How to Invest in Lithium
Lithium is a metal used in many 21st-century electronics and devices. You can find batteries and products like computers and smartphones. Even though investing in technology that might not be better tomorrow is a gamble, the lithium demand will continue to be high. Here are some tips on how to invest in this market.
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Stocks and Stock Funds
There are two ways to invest in lithium. The first way is to invest in stocks, which are called equities. It means you are investing in a company that uses or supplies lithium. It is an excellent way to invest in the demand for lithium. The second way is to invest in derivatives. It is a type of security that covers the price of commodities like lithium. It can help smooth out some volatility when you invest directly in commodities.
When you invest in companies that make lithium-ion batteries, like Panasonic, Livent, and Samsung, you are investing in the market for lithium. It means that if someone invents a better way to store power, you are less likely to lose money than if you had invested directly in lithium.
This space has two main products: consumer products like laptops and phones and electric vehicles. Companies like LG, Panasonic, and CATL are good options for investors looking to invest in the electric vehicle market. Investors should be aware, though, that CATL is a Chinese company, which raises important political and accounting questions. Tesla, Rivian, General Motors, Lucid Group, and Ford are all companies at the front of this market. You can get exposure to lithium by investing in any or all of them.
Some lithium producers are publicly traded. It means that they sell their products to the public. When the price of lithium goes up, it is suitable for these companies.
Exchange-traded and mutual funds are other options for getting exposure to lithium equities. For example, there is the Lithium ETF by Global X. This fund invests in lithium as a commodity. This fund puts money into commodities like lithium. The goal is to make a fund that does as well as the overall lithium market.
Futures and Options
You can also invest in lithium by buying futures and options. It is a way to buy and sell access to lithium as a material. However, it is essential to note that the commodities market is risky. It is not a good market for inexperienced investors. You should only participate if you fully understand the risks involved.
A futures contract is a promise to buy or sell a product in the future. The price you agree on now will be the price you pay (or receive) when the contract expires. The difference between the price of the contract and the asset’s price at expiration is your profit (or loss).
There are two types of futures contracts. In a standard futures contract, you agree to buy a product in the future. Agree to purchase lithium, for example, and do not sell it to someone else on the contract’s expiration date. Someone will show up with a truck full of lithium. It is generally relied upon by producers and businesses who want to set their prices in advance. You can also buy a cash settlement futures contract, in which both parties agree not to exchange physical assets but rather to exchange the value of the contract in cash.
An options contract is when you trade the value of an asset.
However, an options contract is different from a futures contract. With an options contract, you have the choice not to follow through on the deal if it is unprofitable. With a futures contract, you must follow through on the agreement even if it is a money-losing position.
To even out this system, when you buy an options contract, you pay an up-front price known as a “premium” to the person selling it.
The Bottom Line
There are different ways to invest in lithium if you’re interested in it. You can buy stocks of companies that produce or use lithium in vehicles, batteries, and other applications. You can also invest in funds with a stake in many different lithium companies. Or, you can support directly in lithium by buying options or futures.
The Best Lithium Stocks to Invest in Today
Lithium is a highly demanding metal in high demand because of its many uses. It is not as precious as other metals. Still, companies worldwide are mining it because it is an essential component in multiple growing markets. Some of these markets include electric vehicle batteries and rechargeable batteries.
This metal is used in the making of glass and ceramics. Lithium is a common material, so the demand for this metal is expected to grow.
Investing in lithium stocks could be a good idea for investors or companies. It is because the lithium market is evolving. But it is essential to understand some basics about investing in lithium stocks before you do this.
What are Lithium Stocks?
Lithium stocks are the shares of companies mining or processing lithium. Investors cannot trade lithium as a commodity, unlike other metals, such as gold or silver. Alternatively, traders can acquire exposure to the market by investing in publicly traded lithium companies.
As an investor, you can invest in lithium mining shares, stocks of companies involved in lithium mining, and lithium battery stocks. It comprises manufacturers of lithium-ion batteries.
Why Move 401(k)s to Gold?
If you want, you can convert your 401 k into an IRA. When you have money in one account and want it in another. You can do it if you quit your job. You can also save money in non-economic ways. For example, buy premium coins or buy gold in a 401 k plan and then move it to a gold IRA.
It was created by the Taxpayer Relief Act of 1997. This is a gold IRA. The 401 k plan allows you to buy gold for your individual retirement account. It can be used to buy physical gold as well as other precious metals. Gold IRA companies can also invest in silver, purchase platinum, and palladium. This allows for more to offer gold investment options than precious metals.
Investing in gold for your gold IRA requires some knowledge. Not all precious metals such as gold are created equal. You must follow IRS rules such as IRS penalties.
13 Best Lithium Stocks to Invest In
1. Albemarle Corporation (ALB)
The Albemarle Corporation is a manufacturing firm specializing in chemical products and has its headquarters in Charlotte, North Carolina. The company has three divisions: Bromine, Catalysts, and Lithium. If you’re seeking the top Lithium stocks, ALB is an excellent place to start. They are the world’s largest lithium producer, with mines in Australia and Chile. Their total market capitalization is $27 billion, achieving a 53% return in 2021.
As EVs become popular, lithium consumption will rise.
2. Lithium Americas Corp (LAC)
Lithium Americas Corporation is a company that focuses on resources for lithium carbonate. This Canada-based lithium miner has projects for lithium mining in Thacker Pass, Nevada, and Jujuy, Argentina.
Lithium Americas Corporation plans to invest $581 million in the Nevada Thacker Pass Lithium Claystone project. The company predicts that this project will produce 60,000 tonnes of lithium annually.
In November 2021, Lithium Americas Corporation acquired Millennial Lithium Corp for $400 million. This acquisition will help the company grow in the field of lithium mining. Looking at their potential and plans, you may find LAC a promising investment.
Lithium Americas Corporation (LAC) has a market capitalization of 4.4 billion CAD. They obtained a 115% return in 2021. If you want to invest in Lithium stocks, keep an eye on this company.
3. Livent Corp (LTHM)
Livent Corporation is a lithium corporation based in Philadelphia, Pennsylvania. The company produces lithium for use in various industrial applications, including batteries. Additionally, Tesla is one of its customers. Mining for lithium is something that Livent performs in both Canada and Argentina.
Livent makes 50% of its revenue from batteries for electric vehicles and energy storage. People can track the performance of lithium stocks on their official website.
4. Piedmont Lithium Limited (PLL)
Piedmont Lithium Limited is a company that produces lithium. It is based in North Carolina. The company operates in Quebec, Canada, Cape Coast, Ghana, and Gaston County, North Carolina.
Piedmont Lithium makes lithium-ion battery minerals. 2022 supplier: Tesla. Gains in the long term might be expected from speculative equities. The performance of lithium stock is displayed on Google Finance. Piedmont Lithium is dedicated to creating technology suitable for the foreseeable future.
5. Standard Lithium Ltd (SLI)
Standard Lithium Ltd is a Canadian company that develops technology and lithium. They use a process to extract lithium from brine called Direct Lithium Extraction. This method is not only efficient in terms of time, but it is also environmentally friendly.
The company has established its operation in Southern Arkansas and mines lithium on 150,000 acres. Standard Lithium (SLI) is a publicly traded business with a market worth of two billion Canadian dollars. In 2021, they had a return on investment of 330%.
6. Tianqi Lithium Corp (SHE: 002466)
Tianqi Lithium Corp is a Chinese mining company that operates in Sichuan. They manage almost half of the global lithium production. In 2020, they produced around 70,000 mt of Lithium Carbonate. By 2023, it is expected that they will reach 180,000 mt.
Tianqi Lithium has a market capitalization of 158 billion (CNY). They expected a 154% return in 2021. Because the price of lithium has been steadily growing, the corporation can expect significant profits in the following years.
The company has mines in China, Australia, and Chile.
7. Chilean Society of Chemistry and Mining (SQM)
Chilean Chemical and Mining Society (SQM)They have a 20% market share for lithium. The company is based in Chile, and they have lithium deposits in South America. The main production facilities are in South America’s Atacama Desert and Antofagasta regions.
The company utilizes brine from the Atacama Desert. It requires less effort and saves time—the margins of profit increase. Brine can be used to produce hydrogen peroxide and lithium carbonate. Aside from lithium, they also make potassium, iodine, and fertilizer. The corporation is worth $16 billion on the market. They had a 1% return in 2021.
8. Frontier Lithium Inc. (FL.V)
Frontier Lithium Inc. is a well-known company in the global lithium market. It focuses on making high-quality lithium resources in North America. Frontier Lithium Inc. is developing a project in Ontario to provide high-grade lithium hydroxide and chemicals. It is one of the company’s significant assetsFrontier Lithium Inc. manufactures lithium for energy storage and electric vehicles throughout North America.
6. Tianqi Lithium Corp (SHE: 002466)
Tianqi Lithium Corp is a Chinese mining company that operates in Sichuan. They manage almost half of the global lithium production. In 2020, they produced around 70,000 mt of Lithium Carbonate. By 2023, it is expected that they will reach 180,000 mt.
Tianqi Lithium has a market capitalization of 158 billion (CNY). They expected a 154% return in 2021. Because the price of lithium has been steadily growing, the corporation can expect significant profits in the following years.
The company has mines in China, Australia, and Chile.
9. Pilbara Minerals (OTCMKTS: PILBF)
People who are looking for lithium stocks can consider buying Pilbara Minerals. This company is located in Australia and has been mining tantalum and lithium since 2005. Pilbara Minerals is expected to make a lot of money in the next few years, and its stock prices reflect that. Buying stock in this company could be a good decision for shareholders.
Pilbara Minerals owns a lithium-tantalum project in Western Australia. The company sells the mined lithium to its customers all over the world. Some of their notable customers are Ganfeng Lithium and EV battery manufacturers. The company has had good sales so that you can invest without worry.
10. Arena Minerals (TSXV: AN)
Arena Minerals is a Canadian company interested in Argentina’s lithium brine projects. The company has a 65% stake in the Sal de la Puna project, spread across 11,000 acres in the Pastos Grandes basin. Arena Minerals also has a share in the Antofalla lithium brine project, which covers 6,000 hectares in the Salar de Antofalla.
The company has also set up a technology to process lithium brine with the help of reagents. They also have copper assets in Chile. Arena Minerals could be an excellent choice if you’re looking for high-return stocks.
11. Sigma Lithium Corp (SGML)
Sigma Lithium Corp is a Canadian company that produces high-quality lithium. This company is environmentally friendly and focuses on powering the next generation of electric vehicles. In 2021, they had a return of 271%.
People looking for profitable lithium stocks can benefit by investing in Sigma Lithium. This company has a project in Brazil called Grota do Cirilo that will allow them to be the lowest-cost manufacturer on the planet. Sigma Lithium Corp plans to manufacture battery-grade lithium for electric vehicles. They have been working on this experimental project since 2018.
12. Pioneer Ltd (OTCMKTS: GSCCF)
Ioneer Ltd is a Sydney-based company that produces lithium boron. They are developing a mine in Nevada, United States, that they say will help create a more sustainable future.
Ioneer Ltd is a mining company that was founded in 2001. They are now also in the business of mining for lithium. However, they have not yet shipped any products. It is expected to happen in the second half of 2024. Ioneer Ltd has a market capitalization of 1.6 billion AUD and received a 185% return in 2021.
13. Rock Tech Lithium Inc (CVE: RCK)
Rock Tech Lithium Inc is a company that produces lithium. They have a project in Canada that produces lithium. However, their converter to turn lithium into hydroxide is set up in Germany.
Rock Tech Lithium Inc. is investing in manufacturing the purest type of lithium hydroxide possible. They will be better able to satisfy the requirements of the automobile sector as a result of this. In the coming years, the market for electric vehicles is expected to experience tremendous growth. You can expect Rock Tech Lithium Inc to grow along with it.
These are some of the best lithium stocks to buy in the industry. They have a market capitalization of 472 million CAD and returned 352% last year. So, ensure you know all the essential details before investing in any of these companies.
What Are the Advantages and Disadvantages of Investing in Lithium Stocks?
Investing in lithium shares may have the following advantages and disadvantages. Benefits include the potential for high profits, while penalties may include a volatile market and the possibility of stock scams
Frequently Asked Questions About Invest in Lithium
Prices for lithium stocks can go up and down, but this doesn’t mean that their demand has changed permanently. Some lithium stocks could still increase in value this or next year, so it is worth investing in them. If you are a beginner, explore the best stock investment apps.
Albemarle has changed its outlook for its fiscal year 2022 because lithium and bromine prices are rising. It now thinks its net sales will increase by 60–70% year-over-year, from $5.2 billion to $5.6 billion. It means that their net sales will increase by a lot in the next year or so.
After many lithium stocks reached record highs in late 2021, the sector hit a roadblock in 2022. It is partly because the market is cyclical. After so many years of strong growth, lithium stocks were due for a correction.
The analysts predict that the average price of lithium will peak at about $54,000 per metric ton this year. But they believe that by 2024, the price will quickly drop to $11,000 per metric ton.
There is no way for individual investors to invest in lithium directly since it isn’t traded on a stock market exchange, and there isn’t a futures market. However, long-term investors can invest directly in lithium producers’ stocks or through exchange-traded funds.
