By Andrey Dashkov, analyst, Casey Research

Andrey Dashkov

Mexico’s government is nationalizing the country’s lithium reserves.

That means it’s prohibiting foreign private companies from participating in the lithium market.

And other hard tech metal markets, for that matter. The law mentions that other minerals “declared strategic” could be taken over by the government, too.

But for now, we’ll talk about lithium.

The good thing is, there’s a silver lining to news like this. There are always better ways to understand and play almost any event.

Today, let’s explore what’s going on with this nationalization and how investors can still benefit…

Mexican Lithium Is Now Off-Limits

Lithium is a hot commodity. It’s at the center of the electric vehicle (EV) revolution.

It’s used in batteries… and companies like Tesla can’t get enough of it.

In fact, just recently, commodities expert Dave Forest wrote that Elon Musk is scrambling for supply of this hard tech metal:

The Tesla CEO recently highlighted lithium via his Twitter account.

Musk honed in on lithium prices… which have gone up exponentially this year. Rising electric vehicle (EV) demand pushed them to new highs.

He then called the jump in lithium hard tech “insane.” Musk further said, “There is no shortage of the element itself, as lithium is almost everywhere on Earth, but pace of extraction/refinement is slow.”

This story (massive demand, constrained supply) just got a boost.

Mexico doesn’t produce much lithium commercially.

So, it’s not that crucial to the current supply-demand situation. No mining supply is even coming from Mexico right now.

But we’re talking about reserves here. Which are a potential future supply.

Due to the nationalization of these reserves, they may never turn into actual mined lithium.

The government could try mining by itself. Or make a deal with another government. After all, the law states only “private participation” is no longer on the table.

But governments aren’t very efficient. And Mexico isn’t the most transparent country in the world. Out of the 180 countries ranked by the global “Corruption Perceptions Index,” Mexico ranks 124th.

It’s safe to say any government-built mines will be inefficient at best. They’ll be a waste of resources. Mexico has the world’s tenth-largest lithium reserve.

Mexican lithium may very well stay in the ground for years, if not decades.

Meaning it will reach the market either years from now… or never.

Here’s the Upside

Mexico is now off-limits for investors who want to put their money into lithium stocks.

This is bad for private companies that already have mineral claims there.

Although, it’s good for the rest of the sector.

Especially the stocks located in more stable and transparent jurisdictions.

You see, the Mexican government is right: Lithium is a strategic metal.

But it shouldn’t be placed under government control.

Mexico will learn that the hard way. Chile and Bolivia may be next in nationalizing lithium. They will have their countries’ reputations damaged, too.

The bottom line is, as a strategic metal and “hard tech” commodity, lithium is becoming more valuable by the day.

And with overwhelming demand and fewer investment options, the companies that still explore for and produce it will stand to win.

Previously, we talked about the world becoming less global. This is another instance of this.

So, invest accordingly. When it comes to lithium, I would look for U.S. and Canada-based exploration, development, and production-stage companies.

As far as I’m concerned, these could be the hottest stocks in one of the biggest trends we see these days.

Good investing,

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Andrey Dashkov
Analyst, Casey Research

P.S. Hard tech is in danger. With countries like Mexico nationalizing reserves and sanctions on Russia taking place, the supply of these critical metals is more important than ever.

Especially as the demand for EVs keeps going up.

This is all pushing prices up to new highs. To find out how to profit from this trend, check out Dave Forest’s special briefing right here.

You don’t want to miss out on huge gains.