Louis Basenese has a new ad promoting his VentureCap Strategist newsletter ($2,000 a year), and it gets our attention with lots of hot air about “White Oil” … which, he says, is explosive in both chemical terms and investment potential.
Here’s a taste of the intro:
“This new White Oil is spiking 9X faster than the price of gold…
“The investment analysts at Goldman Sachs call it ‘the new gasoline.’ And MIT-trained chemical scientists call it ‘the holy grail.’ Because it’s 2116 times more powerful than the black oil you’re pumping into your engine now….
“… our models show potential for a 33,700% sector growth explosion….
“Drive 3 hours north from Las Vegas — like our venture cap strategy team just did — and you can hold a jar of this White Oil in your own hands.
“Feeling greedy? You can claim your stake in an entire MOUNTAIN of it today with just one click of your mouse.”
Basenese even includes a video of a “drunk hillbilly” setting a jar of salt water on fire… and implies that this new fuel will be a savior without “alternative energy” tax breaks:
“… what the salt water in that jar contains is valued at trillions upon trillions of dollars….
“… it’s the final American kill-shot that will put Vladimir Putin and the Saudi royal family out of business.
“With no need for ‘alternative energy’ gizmos that run on sunbeams, good wishes, or pork-barrel tax breaks either.
“Because this White Oil burns more than three times as clean as the oil and natural gas we use now.
“And just a little of it goes a long, long way.”
He even goes so far as to say that his camerman drove the six hour round trip to Clayton County, Nevada from Las Vegas in a Chevy coupe that was “running 100% on White Oil” and used “just two tablespoons.”
So what the heck is he talking about? Some kind of saltwater fuel that you pump out of the ground and burn in your car? That’s what it sounds like, right? Especially when he has prominent notes like this in his ad:
“It’s a liquid fuel. You pump it out of the ground. You refine it. You put it in your car. You drive. Then you fuel up again… 8 years later.”
But, of course, it’s not a fuel at all (even though yes, the source brine can be flammable or even explosive). What Basenese is talking about (though he doesn’t once mention the word in his ad) is lithium. Lithium prices are often quoted as “lithium carbonate equivalent (LCE)”, and he does slip up and use that “LCE” term a few times…
… and, of course, anyone who’s been paying attention to the lithium market lately will know that Clayton County, Nevada is the only current lithium production site in the US (that’s Albemarle’s , and that it has also hosted a land grab in the last couple years as companies have staked out potential future production because of the hotly anticipated multi-year lithium demand spike coming on the heels of Tesla’s Gigafactory opening and other lithium battery production increases for the electric car market.
If you’ve not been paying attention to the whole electric vehicle trend, lithium is the lightest metal on the periodic table and is one of the key ingredients in lithium-ion batteries. That basic battery technology has been around for decades, and is what powers most portable electronics (laptops, phones, etc.), but the big new(ish) anticipated demand increase is from electric vehicles… thanks largely to the fact that Tesla, since the first roadster was built, has based their battery designs on huge networks of what are, for lack of a better term, standard laptop batteries.
So we’ve seen lithium stocks pitched off and on over the past five years, and those pitches have heated up in recent years as Tesla’s Gigafactory is being built and going online in Nevada — that’s mostly because the Gigafactory is, above all, designed to dramatically cut the price of batteries… and the only way it can do that is if it is extremely efficient and produces a huge number of batteries to achieve economies of scale, which is why it’s so incredibly massive (when finished, it is expected to have the largest footprint of any building in the world).
That size and dramatic ramp-up in production of batteries, which will be needed if Tesla is to achieve real commercial scale, producing hundreds of thousands of cars a year at more modest price points than their current luxury models, is also going to require a huge amount of lithium carbonate. It will also require a lot of graphite, which accounts for more of the weight of the battery than the lithium does, but graphite is by no means in short supply… and lithium might be.
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That’s not because lithium is rare. It’s not particularly hard to find, and vast reserves are known — particularly in the real heart of global lithium production, in the high desert peaks of the Andes of South America, but also in Australia and China. and, to a smaller degree in Nevada and a few other places… but production is not high enough to satisfy anticipated future demand from a booming electric car market, so there are lots of projects on the drawing board to both build new capacity and expand existing production. That makes resource investors and speculators smell money, and lithium prices have already risen pretty dramatically over the past couple of years as customers sense that future supply pressure… so, naturally, the newsletter guys are beating the bushes to find exciting lithium stories to tell and lithium stocks to recommend.
This is what lithium production looks like from the sky — most lithium is not mined (though some is, particularly in Australia, where there is substantial mined production from spodumene — but that’s generally a more expensive production method), the best concentrations of lithium are in underground salt brine “lakes” and most lithium is produced by pumping that saltwater out of the ground, evaporating the water in huge pools (one reason why production is all in sunny, arid locations), and processing the lithum carbonate out of the resulting “ore.”
These underground salt lakes (salars) and evaporation pools also generally have high concentrations of other minerals, often including magnesium and iodine and potassium… usually, in fact, more potassium than lithium, so agricultural demand for fertilizers also has a substantial impact on the economics of most lithium producers (economic plans for lithium projects often use an assumption about potassium prices as a net credit to offset the production cost for lithium, much the same way a gold mine in its investor materials might use the “credit” of the silver they also produce to offset the per-ounce cash cost of the gold production). SQM in Chile has for many years been the global giant of lithium, but they’re also a major fertilizer company… none of the big three lithium producers, SQM, Albemarle and FMC, have historically gotten anything close to a majority of their revenue from lithium (that “big three,” to be clear, is no longer quite as dominant as they were when lithium demand was sleepier a decade ago, thanks to some new producers and a bigger push from Chinese companies into the business, but they still control a huge amount of global lithium production).
If you want to see some other images or get an idea of the massive scale of the lithium production projects or of the Gigafactory itself, check out this post on a Google Earth blog for some pictures.
We’ve already written about a bunch of these over the past couple years… so, what specifically is it that Basenese is talking about within the lithium space?
We don’t get a lot of detailed clues, but we get some hints that will help us give you at least an idea of the stocks he has in mind…
“This is the only ‘pure play’ on White Oil that covers all the best mining sites in Nevada.
“That’s why I’ve identified the top five White Oil stocks for you….
“… my own personal map of White Oil country. The one I began sketching out after that jar of this fuel exploded right in front of my eyes.
“But this is more than just a map. It’s also a five-stock venture cap strategy alert that shows you how to ‘R.I.N.G.’ the entire Clayton County White Oil reserve. Including the mine that’s already operating in Silver Peak. And the othe