What is Lithium?
Lithium is a soft silver and white alkali element and metal found primarily in the earth’s crust and the oceans. It is not found freely in nature, but in a compound form with other minerals usually in igneous rock or in brine pools.
Lithium has physical properties that make it different from other metals. It is the lightest chemical element and the lightest metal. It is so soft it can be cut with a knife, and so low in density that it can float on water.
These unique properties make lithium and its compounds capable of energy density – the ability to pack a lot of power into a very small space. As a result, lithium has become an extremely important component of batteries for laptops, phone and other digital devices. Furthermore, its potential for use in other devices such as electric cars may be enormous. As a result, lithium is a very important global commodity that has experienced explosive growth in its demand.
Lithium’s discovery traces back to the 19th century when Swedish chemist Johan August Arfwedson identified the element in the mineral petalite. To this day, petalite remains an important source of lithium. Lithium is also found in igneous rocks such as granite pegmatite and in oceans and salt lakes.
Lithium UsesLithium has a range of uses in many different industries. Its uses vary by location and end-use markets, but in general the following industries comprise the bulk of lithium demand worldwide:
|Use||Example||Percentage of whole market usage|
|Batteries||e.g. smartphone battery||39%|
|Ceramic and glass||e.g. fire viewing windows for fireplaces||30%|
|Lithium soap||e.g. lubricating grease||8%|
|Lithium polymer||e.g. lesser known type of lithium battery||5%|
|Air treatment||e.g. air conditioner||3%|
Why is Lithium Important?
The explosive growth in demand for lithium and the resulting rise in its price is almost entirely a function of its fast-growing adoption in batteries. Lithium batteries are used in an increasing number of products in different industries across the globe. By 2020, analysts expect batteries to account for more than 55% of lithium demand.
Shift to Electric Cars
Although less than 1% of automobiles run on electricity, these vehicles use half of the world’s lithium-ion battery supply. The size of the electric automotive market is expected to increase more than thirtyfold by 2030. As this market grows, its market share of lithium-ion battery use will almost certainly grow as well.
“We would basically need to absorb the entire world’s lithium-ion production.”
Elon Musk – explaining the challenge Tesla faces to hit their production target of 500,000 vehicles per year
The catalyst for this rapid adoption has been the incredible efficiencies achieved in lithium battery production. Lithium-ion batteries cost about $3,000 per kilowatt hour (kWh) to produce when they were first introduced commercially in the mid-1990s. This figure has plunged to $190 per kWh and is expected to approach $100 per kWh in the years ahead. To put this in perspective, $240 per kWh equates to about $3 a gallon gasoline while $150 per kWh equates to a gas price of $2 per gallon. These improvements are certain to hasten the move toward electric vehicles and away from fossil fuels.
Off-grid systems such as the Tesla Powerwall and other do-it-yourself imitators absorb an increasingly large supply of the world’s lithium production.
These systems allow consumers to store electricity from their electric grid or from solar panels in lithium-ion batteries. These energy-efficient homemade power grids are expected to grow in popularity as consumers seek cleaner sources of energy.
Large scale battery systems also have the potential to solve problems in areas around the globe that suffer from regular power cuts and energy shortages. For example, South Australia as a region frequently experiences powercuts as a result of storms and spikes in demand due to heatwaves.
Elon Musk, founder of Tesla, offered to solve this and install the World's largest battery system. If that wasn't a big enough challenge he even agreed to have it up and running in 100 days or he wouldn't charge the Australian Government for it.
Before the automotive industry and off-grid systems began consuming a large percentage of the global supply of lithium, the smartphone and electronics industry consumed the lionshare of lithium each year.
Lithium battery demand was surging at a rate of more than 20% annually. Consumption has grown by high double-digits in recent years and has outstripped supply, which has grown at a slower rate.
Demand for lithium-ion batteries should continue to grow as smart home devices including thermometers, smoke detectors and alarms increase in popularity
Research suggest suppliers will struggle to keep up with lithium demand over the coming years.
Giant lithium-ion mega-factories such as the Tesla Gigafactory could help bring economies of scale to production of batteries, but the pipeline of lithium needed to make these batteries could be subject to supply chain issues.
As demand for lithium continues to soar, world producers will have to harvest the mineral from new sources to keep up with demand. For example, scientists at Stanford University have been exploring how to extract lithium deposits from supervolcanoes in the US.
Not everyone agrees there will be a shortage of lithium. According to Deutsche Bank estimates, there are 185 years' worth of reserves in the ground and leading mining companies plan to add 20 lithium production sites to the 16 currently operating.
“There are a lot of projects out there, and they’ll end up oversupplying the market.”
Mark Cutifani, CEO of Anglo American
7 Alternatives to Lithium-ion BatteriesThe main reason the price of lithium has skyrocketed is because of the surge in demand for lithium-ion batteries; used in smartphones, electric cars and homes. But there are alternatives that just might beat lithium-ion to the punch as the power source of the future.
|Alternative||Why it might replace lithium-ion||Further Reading|
|Hydrogen Fuel Cells||Production of hydrogen is more cost-effective.||Energy.gov|
|Lithium-sulphur||Lighter than lithium-ion giving this rechargeable battery a higher energy density.||Wikipedia|
|Graphene supercapacitors||Able to hold hundreds of times the amount of electrical charge potentially suitable as a replacement for electrochemical batteries such as lithium-ion and lithium-sulphur||Graphenea|
|Redox flow batteries||Nearly limitless longevity dues because there are no solid-to-solid phase transitions||Energy Storage Association|
|Aluminum-graphite batteries||Quick to recharge - as little as 60 seconds||Extreme Tech|
|Bioelectrochemical batteries or "Bacterial Batteries"||Perfect for use in remote, dangerous and resource-limited areas.||TechCrunch|
Which Countries Produce Lithium?
Worldwide lithium production has been steadily growing in response to its demand for battery applications and is estimated to be about 35,000 tons annually. The 7 leading mining countries include:
The Top Lithium Producing Countries
|Rank||Flag||Country||Annual Production (tons)|
However, some lithium mining remains secretive due to the highly competitive nature of the industry and the relative scarcity of the commodity. In the United States, for example, a brine operation in Nevada produces lithium, and two companies produce downstream lithium compounds from domestic and imported lithium carbonate, lithium chloride, and lithium hydroxide. However, these companies do not release production data, so US production numbers are unknown.
Which Countries Have Lithium?
Lithium resources are growing worldwide as geologists discover new continental brines, geothermal brines, hectorite, oilfield brines, and pegmatite. Estimates place current global reserves at c.40 million tons.
Top Countries by Lithium Reserves
|#9||Democratic Republic of Congo||1,000,000|
How to Trade Lithium
There is, unfortunately, no way to invest directly in the lithium commodity, this is because there are no exchange-traded futures as with other industrial metals such as copper, nickel and aluminum. There are, however, ways for traders to gain exposure to lithium prices through investing in shares of companies involved in the lithium industry.
The easiest way to do this is via the BITA American Lithium and Battery Metals Giants Index or BALITG.
The BALITG captures the Gross Total Return Performance of the 15 largest American publicly listed companies with direct revenue exposure in extraction and commercialization of metals used for battery production. Plus500 offer a CFD that tracks the BALITG so you can gain exposure to lithium in this way.
Alternatively, the 15 companies listed below are publicly traded companies involved in lithium mining or processing.
The list is intended for information purposes only and inclusion here does not constitute investment advice.
15 Lithium Stocks
|Current Price||Overview||Listings||Founded||Interesting Fact|
|Sociedad Quimica y Minera de Chile||The World’s largest lithium producer and a leader in producing lithium compounds.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||New York (NYSE)||1968||Originally formed in 1882 as Anglo-Chilean Nitrate and Railway Company.|
|Albemarle Corporation||Specialty chemicals company and an industry leader in lithium and lithium derivatives products.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||New York (NYSE)||1984||Started life as a paper manufacturing company.|
|FMC Corp.||Diversified chemical company that extracts and processes lithium.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||New York (NYSE)||1883||Built amphibious landing vehicles for the United States Department of War in WWII|
|Liberty One Lithium Corp.||Canadian-based exploration company developing lithium brine deposits in the West Argentina.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Calgary (TSXV)||1996||One of the largest land owners in the lithium triangle of South America.|
|Lithium X Energy Corp.||Operates two wholly owned brine projects in Argentina.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Calgary (TSXV)||1997||Largest shareholder in Pure Energy (another lithium producer)|
|Altura Mining Limited||Australian-based lithium raw materials producer with a hard rock extraction project in Western Australia.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Sydney (ASX)||2000||Also has interests in coal and iron ore.|
|Nemaska Lithium Inc.||Supplier of lithium hydroxide and lithium carbonate supplier to the battery market.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Toronto (TSE)||2007||Owns proprietary technology that converts spodumene deposits into high-grade lithium hydroxide and lithium carbonate.|
|Critical Elements Corporation||Early-stage lithium exploration and mining company based in Canada.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Calgary (TSXV)||2006||A producer of tantalum, another material used in the electronics industry.|
|Neo Lithium Corp.||Operates a brine operation in the southern end of the Lithium Triangle.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Calgary (TSXV)||2016||Owns one of the highest-grade lithium brine projects in the World.|
|Dajin Resources Corp||Canadian-based mining company engaged in the acquisition, exploration and development of lithium deposits.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Calgary (TSXV)||1987||Dajin management believe we are on the cusp of a lithium revolution.|
|International Lithium Corp.||Manages four joint-venture lithium projects in Canada, China, Ireland and Argentina||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Calgary (TSXV)||2009||Leading exploration for lithium in Ireland.|
|Pilbara Minerals Limited||Australian-based minerals mining company that operates lithium mining projects in Western Australia.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Sydney (ASX)||2005||Owns Pilgangoora, one of the largest deposits of spodumene in the World.|
|Galaxy Resources||Australian company that operates lithium production facilities, hard rock mines and brine mines in Australia, Argentina and Canada.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Sydney (ASX)||1996||Merged with General Mining Corporation in 2016.|
|Lithium Americas||50% owner of the largest lithium brine deposit in the world.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Toronto (TSE)||2007||Joint venture partner of Sociedad Química y Minera de Chile.|
|Orocobre Limited||Australian industrial chemicals company and lithium miner.||Start Trading with Plus500 *CFD Service. 80.6% lose money.||Sydney (ASX)||2007||Orocobre funds health programs in the communities where it works.|
*Price information is delayed by 5 seconds and should not be used for trading purposes.
Important: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail trader accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.