On the first trading day of the week (July 11th), the stock price of Tianqi Lithium, one of China's largest lithium companies, plummeted by 9.16%, closing at 134.45 RMB per share, with a market capitalization evaporating nearly 20 billion RMB in a single day.

Although some attribute this to a statement made by Ying Ying, the wife of China's "private equity king" Xu Xiang—"Personally, I believe that Tianqi Lithium's double play has reached its peak, and the price is overvalued."—it might be precisely because she spoke the truth that caused the sharp decline in Tianqi Lithium's stock price.

Whether for electric vehicles, household use, or large-scale grid storage, the battery revolution has led to a fundamental shift in demand for commodities like lithium. In the current market, which can be described as "panicked at every shadow," the battery supply chain and new energy sectors are almost the only hot spots.

In less than three months, Tianqi Lithium's stock price has risen by nearly 150% from its low in April. A drop due to a single statement only illustrates the market's severe "fear of heights" sentiment.

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In the Australian market, lithium mining companies' stock prices have already undergone a period of correction. Even so, over the past year or so, the stock prices of some small and medium-sized lithium mining enterprises have also seen significant increases. For instance, the stock prices of Argosy Minerals, AVZ Minerals, Core Lithium, and Global Lithium Resources have all experienced astonishing growth over the past 12 months, with annual increases all exceeding 200%.

The sharp decline in Tianqi Lithium seems to be reminding investors that electric concept stocks cannot keep rising indefinitely. In the current economic cycle, investments in the battery sector should be planned from a longer-term perspective.

Investing in battery raw materials: Look for early-stage and alternative options.

In the battery sector, electric vehicles have always been the core development area. According to predictions by the rating agency S&P, by 2030, global sales of light electric vehicles will reach 26.8 million units, up from 6.3 million units in 2021, an increase of over 100%.

Furthermore, PwC's recently released 2022 Mining Report analysis shows that the key minerals required to manufacture an electric vehicle are approximately six times those needed for an internal combustion engine vehicle."These minerals include silicon, rare earth elements, and uranium used for energy production; copper, aluminum, and steel for supply networks; and battery minerals such as nickel, lithium, and cobalt for energy storage. The demand for critical minerals is expected to grow significantly over the next 30 years."

PwC believes: "These critical minerals are needed at all stages of the low-carbon energy cycle."

The report states: "The International Energy Agency estimates that by 2050, the annual demand for critical minerals from clean energy technologies will exceed $400 billion ($58.4 billion AUD), equivalent to the annual revenue of the current coal market."

This may seem like a long way off, but mining companies are already struggling to meet the demand for critical minerals.

Some national governments, including Australia, have classified certain minerals as resources of vital national interest.

There are also several strategies for investing in these critical minerals.

The first strategy is to target the minerals that are in the greatest demand now, such as lithium mines, and look for a company in the early stages of exploration, anticipating extremely high returns when they discover resources and start development. Of course, this method is high risk, high reward, as it is a significant unknown whether companies in the early exploration phase will ultimately succeed.

However, there are indeed successful cases in the market, such as Liontown Resources. Liontown's share price has risen from 0.02 AUD at the beginning of 2019 to the current 0.94 cents AUD. The company has signed an agreement with Ford, which will purchase the company's products and provide 300 million AUD in debt financing to facilitate the advancement of its Kathleen Valley project in Western Australia.

The second strategy is to "bet on" newer technologies. Lithium-ion batteries have been the preferred technology to date, and demand for lithium has been strong, but this could also change. Many analysts believe that by 2040, the demand for cobalt and graphite used in battery anodes could be six times, or even 30 times, higher than in 2021. Of course, this depends on the actual direction of battery chemistry technology development at this stage.

In fact, the Australian government also hopes to further promote the comprehensive development of Australian battery technology. The graphite technology company Renascor Resources' graphite project in South Australia has already received government subsidies and successfully secured a loan of 185 million AUD for its Siviour development project.Investing in Battery Infrastructure: Awaiting Economies of Scale

Although Australia has a clear advantage in the raw materials sector of the battery manufacturing industry, with the midstream and downstream segments being almost non-existent, there has been some progress in the application of grid battery projects in recent years. This has made investing in new energy infrastructure a more promising direction.

The grid-scale battery storage capacity in Australia is expected to increase more than fourfold over the next five years, a significant change from the situation five years ago when Elon Musk's large-scale battery project in South Australia was still controversial.

In September 2016, due to extreme weather and other reasons, a statewide power outage occurred in South Australia. Following this disaster, the state has been striving to establish stronger electricity storage capacity for the power supply system.

During this period, billionaire and Atlassian co-founder Mike Cannon-Brookes challenged Tesla CEO Elon Musk to build the world's largest grid-scale battery within 100 days. Musk responded by saying that it would be completed within 100 days, or it would be free. The battery, owned by French company Neoen, was eventually put into operation in November 2017.

Since then, large battery packs have truly entered the vision of some investors. With the global push for energy conservation and emission reduction in recent years, grid battery packs have been accepted by more people. The scale of grid batteries in Australia is becoming larger and larger.

The Clean Energy Council (CEC) stated that there are currently 15 projects that can provide 800MW of batteries nationwide. The largest is Neoen's 300MW battery in Victoria, which also makes Victoria lead the country with a capacity of 376MW.

Although batteries can store energy for later use and play a key role in providing dispatchable electricity from renewable energy sources such as solar and wind, they also play a key role in grid stability in various ways, including providing "frequency control ancillary services."

In simple terms, the power system operates at a specific frequency, which can be disrupted, for example, when a generator shuts down. Then, batteries can be used to provide support for the power grid.

Last month, Edify Energy signed a 200 million Australian dollar, 150MW Riverina project agreement, which is supported by Shell and Australian Energy Company's purchase agreements, providing the aforementioned grid enhancement capabilities and dispatchable electricity.The company's CEO, John Cole, stated that new batteries like Riverina utilize advanced power electronics, enabling them to provide complex grid support services. He believes that over the past few years, the lack of overall policy guidance for the Australian battery industry has led to a decline in investment. However, the change in focus by the new government and recent shocks to the power system mean that interest in investing in this industry has been reignited.

The constant shutdowns for maintenance of traditional power plants, along with high energy prices, have made many realize the need to develop new energy power infrastructure more quickly. Although South Australia's initial large-scale battery project was ridiculed by some at the time, Neoen later expanded its capacity by 50% and stated that it has saved more than 150 million Australian dollars since its commissioning.

The Clean Energy Council estimates that by 2027, Queensland is expected to surpass Victoria as the state with the largest storage capacity, reaching 1.8GW. Additionally, Edify Energy's Riverina project in New South Wales is also the agreement for Australia's largest grid-connected battery project.

The Clean Energy Council said: "In the next five years, it is expected that an additional 18 projects will be introduced, which are either under construction, funded, or have received development approval; it is expected to bring 3.6GW (an increase of 351.63%) of electricity to the market."

According to the "Integrated System Plan" recently released by the Australian Energy Market Operator (AEMO), by 2050, this figure will grow rapidly, with an expected 47GW of new battery and hydropower storage.

In line with the Labor Party's election promise, the government will release more than 58 billion Australian dollars in private sector investment in renewable energy generation and related infrastructure in the coming years.

In addition to the battery pack projects themselves, the upgrade of corresponding equipment after new energy electricity is connected to the grid is also an important investment direction in the Australian market. This industry transformation may release growth potential in the trillions in the future.