If you’re looking to buy a car, you should know that the electric car revolution will one day sweep South Africa.
Currently, there are only three electric models on the local market, but if the rest of the world is anything to go by, the time will come when we catch up and have charging stations dotted around the country, and not just in our garages.
But what does this have to do with importing and exporting?
Well let’s start at the beginning. According to Business Insider, the “electric vehicle (EV) revolution is underway”:
The market thinks Tesla, with a market cap of roughly $60 billion, will produce more than a million cars in the coming years. In 2016, Tesla produced only about 75K EVs.
And it’s not just Tesla; the traditional automakers are finally taking seriously the shift in consumers’ tastes towards EVs.
But, as the article continues to suggest, there is one aspect of the market that has yet to be fully priced: the lithium battery market and the impending lithium commodity supercycle.
You see, based on current lithium carbonate prices, “each EV demands about $1 000 worth of lithium carbonate”, but the global lithium carbonate export market for EVs is still very small, coming in at around $1 billion a year.
So what will those figures look like by, say, 2030 – when the majority of the world needs to plug in before driving their car?
Assuming there are around 25 million EVS by then, and based on current lithium prices, it’s implied that the global lithium EV export market will sit at around $25 billion.
In our view, not only will EV car production likely accelerate faster, lithium prices could be poised for another big spike.
This view could translate to at least a $50 billion lithium EV market by 2030— on par with the size of the copper market today.
That’s a whole lot of money for a commodity right on our doorstep. Yep, look north…
When the time arrives, Zimbabwe could well become one of the world’s biggest exporters of lithium – this from Daily News:
The investment-starved country produced 900 tonnes of lithium in 2015, with top producer Australia accounting for 13 400 tonnes, Chile for 12 900 tonnes, Argentina for 3 800 tonnes and China for 2 200 tonnes.
However, anticipated global demand for lithium — popularly known as “white petroleum” — may increase production of the mineral that powers rechargeable devices, including telephones and automobiles.
And because of this, Zimbabwe could increase its share of a growing market if it actually does things right.
One project based in the country, called Arcadia, is “expected to have an internal rate of return of 39 percent, and a pre-tax net present value of $139 million, with projected mine revenues of $2 billion over the life of the project”.
And, if you have forgotten, Zim are our neighbours. Whoo.
The close-proximity is ideal for anyone wanting to hop over and start wheeling and dealing in the natural resource. Once you have your supplier and buyer sorted, it’s nothing to get the likes of Berry & Donaldson on board to ship your quality lithium to where ever you want.
Before you know it you could be making it rain when lithium hits big.
Use it, don’t use it, your call – but it never hurts to throw something like this out there to see who nibbles.
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