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The White Gold Rush
Lithium mining

 We’re in the midst of a new gold rush, and it’s minting millionaires and billionaires worldwide. However, today’s gold rush differs dramatically from past versions, particularly in how people are exploiting and controlling the resource treasure troves.

The ‘White Gold Rush’

100+ years ago, during the Gold Rush of California or Yukon, it was a free-for-all. Go to those lands with enough knowledge, determination and drive, and you could walk away incredibly wealthy… from a poor prospector to a gold mining millionaire in months. But those days are long gone.

Today’s ‘White Gold Rush” (I’m referring to lithium) is closely monitored and often entirely controlled by the government. Entrepreneurs aren’t nearly as central to the plot as in past commodity booms. I think tough lessons were learned during WWII by governments, and those lessons were never forgotten. A shortage of oil in WWII meant an inevitable defeat. Just ask the Japanese and Germans.

If lithium is indeed the fuel of the future, maybe that’s why so many governments are nationalizing their lithium industries… could they be trying to avoid catastrophic mistakes of the past by other governments in times of geopolitical turmoil? Do they feel more secure in their sovereignty if they control their energy industry? Probably.

You see, governments of many countries are racing to capture market share for lithium whilst making attempts to not let one penny of potential revenue from the White Gold slip through their hands… problem is, they’re discounting the role of the risk-taking entrepreneurs and the value they provide (if properly incentivized) to the overall supply chain ecosystem. I digress…

Latin America Has the ‘Gold’, But Much of the Treasure is Now Government Controlled

We are seeing lithium asset nationalization in several Latin American countries right now. The problem for the rest of the world, particularly countries which rely on lithium imports, is security of supply. Latin America is sitting on copious amounts of lithium… an estimated 60% of the planet’s reserves. So, they have all the cards for the moment.

Countless times throughout history we’ve seen the nationalization of industries fail profoundly. So this move by several Latin American countries is concerning for lithium end-users, such as manufacturers of technologies and automobiles. A government-run sector is almost always less efficient than a free-market one…

Chile, Bolivia and Mexico have or are nationalizing their lithium sectors. Deemed a critical strategic mineral by much of the world, lithium powers EVs, tablets, smartphones and much more. It’s at the centre of the global electrification movement and is viewed by many as the new oil. Therefore, countries which control the supply will rise to the top of geopolitics.

We discuss all this and more in my latest pod from Mexico City.

I hope you enjoy it.