Lithium, Nickel: Why is Elon Musk talking about these commodity stocks?

Highlights:

• In the world's transition to a sustainable future, demand for battery metals including lithium, nickel, is likely to rise due to the drastic rise in electric vehicle (EV) sales. 
• Elon Musk recently termed lithium refining a 'license to mint money'. 
• Recently, Musk signed deals with two ASX-listed companies, including BHP and Core Lithium Group. 

There is hardly a day when the world’s richest man Elon Musk is not in the news. Musk’s actions are closely monitored by social media platforms worldwide, and even a single tweet by the Tesla CEO makes Headlines in the financial world, whether it be acquiring Twitter or investing in Dogecoin. 

Elon Musk surprised everyone when he indicated he was buying lithium and nickel resources. As we all know, Musk owns the electric vehicle company, Tesla. Before electric vehicles came into being, the automobile industry depended on petrol and diesel as energy sources. There was a time when countries with abundant natural resources, particularly oil and natural gas, dominated the entire world. In contrast, the countries lacking these resources had to spend a ransom amount to satisfy their energy needs. As a result, the oil and natural gas exporting countries gradually amassed a lot of wealth, thus becoming economically strong. 

Elon Musk’s acumen and farsightedness are not hidden from anyone. It seems that the gentleman has very strategically caught the pulse of the electric vehicle industry. Since Lithium and Nickel are two essential components used in the battery manufacturing of the electric vehicle industry, Elon has chosen an opportune moment to invest in these two metals. Meanwhile, when soaring inflation has broken the backbone of most sectors and businesses involved, the commodity sector is faring relatively better. Taking cognizance of this, Elon Musk said in one of his tweets:

Not only this, the serial entrepreneur once even termed lithium refining a 'license to mint money'. 

In the world's transition to a sustainable future, demand for battery metals, including lithium, nickel, is likely to rise due to the drastic rise in electric vehicle (EV) sales

Considering the importance of these metals given the electric vehicle revolution, Musk has signed deals with two ASX-listed companies, including BHP and Core Lithium Group. 

Tesla's deal with Core Lithium Ltd:

In March this year, Australia's Core Lithium Ltd (CXO:ASX) signed an agreement with Tesla to supply the American electric car maker with lithium spodumene. In the deal, Core Lithium is expected to provide Tesla with close to 110,000 dry metric tonnes of spodumene concentrate from its Finniss Project for over four years.

Musk’s deal with BHP:

In order to protect itself from a future supply crunch, Musk’s Tesla Inc was quick to be on the safer side as it signed a nickel-supply agreement with BHP Group (ASX:BHP) in July this year. The global mining giant BHP will provide the electric vehicle manufacturing the metal from its Nickel west operation in WA. BHP is an ASX-listed iron ore mining giant involved in mining various other metals, including Nickel, Copper, metallurgical coal, Potash, etc. 

With that said, let us have a look at the major lithium and Nickel players in Australia.

Major ASX-listed Nickel players and their last one-year performance:

• GME Resources Limited (ASX: GME) – up 110%
• Centaurus Metals Limited (ASX:CTM)- up 15.98%
• Galileo Mining Ltd (ASX: GAL) – up 222.58%

Some of the top performing ASX-listed lithium stocks and their past one-year performance:

• Sayona Mining Ltd. (ASX: SYA) up 91.33%
• Liontown Resources Limited (ASX: LTR) up 97.16%
• Lake Resources N.L. (ASX: LKE) up 104.17%
• Pilbara Minerals Ltd (ASX: PLS) up 50.65%

Conclusion:

In the current market volatility, investors are considering investing in the commodities sector, especially Lithium and Nickel stocks, in view of the growing demand for these two metals. It is also not incorrect to say that Elon Musk’s statement on these two battery-making materials also has to an extent, motivated investors to consider adding them to their portfolios. Given the present situation, the prospects of these two metals appear brighter unless there is another substitute that can be used in the manufacturing of electric vehicle batteries.

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