Lithium Stocks

The Best Lithium Stocks Amid Soaring EV Sales and Climate Change Push 

Lithium is one of the most sought-after metallic elements amid the race to electrify the auto industry and combat climate change. Therefore, it is not surprising that it is often touted as the new oil, given the role it continues to play in the clean energy era. Demand for the metallic element continues to outstrip supply, given its growing use in rechargeable batteries for mobile phones, laptops, digital cameras, and, most importantly, electric vehicles.

Over the past few years, Lithium prices have increased by over 500% in response to growing demand amid limited supply, given the ever-growing use cases. Analysts estimate that global lithium production was 737,000 tons in 2022 and rose to 964,000 tons in 2023. It is expected to hit record highs of 1.17 million tons by the end of 2024.

The driving force behind the increased production is the surge in demand in response to various factors. A US gasoline price surge of over $2 since Biden took office has spurred a strong demand for electric vehicles, all but fuelling demand for the crucial metallic element.

Governments worldwide pushing for aggressive measures to combat climate change continue to fuel lithium demand. For instance, the government setting up ambitious targets for EV adoption only forces auto companies to ramp up production chains, forcing lithium companies to enhance their production operation.

The 2021 Infrastructure Investments and Jobs Act put aside $5 billion to set up electric vehicle charging stations in the US. The 2022 Inflation Reduction Act, implemented to support EV sales, is another factor expected to support lithium demand. Lithium demand is expected to explode amid the friendly policy framework and automakers on board.

While lithium reserves are plentiful, the biggest challenge has always been in processing the ores for use in various industries. Given that it is not found in metallic form and exists in over 145 types of mineral ores, various extraction methods are used to recover it from hard rock. Some of the strategies involve utilizing solar evaporation in extensive saltwater brine basins.

Amid the production challenges, the global lithium market reached $37.8 billion in 2022 and is expected to be worth $89.9 billion by 2030. The expected compound annual growth rate of 22.1% should create unique investment opportunities for investors.

In anticipation of lithium supply constraints and robust demand, there are several stocks that investors can tap into for exposure to the burgeoning industry. The stocks are spread in the sector, mostly involved in mining, processing, or working on Lithium as an end product.

Albemarle

 

It stands out as one of the best lithium stocks as a mining and chemical producer of the key ingredient. The company operates some of the biggest mines, setting it at the top of the chain and benefiting from higher lithium prices. The company has already inked a strategic partnership with Panasonic, one of the biggest manufacturers of lithium batteries for small consumer electronics EVs.

Albemarle has already inked a deal to acquire Liontown Resources, further expanding its footprint into Australia. The fact that the company has minimal debt and plenty of cash to fund new projects makes it an ideal investment play on Lithium mining and production.

Ganfeng Lithium

China is one of the biggest producers of Lithium. In addition, the country is a leading producer of electric vehicles and batteries for consumer products. Ganfeng Lithium is one of the country’s largest producers of the base material used for lithium battery manufacturing.

Ganfeng remains a solid Lithium stock given the sheer size of China’s population, which provides an ideal market. In addition, the rapid rise in demand and sales for EV vehicles means the company is well-positioned to be a top supplier and profit from the same.

Sociedad Quimica y Minera de Chile

Chile is the second largest lithium producer in the world, making Sociedad Quimica y Minera de Chile one of the biggest beneficiaries of the burgeoning sector. The company is one of the largest metal producers in the country, with established mining and production operations.

The company generates double-digit operating margins, leading to plenty of cash for expansion purposes, making it an ideal investment play in the nascent sector. The company has been investing in increasing its production capacity in anticipation of demand outpacing supply in the long run.

Livent

Livent might be new to the game after being spun off farming chemical supply company FMC but is emerging as a key player in the lithium business. It has carved a niche for itself as one of the most extensive lithium pure plays, its operating margins having risen by over 40% in 2022.

Even though the company’s pockets are smaller than Albemarle’s, it has continued to expand its production capacity. Likewise, the company is merging with Australian mining company Allkem in a $10.6 billion deal expected to result in one of the biggest lithium companies.

Lithium Americas

Lithium Americas has yet to generate any revenue, but it’s making strides to become one of the most prominent players in the sector. The company has already inked a deal with Ganfeng Lithium to develop lithium extraction sites in Argentina. It has also completed feasibility studies in Northern Nevada and begun construction.

Signing an off-take agreement for raw Lithium with General Motors also underscores its credibility as a critical player in the sector. Setting up a base in Nevada positions the company to be a key supplier of Lithium to

Tesla’s Gigafactories produces lithium-ion batteries for electric vehicles and consumer devices. In addition, the company is discussing securing a $1 billion loan for its Nevada project.

Sigma Lithium Corporation

A leading Canadian mining company, Sigma Lithium, offers exposure to the development of lithium properties in Brazil. The company already holds full ownership rights to Grota do Cirilo, Genipapo, Santa Clara, and São José properties, encompassing 27 mineral rights across 190 square kilometers.

Late last year, the company announced the production of 22,500 tons of battery-grade carbon-neutral Lithium. It has also collaborated with Glencore to establish an eco-friendly and socially responsible lithium supply chain.

Enovix Corporation

Enovix Corporation has carved a niche as a advanced silicon anode lithium-ion battery manufacturer. The company boasts a unique 3D cell design that enhances energy density for an extended cycle life.

Last year, the company confirmed the acquisition of Routejade, an established Korean battery manufacturer. The acquisition marks an important milestone in the company’s bid to become an established lithium-ion battery producer.

QuantumScape Corporation

QuantumScape is an ideal investment play for investors looking to diversify their portfolio beyond lithium mining and production. The developmental stage company focuses on the research and development of solid-state lithium metal batteries for electric vehicles and other applications.

The company has already showcased promising advancements in cell tests with a leading prototype AO cell developed in collaboration with Volkswagen. The AO prototype has already exceeded 1000 full cycle equivalents with over 95% discharge energy retention in battery testing in the lab.

Pilbara Minerals

Pilbara Minerals is another exploration and development company that deals with mineral resources in Australia. The company primarily explores Lithium through its 100% interest in the Pilgangoora Lithium tantalum project.

The company has seen a significant uptick in its materials after slumping last year. Even though the lithium industry is grappling with a slump in prices, the outlook has improved amid the ever-growing demand.

FREYR Battery

FREYR Battery is another company with a niche in developing lithium-ion batteries. The company is engaged in the production and advancement of battery cells commonly used in energy storage, electric mobility, and marine applications across the globe.

Additionally, it has set out to offer large-scale environmentally friendly battery solutions as it seeks to play a role in reducing carbon emissions.

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