the mid-$20s. I’d not been paying attention — my approach is typically to buy and hold, and look back a few months later on stocks that I truly care about.
So what’s going on with $PLL did I miss something? That graph flatlined. And you can’t buy or sell—or is that just Robinhood tripping?
I bough the shares at around $5 each back in July pic.twitter.com/afrzTUIst8
— Johnna (@JohnnaCrider1) October 21, 2020
“Tesla is the leader in so many things, and everybody is trying to copy them to some degree. If VW or GM saw that Tesla got into lithium mining, all of a sudden there would be a rush,” Klein said.
One thing that Klein noted was that there weren’t enough investments in the lithium markets — which needs those investments to produce a lot more lithium. My two shares are meager at best, but knowing that I’m investing in something that will help an industry that is producing a product used in EVs means something to me. For now, I’m going to keep my Piedmont shares and see how well they do.
Note: We do not provide investment advice of any sort here on CleanTechnica.
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