For decades now, oil has been the backbone of our global economy. However, as technology progresses and electric vehicles become more popular, it is becoming clear that lithium may soon take over this role. Some economists are projecting a “gold rush” for this once-obscure mineral.
This blog post will discuss this new environment, how it is making lithium more valuable than ever, and how the stock market is likely to react.
Let’s start with the basics: what is lithium, and why is it getting so popular?
What Is Lithium?
Lithium is a soft, silver-white metal found in the earth and in some rocks and minerals. It is also found dissolved in seawater with concentrations of 0.17 to 0.79 parts per million, which means more lithium ions in seawater than copper or tin.
In its pure form, it is called “lithium metal” and has the chemical symbol Li.
However, it is rarely found because it reacts very readily with water (and even moist air) to form compounds like lithium hydroxide (LiOH), an alkali metal salt.
Lithium is among the lightest metals, with a density of 0.53 grams per cubic centimeter. Comparing this to steel (8.0 grams per cubic centimeter), aluminum (2.7 grams per cubic centimeter), and water (1 gram per cubic centimeter), lithium is very light indeed!
The most efficient way to find lithium is through mining it from underground deposits, although it can also be found in some brine pools. It is even estimated that there are more than 10 million tons of these pools beneath the earth’s surface, and they can contain up to 350 grams per liter of lithium.
To make the metal, we must reduce the compounds through a process called “lithium extraction.” This is done by exposing the compounds to a process called “roasting,” which releases the lithium in gaseous form. The gas can then be collected and condensed into a solid-state.
Why Is Lithium So Popular?
So what makes lithium so important? Why are companies like Tesla obsessed with finding new sources of metal? The answer is simple: Lithium is very useful because producers can use it to make powerful batteries for both electric vehicles and household appliances.
The demand for electric vehicles is rising every year, and it looks like this number will continue to rise as companies like Tesla put more cars on the road. It’s even estimated that by 2030 there could be 115 million electric vehicles on the world’s roads, which would mean a huge increase in demand for lithium.
The actual metal is only part of the story, however. It is also important to remember that lithium ions are used in most of the rechargeable batteries for mobile devices, electric cars, and even appliances like power tools.
Why Are Lithium Batteries So Efficient?
The discovery that lithium ions can be used in batteries is fairly recent; the first rechargeable lithium battery was invented by John B. Goodenough and reported in 1980 (though it wouldn’t be until 1991 that Sony commercialized this technology).
So, why is lithium such a good choice for batteries like these? It’s because when you charge or discharge a lithium battery, it can maintain a relatively high voltage for much longer than other types of batteries. For example, the first rechargeable lithium batteries could maintain 2.8-3.0 V for 100 hours or more – whereas nickel-cadmium batteries only had a capacity of 1.2-1.5 V for 20 hours.
Another paramount quality of lithium batteries is that they can be charged and discharged very rapidly without sustaining damage. This allows them to store and release large amounts of energy, which means that you can use much smaller batteries in your devices than if you were using nickel-cadmium or lead-acid batteries.
Also, lithium batteries don’t have to be fully discharged before they can be recharged. Lithium batteries work best when you charge them as soon as possible after using them; this increases their overall lifespan because it reduces the amount of stress on the active materials over time.
Lithium In Cars
When it comes to cars, especially electric vehicles, the batteries are like the heart. It provides the energy to power the electric motor, allowing cars like Tesla’s Model S to go almost 500 kilometers per charge.
To put this in perspective, most other batteries would only allow you to drive about 100-200 kilometers before needing a recharge – which is less than half of what lithium-ion batteries can do.
Lithium battery technology is constantly improving, leading to better, more powerful batteries. This means that electric vehicles are becoming more viable for the average person on the street, which is great news for those of us who are interested in saving the planet by reducing our carbon footprint!
With many countries pushing for people to stop using gas-powered vehicles, lithium batteries are sure to become even more important in the coming years.
Lithium In Other Appliances
Lithium doesn’t just make life better for cars; it is also found in batteries for household appliances. For example, lithium batteries are used in smart meters and household solar cells.
Of course, the main advantage of using lithium-ion batteries in these appliances is that they can store more energy than nickel-cadmium or lead-acid batteries. This means that you don’t have to buy replacement batteries as often, saving you money in the long run.
The Lithium Stock Market And Beyond
As demand for electric vehicles continues to increase, so will the price of lithium. If you need proof, just look at the performance of companies like Tesla and Panasonic; since 2010, shares of Tesla have soared while shares of Panasonic have remained rock-steady. Many industries are expected to be affected by the “Lithium rush,” but a few main players are here.
Tesla (NASDAQ: TSLA)
Tesla is the most well-known company for electric vehicles, and it will be hard for anybody else to catch up. Tesla has also recently announced that they are planning on expanding into solar panels and batteries – powered by none other than lithium-ion batteries! Not surprisingly, shares of Tesla have continued to break records in recent months. As more people catch on to the potential of lithium, shares of Tesla could hit the stratosphere.
With this stock going up over 60% YTD and with the future looking brighter and brighter for electric vehicles, investors would be wise to consider adding this company to their portfolios.
Orocobre is a mining company that produces lithium from its operations in Argentina. They have been steadily increasing production over the years and continue to remain profitable. In recent quarters, Orocobre has reported strong earnings, which has helped to increase the stock price.
This large-scale lithium brine operation has the potential to grow exponentially as demand for lithium rises. This would be great news for Orocobre investors. Lithium brine is the most abundant and cheapest type of lithium, so this will be an important factor to watch.
Brine is a concentrated natural salt solution high in lithium salts, often found beneath the earth’s surface. Argentina is rich in this resource, and that is why it’s a great location for Orocobre.
The lithium market is still in its infancy, and this company could be one of the big winners when it comes to investors looking for ways to profit off increasing demand for lithium. Shares of Orocobre have shot up roughly 100% since this time last year; if you want to get in on this “Lithium rush”, Orocobre is a great place to start.
Lithium Americas Corporation (NYSE: LAC)
Lithium Americas is currently overseeing the development of the Cauchari-Olaroz brine deposit in Argentina, making it the third-largest lithium brine resource in the world. The company is planning on eventually establishing an operations base in South America and using the Cauchari-Olaroz operation as a means to create jobs and help boost the economy.
The company has recently announced that it is partnering with Toyota Tsusho to create a joint venture. This comes as welcome news for investors, who are starting to realize the potential of lithium and its effect on various industries – including electric vehicles. Lithium Americas is worth keeping an eye on in 2021, with an increase in the stock value of 156% YTD.
Sociedad Química y Minera de Chile (NYSE: SQM)
SQM is the world’s largest lithium producer, and it has been operating in Chile since the early 1900s. The company started out producing iodine but eventually moved on to saltpeter (a key ingredient used to make fertilizer) before making the big move into lithium.
Since the 1970s, SQM has been selling lithium carbonate, used to make batteries and other industrial products. Lithium demand first started gaining mainstream attention in 2010, but it wasn’t until recently that prices started shooting up – causing a shortage for this rare metal.
With demand increasing and supply limited, shares of SQM have increased to the tune of 31% YTD. This stock is a safe bet for investors looking to score a piece of the lithium pie without taking on too much risk.
Albemarle Corporation (NYSE: ALB)
Albemarle operates in various business segments, including oil and gas, catalysts, lithium, performance chemicals, and coatings. The company’s focus going forward will be to increase its lithium production, with approval to produce 145,000 metric tons in Chile back in 2018.
Named as one of “The World’s Top 10 Most Innovative Companies” by Forbes magazine, Albemarle is one of the largest lithium producers in the world and has been operating in South America since 1961. They have been selling lithium for decades and continue to grow as demand increases. One of their key markets is, unsurprisingly, the battery industry.
This year, stock in Albemarle has increased by 82%. With a market cap of $31,877,216,418, this is one of the higher risk bets on the board. But, it could be one of the most profitable if lithium demand continues to climb and Albemarle can meet it.
Wealth Minerals (TSXV:WLV)
Wealth Minerals is a Canadian company currently mining lithium in Argentina and has interests in Canada, Mexico, Peru, and Chile. They plan on selling their product to manufacturers and producers of electric vehicles and other rechargeable batteries, like Tesla and Panasonic. Electric vehicles use roughly ten times more lithium than traditional vehicles, which means that Wealth Minerals will be able to sell all the lithium they can produce.
This stock has risen significantly in recent months, but it still represents an opportunity for investors looking for ways to profit off the “Lithium rush.” Shares of this company are up roughly 540% YTD, and they are still penny stocks. The 0.58 CAD entry price is a steal as well.
Piedmont Lithium (TSXV:PLL)
Piedmont is an American company that recently signed a deal with Tesla to supply them with 53,000 tonnes of spodumene concentrate, with the option to increase their purchases by another 27,000 tonnes of concentrate. Spodumene is a mineral used in lithium production, and Piedmont has one of the largest reserves on the planet.
Shares are up 171% this past year, but they haven’t seen any significant growth recently – which could be due to a delay they experienced in production. This is a good stock to watch, but not one you should invest heavily in. It’s still cheap, at 0.64 USD, making it a safe gamble that could pay off in the future.
A few things are fueling this so-called “gold rush” of lithium. First, the demand for electric vehicles is expected to continue growing at an astounding rate. Environmental regulations and initiatives are also pushing for a greater share of clean energy vehicles.
We also have to look at the scientific advancements in battery tech. Scientists are constantly coming up with new ways to increase the amount of energy that can be stored in these batteries, and lithium is one of their key ingredients.
If the market continues to grow at its current rate, this “gold rush” will become a feeding frenzy – which means now is the time to invest. Lithium is poised to explode in price as demand increases exponentially, and lithium producers are among those most likely to see their stocks skyrocket.