Supply surplus weighs on lithium prices

Market saturation emerged as a key theme for lithium early in the year as a continued surplus weighed on prices.

The excess comes on the back of steadily growing mine supply over the last four years. In 2020, the annual global mine supply tally was 82,500 MT, a number that more than doubled in 2023 to 180,000 MT.

Prices for lithium carbonate remained in the US$13,000 range for January, but began to rise in mid-February, ultimately reaching a year-to-date high of US$15,969.26 on March 14.

The price momentum was attributed to announcements that some new projects were being delayed, while operations in development and production were being transitioned to care and maintenance.

“I only expect this to palpably impact the supply picture in 12 to 18 months, as that is when these expansions were planned to ramp.”

Record-setting lithium M&A activity

This precarious landscape was fertile ground for M&A deals, which occurred throughout the year.

“As lithium projects struggle to stay above water, analysts also expect M&A activity to increase as major producers with positive cash flow try to find deals in the market while junior companies try to sell projects in a market where private capitals are scarcer than previous years,’ a February 12 report from S&P Global states.

2024 started with the completion of Livent (NYSE:LTHM) and Allkem’s merger of equals. The deal saw the two companies combine under the Arcadium Lithium (NYSE:ALTM,ASX:LTM) banner,boasting a market cap of US$5.5 billion and an extensive portfolio of lithium production assets and resources across the Americas and Australia.

By September, the weak price environment had forced Arcadium to halt expansion plans for its Mount Cattlin spodumene operation in Western Australia, with plans to transition to care and maintenance by mid-2025.

Despite that setback, Arcadium made headlines once again a month later as global mining major Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) made a move to acquire the multinational lithium company. Once the US$6.7 billion all-cash transaction closes, Rio Tinto will become the third largest producer of lithium globally.

Another notable 2024 lithium deal was Pilbara Minerals’ (ASX:PLS,OTC Pink:PILBF) August plan to acquire Latin Resources (ASX:LRS,OTC Pink:LRSRF) in an all-stock deal valued at approximately US$369.4 million.

The acquisition will grant Pilbara Minerals access to Latin Resources’ flagship Salinas lithium project in Brazil’s Minas Gerais state, enhancing its presence in the burgeoning North American and European battery markets.

In late November, Sayona Mining (ASX:SYA,OTCQB:SYAXF) and US-based Piedmont Lithium (ASX:PLL,NASDAQ:PLL) unveiled a merger that is set to create a consolidated entity valued at about US$623 million.

These deals helped make lithium one of the most active M&A segments in the critical minerals space.

“Lithium stands out with both the highest volume of deals and largest total deal value from 2020-24 (US$24 billion),” a 2025 critical minerals outlook from Allens reads. “Deal volume for lithium M&A deals peaked in 2023, but remains relatively high in 2024, showing comparable volume to 2022.”

Global EV sales rebound amid trade tensions and policy shifts

As one of the largest end-use segments for lithium, the EV industry is a key factor in the market.

Weak North American EV sales early in the year offset some positivity out of Asian markets; however, in late Q3 and Q4, global sales began to pick up momentum. In October, the Chinese EV market set another monthly record with 1.2 million units sold, a 6 percent month-on-month increase. According to data from research firm Rho Motion, EV sales between January and October were up 24 percent compared to the same period in 2023.

“The global EV market is now picking back up again, hitting record sales for the second month in a row. Most of the growth is coming from China and Western manufacturers are clearly feeling threatened by this. The US market remains buoyant in part thanks to Inflation Reduction Act (IRA) funding for consumers switching to electric which may be at risk with the start of the Trump presidency,” said Charles Lester, data manager at Rho Motion.

However, there is speculation that President-elect Donald Trump will dismantle key components of the IRA, particularly targeting the US$7,500 EV tax credit. His transition team has indicated intentions to eliminate this consumer incentive, which was designed to promote EV adoption and bolster the country’s clean energy sector.

Critics have argued that removing the tax credit could hinder domestic EV sales and potentially benefit foreign competitors, notably China, by undermining investments in the US battery supply chain.

With that in mind, the proposed repealing of the tax credit has raised concerns among automakers and environmental advocates about the future of America’s competitiveness in the rapidly growing global EV market.

The Biden administration made efforts to address that issue in May, when it sharply increased tariffs on Chinese EVs, raising duties to over 100 percent to counter alleged unfair trade practices. While the move was made to bolster domestic EV production and sales, critics said it could disrupt supply chains and raise consumer costs.

Following suit in August, North American neighbor Canada levied a 100 percent tariff on Chinese EVs, aligning with the US and EU to counter China’s trade practices. At the time, Prime Minister Justin Trudeau criticized China’s policies as unfair, citing their impact on Canadian industries and workers. He emphasized the need to protect the domestic EV and metal sectors from overcapacity caused by China’s state-driven production.

Canada also introduced a 25 percent surtax on Chinese steel and aluminum imports.

In response, China filed a formal complaint with the World Trade Organization over Canada’s decision to impose tariffs on Chinese-made EVs, steel and aluminum. Beijing criticized the measures as protectionist and in violation of international trade rules. China also filed similar complaints against the US and EU.

As uncertainty continues to plague the lithium space, analysts are projecting a sustained low-price environment into 2025, despite the production cuts and project delays that were prevalent in 2024.

‘With the production cuts announced so far having primarily been about slowing future growth rather than immediate production, strong mine supply growth is still expected in the short-term, namely 24.7 percent in 2024 and 17.4 percent in 2025,’ Macquarie analysts told S&P Global as 2024 drew to a close.

‘This suggests lower prices will need to persist for longer in the absence of any further price-induced cuts that rebalance the market sooner than our forecasts indicate.”

1. Bitcoin’s Latest Halving is Complete, Here’s What Happened

The highly anticipated Bitcoin halving occurred on April 19, 2024, at 8:10 p.m. EDT, when ViaBTC mined block number 840,000.

This milestone reduced the block reward for miners from 6.25 Bitcoins to 3.125, marking another pivotal moment in Bitcoin’s history.

While Bitcoin’s price remained relatively stable post-halving, trading between US$63,000 and US$65,000, the cryptocurrency showed a modest 2.2 percent gain by April 22, reaching US$66,243.

Over the past year, Bitcoin’s market cap has surged by 142 percent, briefly surpassing that of silver in March.

Historically, Bitcoin halvings have led to significant price rallies. However, the 2024 halving was unique in its context, coinciding with increased institutional interest fueled by the approval of Bitcoin exchange-traded funds (ETFs) and a favorable macroeconomic environment.

Halving events also impact miners significantly since they cut block rewards, reducing profitability. Crypto miners ramped up their operations with more efficient hardware to maintain profitability, even as production costs were estimated to rise to US$37,856 per Bitcoin post-halving.

2. Bitcoin Reaches New Record High on Reserve Asset Speculation

Bitcoin soared to an unprecedented high of US$107,554 on December 16, fueled by speculation that US President-elect Donald Trump plans to designate it as a US reserve asset.

The surge followed Trump’s December 12 interview on CNBC, where he shared his vision for a strategic cryptocurrency reserve. Highlighting concerns over international dominance in the crypto space, Trump emphasized that the US must act decisively to prevent other nations from gaining an edge. This was not the first time he mentioned this plan, as we discuss in the next entry.

This interview came alongside a trend of strong institutional investment. Digital asset inflows reached US$3.2 billion during the week of December 9 through 13, while the global market for Bitcoin ETFs also expanded, managing over US$135 billion in assets amid heightened demand.

Globally, governments have been increasing their Bitcoin holdings, with the US owning nearly 200,000 Bitcoin valued at over US$20 billion at the time of the new high.

Trump’s pro-crypto administration, including key appointments like David Sacks and Paul Atkins, has added to crypto investors’ confidence in the market.

3. Crypto Market Buzzing on Rumor Trump Will Announce Bitcoin as Strategic Reserve Asset

Looking back before the US election, speculation reached fever pitch last July when candidate and former US President Donald Trump delivered a keynote address at a Bitcoin conference in Nashville, Tennessee.

The Republican presidential nominee used the platform to promise sweeping changes to US cryptocurrency policy if elected for a second term.

In his speech on July 27, Trump pledged to establish the United States as the ‘crypto capital of the planet’ and announced plans for a Bitcoin strategic reserve utilizing the government’s existing cryptocurrency holdings.

The announcement marked a major shift from his earlier criticism of digital assets, fueling investor enthusiasm and market volatility.

The prospect of Bitcoin as a strategic reserve asset has raised significant questions about its integration into national financial systems. While proponents see it as a step toward legitimizing Bitcoin as ‘digital gold,’ critics point to the asset’s volatility and cybersecurity concerns as major hurdles.

4. ASX Welcomes First Bitcoin ETF as Crypto Soars in Popularity

In a landmark move for Australia’s financial markets, the Australian Securities Exchange (ASX) launched its first Bitcoin exchange-traded fund (ETF) on June 20.

The VanEck Bitcoin ETF (ASX:VBTC) provides Australians with a simplified way to gain exposure to Bitcoin’s price movements through traditional brokerage accounts.

The launch, backed by an initial investment of AU$985,000 (US$657,000), caters to the increasing demand for digital asset investment options in the region.

This followed global crypto trends, with spot Bitcoin and Ether ETFs in the US launching in January and July respectively, while Hong Kong permitted the trading of ETFs for Bitcoin and Ether in April.

Bitcoin’s strong performance throughout 2024 further bolstered interest in the ETF. At the time of the launch, Bitcoin had nearly quadrupling in value since early 2023. Other Australian firms such as BetaShares and DigitalX have since launched their own crypto ETFs.

5. Spot Ether ETFs Make US Debut

After months of anticipation, the US market witnessed the launch of nine spot Ether ETFs on July 23.

These ETFs, which are now trading on major exchanges such as the New York Stock Exchange, Nasdaq and the Chicago Board Options Exchange, provide regulated exposure to Ether, the second-largest cryptocurrency by market capitalization.

The newly launched spot Ether ETFs were:

The SEC’s approval of these ETFs came after regulatory uncertainty, with the commission previously expressing concerns about Ether’s classification and the complexities of crypto staking.

However, the SEC gave the green light to these ETFs on May 23, following the filing of updated applications, and this decision contributed to a surge in Ether’s price.

While they had a slower start than analysts expected, Ether ETFs ultimately saw net inflows of US$2.62 billion in 2024 as of December 30 according to data from Farside Investors.

The source of this additional energy will be a crucial consideration, as a shift towards renewable energy sources will be essential to mitigate the environmental impact of ever-growing energy demands.

Nuclear and geothermal energy emerged as two promising carbon-free options in 2024. Microsoft (NASDAQ:MSFT), for instance, has signed a 20 year power purchase agreement with Constellation Energy (NASDAQ:CEG) to purchase carbon-free electricity from the soon-to-be-restarted Unit 1 reactor at Three Mile Island.

Similarly, Amazon’s (NASDAQ:AMZN) Climate Pledge Fund joined a US$500 million funding round in October to back a start-up company, X-energy, that’s developing a Generation IV high-temperature gas-cooled pebble-bed nuclear reactor. X-energy’s Xe-100 is a small modular reactor (SMR) that is more compact, simpler and safer than traditional reactors.

News of Amazon’s deal broke just a week after Alphabet’s Google (NASDAQ:GOOGL) announced a power purchase deal with Kairos Power to deploy 500 megawatts (MW) of nuclear power by 2030 using reactor technology.

More recently, on December 4, Meta (NASDAQ:META) communicated a request for proposals to nuclear developers, saying it is seeking up to 4 GW of new nuclear power for its data centers. Welcoming collaboration from both SMRs and larger nuclear reactors, Meta emphasized the need for early engagement and scaled deployments to reduce costs.

Oklo (NYSE:OKLO), a company with strong ties to OpenAI CEO Sam Altman due to his early investment and role as chairman of the board, signed a deal in late December with data center operator Switch to build SMRs to power its data centers. Switch’s clients include Google, NVIDIA (NASDAQ:NVDA) and Tesla (NASDAQ:TSLA), among others.

In addition to nuclear energy, geothermal energy is a viable solution for data centers’ high energy consumption. Google’s partnership with NV Energy leverages what’s known as a Clean Transition Tariff to secure 115 MW of geothermal power for Google’s data centers, outsourced from Fervo Energy’s enhanced geothermal system.

Meta is also pursuing geothermal sources for its energy needs, signing a power purchase agreement with Sage Geosystems in August. The first phase of the project is scheduled to become operational by 2027.

Furthermore, the increased power consumption of AI technologies necessitates more efficient cooling methods. According to analysis from Zainab Gilani, a research associate at the Cleantech Group, liquid cooling offers superior performance and scalability compared to traditional air cooling, particularly direct-to-chip cooling.

Companies like NVIDIA and Intel are working to advance liquid cooling solutions for data centers, including collaborating with cooling technology providers like CoolIt Systems.

In its global outlook report for 2025, BlackRock explains how investors could benefit from this trend, highlighting the utility sector as a potentially attractive avenue for indirect investment in the AI boom.

EVs, tariffs and trade under Trump

The EV market grew globally in 2024, but in the US it faces a complex and uncertain landscape.

While consumers have more EV options than ever after a wave of newly introduced models from automakers like Ford (NYSE:F), Toyota (NYSE:TM) and Rivian (NASDAQ:RIVN), adoption initiatives put in place by the Biden administration are at risk of being defunded or repealed under President-elect Donald Trump.

For example, Trump wants to eliminate the Inflation Reduction Act, although he would need Congressional approval.

In a December interview with Yale Environment 360’s Elizabeth Kolbert, Professor Leah Stokes of the University of California Santa Barbara said corporate lobbying will be instrumental in retaining some aspects of the act.

“The things that will be on the table are largely (clean energy) tax credits because the grants will be mostly out the door by the time the Biden administration wraps up at the beginning of January,” she said. “These tax credits are benefiting companies, and you’re already seeing the reporting that for even the most vulnerable tax credits, which I would assume are the EV tax credits, there’s a constituency out there trying to defend those. Companies have made investments that take years to really come to fruition, and they can’t really turn around on a dime.”

Tax incentives to spur investment have also created thousands of jobs, particularly in Republican states. This may encourage Trump to selectively choose which programs to cut.

“When you think about all the manufacturing investments that are in these Republican districts, it’s not just the manufacturing jobs that matter,” Stokes continued.

“You start to realize that all those investments in making stuff in America, they want to sell that stuff in America too. And in order to sell that stuff in America, they need the other tax credits for deployment.’

In her view, the IRA may turn out to be ‘a much stickier policy’ than many expect.

One additional factor to consider is Trump’s approach to international trade, particularly with regard to tariffs. Given the importance of lithium in the production of EV batteries, changes in trade policies involving countries with significant lithium reserves and processing capabilities, such as China, could impact the EV industry.

The proposed tariffs run the risk of provoking retaliatory measures from other countries, including trade barriers. Such a response could escalate into a trade war, with negative consequences for all involved economies.

Sodium-ion batteries, especially if they become commercially viable and cost-effective, could reduce US dependence on China for lithium-ion battery materials and technology.

In April 2024, Osaka Metropolitan University shared research focused on the challenging task of developing a new process for mass producing solid sulfide electrolytes for sodium-ion batteries. This new method has the potential to enable the production of solid-state sodium batteries that could be scaled up for mass production.

Sodium-ion batteries offer other advantages such as improved safety, lower costs due to the abundance of sodium and potentially higher energy density compared to traditional lithium-ion batteries.

Investor takeaway

The cleantech sector is poised for change in 2025, driven by escalating energy demands and the push for sustainability. Advances in nuclear and geothermal energy offer promising solutions, while innovations in battery technology and cooling solutions further support the transition toward a cleaner future.

Overall, the cleantech industry’s trajectory depends as much on policy decisions as it does on technological advancements and the global push for sustainability. Industry leaders’ ability to innovate and adapt will be crucial in shaping a cleaner and more energy-efficient future.

A rich history of mining

Arizona’s gold mining story began in the mid-19th century, marking the start of an adventurous era of discovery and innovation. The 1860s saw prospectors flocking to Arizona’s rivers and streams, driven by the promise of golden riches. While initial findings were modest compared to other states, they laid the groundwork for a robust mining industry.

As the 1870s unfolded, significant silver deposits were unearthed, catalyzing a population boom and the establishment of numerous mining towns across the state. This silver rush, though overshadowing early gold efforts, played a crucial role in Arizona’s economic development.

The 1880s ushered in another pivotal moment with the discovery of substantial copper deposits. This shift towards copper mining would eventually dominate Arizona’s mining revenue. However, gold production continued to evolve, benefiting from technological advancements and improved extraction techniques, particularly in porphyry copper mines where gold was often a valuable byproduct.

From 1900 to 1965, Arizona’s gold output was primarily tied to large-scale copper-mining operations, reflecting the industry’s adaptability to changing mineral focuses and economic landscapes. Today, the remnants of historic mining towns stand as testament to Arizona’s rich mining heritage, while modern exploration techniques promise new chapters in the state’s golden history.

Gold-rich geology

Arizona’s geological tapestry is a complex interweaving of metamorphic, igneous and sedimentary rocks, creating ideal conditions for gold deposition. The state’s gold deposits are predominantly concentrated in the western regions and along the central highlands, with notable gold-producing areas including the famed Oatman District.

The Oatman District, located in Mohave County, stands out as Arizona’s largest gold-producing region, having yielded over 2 million ounces of gold from epithermal vein deposits between 1863 and 1943. This district exemplifies the rich potential that still exists within Arizona’s borders.

Geologists and mining experts continue to identify areas with potential for undiscovered gold resources, particularly in less explored or remote regions. This ongoing potential is evidenced by the fact that in 2019, gold activity accounted for 27 percent of Arizona’s mining sector, underscoring the state’s enduring importance in gold production.

The resurgence of gold exploration in Arizona is palpable, with numerous mining projects currently in various stages of development. This active exploration environment, coupled with global economic factors driving interest in gold, presents exciting prospects for investors looking to tap into Arizona’s mineral wealth.

Mining-friendly environment

Arizona’s appeal to the mining industry extends beyond its geological riches. The state has cultivated a supportive regulatory framework that balances economic growth with environmental stewardship. Key regulatory bodies, including the Arizona State Mine Inspector and the Bureau of Land Management, oversee a comprehensive system for mining operations.

The Arizona Mining Permitting Guide serves as a roadmap for obtaining necessary permits, ensuring regulatory compliance while promoting sustainable practices and community engagement. This approach facilitates a systematic review of potential impacts, fostering responsible development of mining projects.

Infrastructure advantages further bolster Arizona’s mining sector. Well-developed transportation networks, including extensive highways and railroads, facilitate the movement of materials and equipment. The state’s robust energy supply and access to water resources are critical for supporting various extraction processes. Additionally, the presence of established mining communities provides a skilled workforce and local expertise that benefits new projects.

Successful gold projects in Arizona underscore the state’s potential. For instance, Sabre Gold Mines’ (TSX:SGLD,OTCQB:SGLDF) Copperstone project in La Paz County has undergone a preliminary feasibility study, indicating its commercial viability. Such projects highlight Arizona’s continued significance in the gold mining industry and underscore the state’s potential for future development.

Junior mining companies in Arizona’s gold sector

Junior mining companies play a pivotal role in driving exploration and resource discovery in Arizona’s gold sector. These smaller firms, often focused on specific exploration projects, are the vanguard of mineral discovery, partnering with larger companies to fund exploration activities and reduce financial risks.

The success of these juniors in Arizona is largely attributed to their ability to leverage local expertise. Many of these firms rely on regional professionals who possess invaluable knowledge about the area’s geology and mineralization potential. This local insight enhances exploration success rates and ensures compliance with regulatory requirements.

Economic considerations are paramount for junior miners operating in Arizona. They must navigate complex regulatory frameworks and permitting processes while aligning their operations with broader economic goals, including community benefits and sustainability. The growing demand for minerals presents opportunities for potential investors to engage in the market, with increased investment in exploration potentially leading to new projects that drive local economies and generate employment.

Environmental considerations are increasingly at the forefront of junior mining operations, as well. Organizations like the Center for Environmentally Sustainable Mining play a crucial role in fostering responsible mining practices that protect local ecosystems. Junior companies are held to stringent environmental standards, ensuring that community concerns about ecological impacts are properly addressed.

Spotlight on GMV Minerals

GMV Minerals (TSXV:GMV,OTCQB:GMVMF) stands out as a prime example of a junior gold development company capitalizing on Arizona’s mineral wealth. The company’s flagship Mexican Hat gold project in southeast Arizona, is recognized as one of the most promising gold development opportunities in the western United States.

Located in Cochise County, the Mexican Hat project boasts strong economic fundamentals, including a projected mine life of 10 years and a significant net present value estimated at US$153 million, based on a preliminary economic assessment filed in 2020 using a gold base-case price of US$1,600 per ounce. It’s worth noting that the project’s economic potential is expected to be much more substantial given the current gold price, which is significantly higher than the base-case price of US$1,600 used in Mexican Hat’s preliminary economic assessment. This discrepancy suggests the project may be undervalued, presenting a unique opportunity for investors to capitalize on the potential upside.

GMV holds a 100 percent interest in the Mexican Hat property, which has been extensively explored, notably by Placer Dome in the early 1990s. Recent metallurgical studies have yielded impressive results, with gold recoveries of up to 96.6 percent and 91.6 percent, indicating a potentially valuable resource that can be economically extracted.

The company’s commitment to advancing the Mexican Hat project is evident in its ongoing drilling and exploration activities. These efforts continue to yield encouraging results, reaffirming the project’s potential and GMV’s strategic position in Arizona’s gold sector.

For investors considering opportunities in Arizona’s gold industry, GMV Minerals presents a compelling case. The company is well positioned to leverage Arizona’s mining-friendly environment and developed infrastructure, factors that significantly facilitate mining operations. Moreover, the geological potential of the region aligns with GMV’s focused exploration efforts, potentially leading to substantial returns for investors as the project advances.

Global demand for gold continues to be driven by a confluence of factors, including economic uncertainty, inflation hedge considerations and geopolitical tensions. Investors increasingly view gold as a safe-haven asset during times of financial instability, a trend that has been amplified by rising inflation and ongoing supply chain issues. Furthermore, central banks worldwide are expanding their gold reserves, adding another layer of demand to the market.

Arizona is strategically positioned to meet this growing global gold demand, with projects like GMV Minerals’ Mexican Hat gold project at the forefront.

The Mexican Hat project’s favorable low capital expenditure profile further enhances its attractiveness as an investment opportunity. This aspect, combined with Arizona’s longstanding mining history and supportive infrastructure, positions the project as a compelling prospect for investors looking to benefit from the ongoing gold boom.

Investor takeway

Arizona’s gold rush is entering a new, exciting phase driven by modern exploration techniques, supportive regulations and growing global demand for gold. The state’s rich geological tapestry, coupled with its mining-friendly environment, positions it as a prime location for gold exploration and investment.

Junior mining companies, particularly those with promising projects like GMV Minerals’ Mexican Hat, are at the forefront of this modern gold rush. These companies offer investors the opportunity to get in on the ground floor of potentially lucrative ventures, leveraging the expertise of local geologists and the support of Arizona’s robust mining infrastructure.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with GMV Minerals and seek advice from a qualified investment advisor.