Lithium stocks that own or control ‘critical minerals’ are receiving newfound support from the Liberal government in Canada. Alex and Aaron talk about the 180-degree shift the current government has taken towards the ‘critical minerals’ space in the advent of lithium’s rise.
Canada Doubles Down on Lithium Sector and Critical Minerals
We wrote about the amazing turn of events and fortunate windfall in credits and funding in Canada Enhancing Energy Superpower Status,
“Canada’s 2022 budget was released in April. To the utter shock of mining proponents, the Mining Association of Canada got basically everything it asked for in a CAD$3.8 billion commitment. Stunning, when one considers the sector often fights against government policy and red tape – especially when the Liberals are in power.
The commitment boiled down to two things: bolstering government tax revenue and reaching net-zero emissions by 2050.”
The TSX Venture and small and micro-cap space need a catalyst. Liquidity has dried up, and until we see either an entire sector or a specific handful of stocks outperform, the entire exchange will drift. Despite being in early September, historically one of the most active times on the exchange, total volumes remain low. The TSX Venture Composite struggles to trade more than 20 million total shares per day – a far cry from the 100 million plus per day in total volume this time last year.
At the moment, lithium and critical minerals are still of interest and catching bids in the market. There are some huge market cap companies operating in the space. A large buyout could spark a period of M&A and reliquidate other sectors. If that happens, liquidity and the overall health of the exchange could improve.
Finally, if Canada’s current government can usher in a new era of lithium and critical mineral production, it will bolster mining investment in the country. While oil remains the ultimate cash cow today, the lithium sector may be tomorrow’s tax revenue giant. After putting up $3.8 billion, the Feds sure seem to think so.
