- Control freaks and power trippers (Moments the mask slips)
- Ray Blanco on lithium’s rise from obscurity
- Familiarize yourself with the term “load shedding”
- Update: California’s doctor-censorship law
- A Norwegian shipping line’s act of rational self-interest.
Every so often, the smiley face on the transition to “green energy” comes off — to reveal the scowl of tyranny beneath.
So it went two years ago when a Massachusetts state official said all the “easy” things to combat climate change like solar panels had already been done… and the rest would have to come from turning down the thermostat and driving less. As he put it not-so-delicately, “We have to break your will.”
And so it went with the academic study that found climate-change targets could be met only if the typical American family of four lived in a 640-square-foot space — and a typical adult’s travel was limited to the energy equivalent of no more than 40 gallons of gasoline each year.
Which brings us to another study making news this week…
“The U.S.’ transition to electric vehicles could require three times as much lithium as is currently produced for the entire global market,” reports The Guardian — “causing needless water shortages, Indigenous land grabs and ecosystem destruction inside and outside its borders, new research finds.”
All of which is true, by the way. Not only is there not enough lithium to meet green goals… there’s not enough copper, not enough nickel, not enough cobalt — the last of which is often produced by child labor in the developing world…
But notice how the study from the University of California, Davis puts the onus on Americans to change their lifestyle to meet global climate targets: “It warns that unless the U.S.’ dependence on cars in towns and cities falls drastically, the transition to lithium battery-powered electric vehicles by 2050 will deepen global environmental and social inequalities linked to mining — and may even jeopardize the 1.5C global heating target.”
The report’s lead author, Thea Riofrancos of Providence College, waxes enthusiastic about “the fastest way to get people out of cars” and how to “rethink our cities and the transportation sector.”
Of course, here at Paradigm Press it’s not good enough for us to shake our heads at the hubris of the control freaks and power trippers. We seek to follow the money — and skim some of the profits. And yes, there’s money to be made in lithium…
“Lithium used to be a relatively obscure metal with a few niche uses for humans, but by the 1990s that started to change,” says Paradigm’s science-and-wealth maven Ray Blanco.
Decades of research led to the lithium-ion battery — a breakthrough that earned its developers the Nobel Prize in chemistry in 2019.
“The properties of the lithium-ion battery made it a superior way to store energy — and made the technology fundamental for the world of today,” Ray tells us. “Mobile or ultra-mobile computing would not be practical without an energy store that’s safe, dense and capable of multiple reuses. The smartphone — the most popular consumer electronics product in history, would just be an idea without the properties of the lithium-ion battery.”
Vehicles are a whole ’nother thing: “Worldwide, 10% of vehicles sold last year were electric, and you can bet that the vast majority of them contained lithium in their batteries for energy storage,” Ray says.
Thus, lithium prices are up 750% over the last two years. “Demand is increasing, but supply isn’t keeping up. According to an analysis by Benchmark Minerals, we will need more than 400 new mines to secure enough capacity to meet future EV battery demand.”
“That makes lithium a very attractive prospect for investors,” says Ray, “and successfully finding and developing a new deposit is a virtual gold mine.”
Last week, Ray identified a tiny lithium developer for readers of his Catalyst Trader service. This week, the company reported extremely promising results from its latest drilling effort.
Ray believes this story is still in the very early innings. Likewise for another of his Catalyst Trader picks — the developer of an arthritis treatment that’s this close to getting a huge green light from the FDA. Intrigued? Details here.
We’re not done with the energy-madness theme today: It’s time to make yourself familiar with the term “load shedding.”
On Wednesday, hundreds of people took to the streets of South Africa’s biggest city Johannesburg to protest the country’s chronic shortage of electricity.
“Scheduled blackouts, known as load shedding, have burdened South Africa for years,” reports the AFP newswire, “as the state-owned energy firm Eskom has failed to keep pace with demand and maintain its aging coal power infrastructure.
“But the outages have reached new extremes over the past 12 months. Lights go off several times a day, sometimes for almost 12 hours in total.”
Says poultry seller Lloyd Peltier, “I had to close four shops and 20 people lost their jobs, all this because I can’t run my business because of load shedding.”
Load shedding is taking a huge toll on South Africa’s mining industry. Mining output in November fell 9% year-over-year, mostly thanks to unreliable electricity. The declines in the platinum group metals, iron ore and diamonds are all on the order of 20%.
We suspect “load shedding” will become a term familiar to Americans as this decade of the Flaming Twenties wears on.
America’s power grid is in sorry shape — and it’s not just the irony of California asking electric-vehicle owners to refrain from charging at certain hours of the day.
Our guidance in this regard isn’t an investment angle per se. Rather we urge you to study this map… familiarize yourself with whoever operates your regional electric “interconnection”… and keep up with its activities via a Google News alert or something similar.
During the Christmas Eve cold snap, the PJM Interconnection serving 65 million people from New Jersey to Illinois warned of rolling blackouts. It didn’t come to that, but just yesterday PJM vice president Asim Haque told West Virginia lawmakers it was “close” — thanks to the failure of natural-gas power plants in other states.
Last April, the Midcontinent Independent System Operator warned the 42 million people in the yellow portion of the map that they were at “increased risk of temporary, controlled outages to preserve the integrity of the bulk electric system” during bouts of hot summer weather.
About a month later, MISO issued a follow-up warning that its capacity would continue to be strained in 2023, 2024 and beyond.
As Reuters reported, “MISO’s biggest problem is that demand was rising at the same time generation resources have declined due mostly to the retirement of coal and nuclear plants for economic or environmental reasons.” [Emphasis ours]
It was the MISO stories last year that finally gave your Upper Midwest-based editor a kick in the pants to buy a generator and have an electrician install a breaker interlock to keep essential loads running (i.e., the freezer).
Bottom line: It’s not your father’s electric grid anymore. Act accordingly.
[Just for the heck of it: Are you experiencing a less-reliable electric grid in your neck of the woods? Write with your experiences: feedback@5minforecast.com]
The stock market is on track to post a weekly gain — with all three major U.S. indexes in the green as we write.
The Dow is up a modest 0.2% — good enough to be back above 34,000. The S&P 500 is up a quarter-percent to 4,071, the highest since early December. The Nasdaq is up nearly 1% to 11,612.
For all the ups and downs of the last 13 months, Paradigm’s options-trading guru Alan Knuckman points out the S&P 500 is down all of 8% since the Federal Reserve started raising interest rates last March.
Barring a calamity, gold will easily end the week over $1,900, the bid currently $1,929. But silver will have to wait to notch a weekly close over $24 — it’s now $23.53. Crude is down more than a buck and back below $80.
The big economic report of the day is the Commerce Department’s income-and-spend numbers…
- Personal income grew 0.2% in December, the slowest pace since last April
- Consumer spending fell 0.2%, the weakest showing in 12 months
- “Core PCE,” the Federal Reserve’s preferred measure of inflation, is now 4.4% year-over-year — down from a peak of 5.4% last February.
Still, while that last figure is moving in the right direction, it’s nowhere near the Fed’s 2% inflation target.
For the record: A federal judge has temporarily struck down California’s doctor-censorship law, first mentioned in our Saturday edition a few weeks ago.
Under AB 2098, the Medical Board of California is empowered to sanction doctors who give their patients information about COVID-19 that the state defines as contrary to “contemporary scientific consensus.” Several doctors are challenging the law with the help of the New Civil Liberties Alliance.
This week Judge William Shubb, a Bush 41 appointee, called the law “unconstitutionally vague” and the law’s definition of misinformation “nonsense.”
The injunction is hardly the last word, but for the plaintiffs’ lawyers, it’s promising…
“Shubb’s preliminary injunction does not mean that California cannot discipline doctors accused of ‘gross negligence,’ ‘repeated negligent acts’ or ‘incompetence,’ which were already covered by the definition of ‘unprofessional conduct,’” writes Jacob Sullum at Reason.
“But it does mean that California physicians do not have to worry about losing their licenses for candidly expressing their opinions about scientifically contentious issues raised by COVID-19.”
We wrap up the week with some welcome pushback against energy madness — or maybe just an expression of rational self-interest.
The Norwegian shipping line Havila Kystruten has banned hybrid and electric vehicles. Those lithium-ion batteries are too much of a fire risk.
“A possible fire in electric, hybrid or hydrogen cars will require external rescue efforts and could put people on board and the ships at risk,” CEO Bent Martini tells the trade publication The Maritime Executive.
Nor is that a hypothetical risk. Last February, the Felicity Ace — owned by the Japanese shipping line Mitsui O.S.K. — was hauling a load of cars when the ship caught fire. Once the fire reached the lithium-ion batteries in the EVs, it took special equipment to put out the flames.
No one was hurt, but the ship and most of its contents were a total loss — capsizing and sinking a few days later. Over 3,000 cars were lost — mostly from Volkswagen, but also including 15 high-performance Lamborghinis that would have retailed for over $500,000 each.
No, this development doesn’t alter our lithium investing thesis — but it’s another vivid reminder that reality has a funny way of interrupting the plans of the world improvers.
Thanks for hanging with us this week. We’re back tomorrow morning with our Saturday wrap-up — and another bad tax idea that just won’t die.
Have a good weekend,
Dave Gonigam
The 5 Min. Forecast
