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A mining startup worth watching: Piedmont Lithium

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A mining startup worth watching: Piedmont Lithium

Can PLL rejuvenate the US lithium industry?

Carter Kilmann
Jan 6
6
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A mining startup worth watching: Piedmont Lithium

www.stockduediligence.com

Good morning, investors — and happy New Year!

If this is your first time with us, don’t forget to subscribe here. If you enjoy today’s issue, please hit the heart button at the end of the report.

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Without further ado…


In 2023, we’re narrowing our scope to follow a simple investment theme: follow the money. 

And who controls the most money? The government.

If Uncle Sam wants something to succeed, he has the power to throw ludicrous sums at the problem until it’s resolved. With that in mind, we’ll dive into industries that stand to benefit from public policies over the next decade. For instance, under the Bipartisan Infrastructure Law, the US Department of Energy recently awarded $2.8 billion to a portfolio of 21 projects for the development of domestic battery facilities. 

One of those recipients was Piedmont Lithium, a lithium-mining startup that just upped its annual delivery to Tesla on Tuesday. 

Piedmont Lithium and Tesla Amend Offtake Agreement 

Electric vehicles run on rechargeable batteries. Those batteries are composed of a variety of metals, such as nickel, cobalt, possibly manganese — and lithium. 

While it’s a small component in the typical EV battery (roughly 10% by weight), it’s critical nonetheless. So, it’s no surprise that lithium demand is expected to greatly outpace supply in the coming years, supporting all-time-high prices for this metal. 

In September 2020, Tesla reached an agreement with Piedmont Lithium for roughly 53,000 metric tons of spodumene concentrate (high-purity lithium ore) each year through the end of 2025 (with an option to renew for another three years). Now, that annual delivery is up to 125,000 metric tons. 

Here’s commentary from Piedmont Lithium President and CEO Keith Phillips via a press release: 

“The electric vehicle and critical battery materials landscape has changed significantly since 2020 and this agreement reflects the importance of — and growing demand for — a North American lithium supply chain. This agreement helps to ensure that these critical resources from Quebec remain in North America and support the mission of the Inflation Reduction Act to bolster the U.S. supply chain, the clean energy economy, and global decarbonization.”

Piedmont Lithium has economic interests in lithium mines in Canada and Ghana, which are its current sources of spodumene concentrate. That said, not all lithium is created equal; this ore still needs to be refined further and converted into lithium hydroxide. The company is in the process of developing facilities in Tennessee (estimated completion in 2025) and North Carolina (2026) that will do just that. 

The US isn’t exactly a world leader when it comes to lithium production — it’s eighth behind a host of other countries, notably Australia, Chile, and China. 

Perhaps Piedmont Lithium will help close the gap. Add PLL to the watchlist. 


Three Eye-Opening Tweets

And finally, we close with three eye-opening tweets. 

That’s a lot of red.

Twitter avatar for @GRDecter
Genevieve Roch-Decter, CFA @GRDecter
Many public stocks are not 'investments'. They are schemes for insiders and bankers to cash out at your expense. The sooner you realize this is the game Wall Street plays, the better.
Image
2:35 PM ∙ Dec 28, 2022
23,099Likes4,676Retweets

A quick summary of critical trends for 2023, via BlackRock. 

Twitter avatar for @GRDecter
Genevieve Roch-Decter, CFA @GRDecter
Many public stocks are not 'investments'. They are schemes for insiders and bankers to cash out at your expense. The sooner you realize this is the game Wall Street plays, the better.
Image
2:35 PM ∙ Dec 28, 2022
23,099Likes4,676Retweets

Who needs profits?

Twitter avatar for @IntrinsicInv
Ensemble Capital @IntrinsicInv
Interesting chart showing that in years when S&P 500 EPS declines, the market has rallied much more often than it has declined.
Image
6:10 PM ∙ Jan 3, 2023
233Likes53Retweets

Thanks for reading. Don’t forget to hit the heart button if you enjoyed today’s report.

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A mining startup worth watching: Piedmont Lithium

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