VANCOUVER, BC / ACCESSWIRE / January 26, 2017 / There will be nothing more explosive on the commodities market over the next few years than lithium, and 2017 was ushered in with a big bang as Tesla turned the switch on its battery gigafactory in Nevada, raising the prospects of lithium-mining euphoria to new levels.

Tesla already has some 330,000 orders for its Model 3 electric vehicle—100,000 of which it has promised to deliver by the end of the year—and securing lithium supplies has never been more critical.

In this atmosphere in which long-term demand is going to bludgeon supply unless we get new projects developed fast, it's great to be a small-cap miner with its hands on very big lithium—like Millennial Lithium Corp. (ML.V).

Firing up the gigafactory has done wonders for Tesla's shares. They're up to their highest since August 2016, and are expected to jump even higher when the Model 3 is released to the masses. It's also set to do wonders for lithium prices, and lithium stocks.

Lithium isn't scarce, but it is a race to the finish to see who will develop new supply first, and one of the hottest arenas is Argentina, in the heart of Latin America's "Lithium Triangle".

Right now, some 90% of global lithium production is controlled by four players: Albemarle Corporation, FMC Corp, SQM (Sociedad Quimica y Minera de Chile) and Chinese lithium giant Sichuan Tianqi Lithium Industries. But this cartel is in its last days, and Millennial Lithium Corp. (TSX.V:ML) is one of the most promising new players in the lithium patch, and it just came back with positive analytical results from its first two completed exploration wells at its flagship project in Argentina.

3 Reasons to keep a close eye on Millennial in the lithium race:

#1 The Battery Market's Voracious Appetite

Grabbing the bull by the horns has never been a more appropriate axiom than right now, and precisely with lithium. This is a bull market, and it's going to be a long run.

According to Macquarie Bank, the share of lithium demand from electric and hybrid vehicles is due to surge from 10% in 2015 to 33% by 2021.

But you have to see the whole picture here. In 2014, lithium prices started to soar because of a supply deficit. The run on investment in lithium and the pace of new projects has caught up with that a bit, but while 2018 might see supply briefly catch up with demand, it won't last long.

Lithium expert Joe Lowry says demand should double between now and 2020, driven by the massive battery market, producers are in no position to keep up with this in the medium or long term.

As the acceleration of EVs into the mainstream picks up astounding momentum, the big question is: Where are the batteries to power the going to come from? The answer is around a dozen battery gigafactories. But it means nothing without lithium. Today's global lithium-ion cell production is only enough to supply around 900,000 to 1 million units, which is only about 1% of the demand considering 100 million light EV sales, according to Evercore ISI analyst George Galliers. PriceWaterhouseCooper (PwC) also agrees that "supply will continue to trail until new projects come online in the next five years."

Prices have tripled—but that was even before the battery gigafactories got off the ground. Tesla's has already opened in Nevada, and 11 more are in play. The battery supply chain is exploding, and the math is brilliant.

As Lowry puts it: "No matter what certain "experts" say – supply and demand are NOT in balance. If the market is adequately supplied, why are we having the current price run-up?"

View photos

Story continues