What are the top lithium stocks to watch?

What is the outlook for lithium?

While lithium has a wide range of uses (for example, it is used in pharmaceuticals to treat depression and in alloys to utilise its lightweight properties), the amount of demand from electric vehicles is expected to dwarf existing supply to traditional and established markets. This means the outlook for lithium will be largely dictated by the adoption of electric cars.

Read more: What metals are needed for electric vehicles and battery storage?

In 2024, global sales of new electric vehicles (EVs) have continued to grow across all markets, despite significant slowdowns in some regions and some EV manufacturers delaying targets.

Additionally, forecasts for future growth are nothing short of astonishing. The International Energy Agency (IEA) predicts that by 2040 the number of EVs on the road could reach 722 million.

Read more: How to invest in electric cars

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Top lithium stocks to watch

The lithium market used to be dominated by just three companies – Albemarle, Sociedad Quimica y Minera de Chile (SQM), and FMC – which used to account for over 85% of the global market share.

However, this has changed dramatically over the last decade as the rise in demand for lithium has encouraged more companies to enter the market.

Chinese companies Tianqi Lithium and Ganfeng Lithium, both encouraged by China’s attempts to dominate the lithium market and electrify the country, have become significant players.

China is one of the few countries to hold a significant amount of lithium reserves and it is one of the largest producers of electric vehicle batteries, competing with Japan and South Korea, according to McKinsey.

In addition, FMC’s decision to spin out its lithium business into Livent Corporation in 2018 means FMC is now focused on agricultural products.

The top lithium stocks to watch

The following shares are the four largest lithium-dedicated stocks in the world, with one smaller stock that could have growth potential. All market capitalisations are in US Dollars — and are subject to currency valuations. Past performance is not a guide to future returns. Always do your own research.

1. Albemarle
2. SQM
3. Tianqui Lithium
4. Ganfeng Lithium
5. Mineral Resources

Albemarle

A familiar name for western investors, Albemarle is the world leading producer of lithium. The US company has a mixture of brine 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 in the world, capable of producing battery-grade lithium in Europe, Australia, China, Chile and the US.

While the electric vehicle market is the driving force behind the company’s growth, it makes over 100 different lithium-based products, such as catalysts and bromines, that are used in pharmaceuticals in addition to a number of other industries. This diversification helps it offset the turbulence of the lithium market, with its income spread across all three divisions.

However, lithium is at the heart of its ‘aggressive growth’ strategy and it is the fastest growing and highest margin segment of Albemarle’s business. The company could become one of the prime beneficiaries of the recent Inflation Reduction Act.

Its latest earnings report revealed solid financial results with double digit volume growth and an EBITDA of $211 million, up 22% year—over—year. Net income reached 1.4 billion, with strong growth in Specialties volumes and Energy Storage. The company is looking to reduce costs through manufacturing efficiencies and cutting jobs. Heading into 2025, it aims to cut its spending by a further 50%.

Market capitalisation: $10 billion

Sigma Lithium

Sigma Lithium is a Canadian based lithium producer who focuses on the development of carbon—neutral lithium for EVs. The company produces ‘Quintuple Zero Green Lithium’ at the Grota do Cirilo facility in Brazil without using dirty power, toxic chemicals, potable water or any carbon emissions. Its subsidiary Sigma Brazil covers 185km and the company own 100% of its assets.

Sigma Lithium has become one of the leading lithium producers worldwide and is looking to increase its production capacity over the coming years. The company reported strong Q3 results with positive cash flows and a revenue of $44.2 million. This was mostly due to an increased demand for EV’s, particularly in China.

Our analysts have given the stock a buy rating and anticipate that it’ll increase by just over 33% in the next 12—month period.

Market capitalisation: $1.4 billion

Microvast Holdings

Battery technology company Microvast Holdings specialises in designing and manufacturing systems for energy storage and batteries for EVs. The company develops all parts of the battery, from the materials to the software. Its products are sold worldwide with its biggest markets being Europe, Asia—Pacific and the Americas.

The company reported strong Q3 results bringing in a record revenue of $101.4 million, up 26% year—over—year. Gross margin reached 33.2%, up from 22.3% the year before and the company made a net profit of $13.2 million, up from a net loss of $26.2 million the previous year.

Since announcing its Q3 results, the company’s stock price has increased significantly and with future growth expected into 2025, further gains are likely.

Market capitalisation: $760 million

Lithium Americas

Canadian lithium resource company Lithium Americas owns 100% of the Thacker Pass project in Nevada and has other smaller investments across the US and Canada.

The company has just received a $2.26 billion loan from the US Department of Energy to help enhance facilities on the Thacker Pass Project, which will produce up to 40,000 tonnes of lithium carbonate each year. To limit risks associated with the project the company are investing in key equipment and advancing planning and design.

As of the 30th of September last year, the company had $341.2 million in cash. The company experienced a higher net loss compared to the year before which was partly due to the increased cost of independently running the company. This loss was partially offset by interest coming from large cash balances.

Our analysts have given the stock a buy rating, with an average price target of $5.03 in the next 12—month period, up just over 44% from its current value.

Market capitalisation: $663 million

Atlas Lithium

Atlas Lithium is a mineral exploration company that has the largest collection of lithium mineral rights in Brazil among all publicly listed firms. The company is developing its most prominent project the— Neves Project, with plans to produce high—quality lithium that caters for the growing demand from the EV industry.

The company’s most recent earnings report showed revenue reached $544k, up from $0 the year before, due to an increased demand for lithium. General and administrative expenses increased by over 200% from 3.7 million to $11.9 million.

Despite having a lower market cap than the other stocks listed, Atlas Lithium could have great growth potential. As it stands, the stock price is down 75% year—over—year, but as the company approaches its first fully funded lithium production project with backing by some of the largest industry names, it’s likely the stock’s value will increase.

Market capitalisation: $107 million

Top lithium ETFs to watch

Choosing a stock is one way of getting into the lithium market, but exchange-traded funds (ETFs) can allow investors to gain broader exposure at a lower risk. ETFs behave like stocks do, but they derive their value from investing in numerous companies operating in the same sector. This means you can invest in a slice of numerous lithium companies through an ETF, rather than putting all your eggs in one basket by picking an individual stock.

These ETFs, however, will be vulnerable to any market downturn that hits all lithium or battery stocks and won’t offer the same diversification or defensive properties that some of the largest lithium producers offer.

You can find more ETFs using our ETF Screener.

Global X Lithium & Battery Tech ETF

The Global X Lithium & Battery Tech ETF invests in a range of companies that produce lithium or make lithium-based batteries, therefore providing exposure to both the lithium and battery markets. 40.1% of its investments are exposed to China, with 25.5% allocated to the US. Its top ten holdings as of 21 January 2025 were as follows:

Global X Battery Tech & Lithium ETF (ACDC)

The Australian-based Global X Battery Tech & Lithium ETF - formerly known as the ETFS Battery Tech and Lithium ETF, invests in companies from around the world that are involved in creating batteries as well as the mining companies that produce the commodities needed to make them. 22.6% of the stocks in its portfolio are based in Japan, with 12.8% in Germany and 8.5% allocated to the US. Its top ten holdings as of 21 January 2025 were as follows:

What is lithium used for?

Lithium has long been used for industrial purposes, helping to create the likes of glass and ceramics, but today it is mostly used as a key component in batteries that power everything from smartphones and tablets to electric cars 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 forecast to reach 2000 GWh in 2030 – which represents about 8% of global energy supply.

Passenger and commercial electric vehicles continue to be the main uses of Li-ion batteries in terms of capacities installed, followed by stationary (energy) storage.

Where is lithium found and how is it produced?

Lithium is predominantly produced from two different sources – by mining hard rock or extracting it from brine deposits. Brine deposits are essentially accumulations of groundwater that contain lithium, which is extracted as salt. Hard rock mining is conducted in a more traditional manner by being taken from a lithium-bearing mineral called spodumene.

Read more: Lifecycle of a mine - a step-by-step guide to mining commodities

Most of the world’s lithium is concentrated in just a handful of countries. Chile is home to over half of the world’s lithium reserves, with other major producers including Australia, Argentina and China. Australia is by far the world’s leading producer of lithium. South America is more associated with brine deposits, while Australia is the leading producer of hard rock lithium.

Read more: Mining in Australia: what you need to know

As noted, expectations for batteries are rising as electric vehicles take off. Battery developers are constantly trying to make batteries lighter, last longer and charge quicker, and part of this comes down to the type of lithium that is used. Companies like Tesla have tinkered with the ratio of metals to try to improve the range its batteries can deliver, which include other key metals like nickel and cobalt.

There are many types of lithium and all of them are suited to different purposes. The two predominant types are lithium carbonate and lithium hydroxide. Lithium hydroxide is regarded as the premium product that is better for battery production (although there are carbonate batteries too).

Notably, the lithium mined from spodumene can be turned into either hydroxide or carbonate, but lithium extracted from brine must be turned into carbonate before it can be converted into hydroxide. This is one reason why there is a growing consensus that hard-rock lithium operations are more suitable for supplying the electric vehicle market.

Footnote:
* As awarded at the ADVFN International Financial Awards 2020 and Professional Trader Awards 2019.