The increase of electric vehicles indicates demand for lithium has more than doubled over the last years. Take a look at the lithium market and find more about some of the top lithium stocks to enjoy.
What is the outlook for lithium?
While lithium has a large range of uses (for instance, it is utilized in pharmaceuticals to treat depression and in alloys to utilise its light-weight properties), the quantity of demand from electrical vehicles is anticipated to dwarf existing supply to traditional and established markets. This means the outlook for lithium will be mainly dictated by the adoption of electric cars and trucks.
The sales of new electrical automobiles (EVs) grew significantly leading up to 2019, when the market experienced a momentary downturn to 2.1 million lorries. In 2020, nevertheless, existing policies and targeted stimulus reactions to the Covid-19 pandemic once again stimulated need-- EV sales increased by 40% to over 3 million cars. This figure represents a motivating 4% market share of brand-new cars and truck sales. By early 2021, estimates of passenger EVs on roadways around the globe exceeded the 10 million mark.
Furthermore, projections for future growth are absolutely nothing short of amazing. The International Energy Agency (IEA) predicts that by 2030 this number may be 125 million. If governments adopt more aggressive policies to eliminate environment change and greenhouse gas (GHG) emissions, the number of EVs could be around 220 million.
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Top lithium stocks
The lithium market utilized to be controlled by simply three companies-- Albemarle, Sociedad Quimica y Minera de Chile (SQM) and FMC -- which used to account for 85% of market share. Nevertheless, this has actually changed significantly over the last decade as the rise in demand for lithium has motivated more companies to get in the marketplace.
Chinese companies Tianqi Lithium and Ganfeng Lithium, both encouraged by China's efforts to control the lithium market and energize the country, have actually ended up being considerable gamers. China is one of the few countries to hold a significant amount of lithium reserves and it is among the largest manufacturers of electric vehicle batteries, taking on Japan and South Korea, according to McKinsey.
Plus, FMC's decision to spin out and relabel its lithium business Livent Corporation in 2018 ways FMC is now concentrated on agricultural items.
We've purchased the listed below list based upon market capitalisation since 23 August 2021.
Ganfeng Lithium
Chinese clothing Ganfeng Lithium (market cap $38.34 billion) is listed in Shenzen and Hong Kong, and offers the broadest exposure to the lithium supply chain. It mines lithium from four hard-rock projects, one named Ningdu Ganfeng in China and 3 in Australia called Mount Marion, Pilbara and Altura.
However, it has broadened into brine and even clay operations by investing in or partnering with other firms operating in Argentina, Mexico and Ireland. Ganfeng also has comprehensive midstream operations in China producing lithium carbonate and hydroxide.
It's primary distinct selling point is that it likewise produces batteries and supplies a recycling and healing service, meaning it gives direct exposure to the worth across the whole supply chain. It's currently a key partner to battery makers like BYD and electric car makers such as Tesla.
Tianqi Lithium
Tianqi Lithium (market cap $26.82 billion) is the other significant Chinese business in the market, although it is only noted in China. The business has actually rapidly broadened by buying up and investing in lithium jobs, with resources in Australia, Chile and China. This consists of a 51% stake in the world's biggest lithium mine named Greenbushes in Australia, which it owns alongside Albemarle.
It is also developing the Kwinana lithium hydroxide plant in Australia that'll be supplied by Greenbushes. It took a significant stake in SQM back in 2018, when it invested over $4 billion into the Chilean firm.
Albemarle
Albemarle (market cap $25.69 billion) has actually long been a world leading manufacturer of lithium. The US business has a mix of salt water and hard-rock mining operations in Chile, Australia and the US, and makes both lithium carbonate and hydroxide. It also has one of the largest networks of processing plants.
It has plants capable of producing battery-grade lithium in Europe, Australia, China, Chile and the US. While the electric cars and truck market is the driving force behind the company's growth, it makes over 100 various lithium-based products for various markets around the world.
Importantly, Albemarle does not exclusively produce lithium but likewise drivers and bromines that are utilized by the pharmaceutical and a variety of other markets. This diversification helps it balance out any weakness in one market and its income is broadly spread in between all 3 divisions.
Nevertheless, lithium is at the heart of its 'aggressive development' method and it is the fastest growing and greatest margin sector of Albemarle's service.
Sociedad Quimica y Minera de Chile
Sociedad Quimica y Minera de Chile (market capitalisation $13.07 billion) is listed in the US however is rooted in Atacama Desert in Chile, where it has special access to big reserves of caliche and salt water, which permits it to produce a large variety of commodities. SQM's caliche bears the similarity iodine and nitrate, while its brines consist of lithium and potassium.
The business states its salt water 'contain the greatest concentrations of lithium and potassium' in the world, and it likewise produces other products like sulphate and boron.
Lithium is among the smallest parts of the business, but SQM is dedicated to quick advancement in anticipation for a spike in demand as electric cars take off. It's aiming to significantly expand production to 120,000 heaps in 2021, and is growing its ability to make both lithium carbonate and hydroxide.
This is reflected in its expansion into acid rock operations in Australia back in 2017 under a venture with Kidman Resources.
Pilbara Minerals
Australia-listed Pilbara Minerals (market cap $4.27 billion) completely owns and operates the Pilgangoora project that is potential for lithium and tantalum. Pilgangoora is a hard-rock project aiming to eventually produce approximately 1.2 million tonnes of spodumene and one million pounds of tantalum per year.
The operation has 2 processing plants: the first produces spodumene and tantalite focuses, while the 2nd produces just a spodumene concentrate. The company got Altura Lithium in the first half of 2021, and presently delights in strategic collaborations with several crucial industry gamers, including Jiangxi Ganfeng Lithium, General Lithium and the Great Wall Motor Company.
Livent Corp
Livent Corp (market cap $3.91 billion) became the biggest publicly traded pure lithium play beyond China when it was spun-out of FMC Corp back in 2018. FMC separated its lithium organization to leave it focused on agricultural products.
Livent's main task is a brine deposit in Salar del Hombre Muerto in Argentina, which has been up and running for over 20 years. This provides lithium carbonate that's sent on to many plants spread out across the US, UK, China and India that turn it into lithium hydroxide for the electric vehicle market, butyllithium that is used in polymers and by pharmaceutical companies, and a variety of specialized lithium substances utilized to develop things like aerospace parts.
Argentina may host its source of lithium, however Livent offers the majority of its product in Asia, which represents over half of the business's earnings. Livent has said that it anticipates 'the shares of lithium hydroxide, energy storage and Asia as percentages of our total revenue by product, application and location, respectively, to increase' as the electric vehicle market acquires momentum.
Other lithium stocks to watch
Below is a list of some of the smaller lithium manufacturers to consider from worldwide, including some still in the expedition or development stage.
Lithium Americas: a Canadian-based business listed in Toronto and New York with two lithium tasks under development. These are the Cauchari-Olaroz brine job in Argentina and the Thacker Pass hard-rock job in the US (which it claims to hold the largest lithium reserve in the United States).
Orocobre: an Australian company developing the Olaroz lithium project in Argentina that produces lithium carbonate, and it also has a 35% stake in Advantage Lithium, which it spun out in return for the significant stake back in 2016. Advantage Lithium's primary project is a joint venture to establish the Cauchari lithium task, which lies south of Olaroz. Orocobre likewise produces borates from a number of tasks in the country.
Galaxy Resources: an Australian business that is already producing lithium from its hard-rock operation called Mount Cattlin in Australia. It likewise has two other major projects in advancement, the Sal De Vida Catamarca salt water task in Chile and the James Bay hard rock job in Canada.
Bacanora Lithium: leading the charge in London is UK-listed small cap Bacanora Lithium, which is developing the Sonora lithium project in Mexico and has a financial investment in Deutsche Lithium, which owns the Zinnwald task in Germany.
Top lithium ETFs
Selecting a stock is one way of entering the lithium market, however exchange-traded funds (ETFs) can permit investors to get more comprehensive direct exposure at a lower threat. ETFs act like stocks do, however they obtain their worth from purchasing various companies operating in the very same sector. This implies you can invest in a piece of many lithium business through an ETF, instead of putting all your eggs in one basket by selecting an individual stock.
These ETFs, nevertheless, will be vulnerable to any market recession that hits all lithium or battery stocks and will not provide the very same diversification or protective homes that a few of the largest lithium manufacturers offer.
You can find more ETFs using our ETF Screener.
Global X Lithium & Battery Tech ETF
The Global X Lithium & Battery Tech ETF buys a variety of companies that produce lithium or make lithium-based batteries, for that reason supplying direct exposure to both the lithium and battery markets. Over 65% of its financial investments remain in Asian business, with most of the staying holdings based in the US. Its top 10 holdings, which represent 60.8% of its overall portfolio, as of 20 August 2021 were as follows:
Albemarle
Ganfeng Lithium
Yunnan Energy
Naura Technology Group
Contemporary Amperex
BYD
Wuxi Lead Intelligent
EVE Energy Co
Samsung SDI
Sunwoda Electronic
ETFS Battery Tech and Lithium ACDC
The ETFS Battery Tech & Lithium ACDC purchases companies from around the world that are associated with creating batteries in addition to the mining business that produce the commodities needed to make them. Nearly half of the stocks in its portfolio are based in Asia, with the rest similarly split in between the United States and Europe. Its leading 10 holdings, which comprise 36.2% of its total portfolio, since 23 August 2021 were a Rolls-Royce Holdingss follows:
BYD
Pilbara Minerals
Livent Corp
SolarEdge Technologies
Samsung SDI
ABB
Bollore SE
Tesla
Eos Energy Enterprises
What is lithium used for?
Lithium has actually long been utilized for commercial functions, helping to produce the likes of glass and ceramics, but today it is mainly used as a key element in batteries that power whatever from smart devices and tablets to electrical vehicles and scooters.
The United Nations Department of Economic and Social Affairs (DESA) reports that demand for Lithium-ion (Li-ion) batteries grew from 19 gigawatt hours (GWh) in 2010 to 285 GWh in 2019. This figure is anticipated to reach 2000 GWh in 2030-- which represents about 8% of worldwide energy supply.
Passenger and commercial electrical vehicles continue to be the main uses of Li-ion batteries in regards to capabilities set up, followed by fixed (energy) storage.
Where is lithium found and how is it produced?
Lithium is predominantly produced from 2 different sources-- by mining acid rock or extracting it from brine deposits. Salt water deposits are essentially accumulations of groundwater that contain lithium, which is extracted as a salt. Hard rock mining is performed in a more conventional way by being drawn from a lithium-bearing mineral called spodumene.
Many of the world's lithium is concentrated in simply a handful of countries. Chile is house to over half of the world's lithium reserves, with other major manufacturers consisting of Australia, Argentina and China.
As kept in mind, expectations for batteries are increasing as electrical vehicles take off. Battery developers are continuously attempting to make batteries lighter, last longer and charge quicker, and part of this comes down to the kind of lithium that is used. Companies like Tesla have tinkered with the ratio of metals to try to enhance the range its batteries can deliver, which include other crucial metals like nickel and cobalt.
There are lots of types of lithium and all of them are suited to various functions. The two predominant types are lithium carbonate and lithium hydroxide. Lithium hydroxide is considered the premium item that is much better for battery production (although there are carbonate batteries too).
Especially, the lithium mined from spodumene can be developed into either hydroxide or carbonate, but lithium extracted from salt water must be turned into carbonate prior to it can be converted into hydroxide. This is one reason that there is a growing agreement that hard-rock lithium operations are better for supplying the electric vehicle market.
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