What are the top lithium stocks to watch?
The rise of electric vehicles means demand for lithium has more than doubled over the last decade. Have a look at the lithium market and discover more about some of 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?
The sales of new electric vehicles (EVs) grew significantly leading up to 2019, when the market experienced a temporary slowdown to 2.1 million vehicles. In 2020, however, existing policies and targeted stimulus responses to the Covid-19 pandemic again spurred demand – EV sales increased by 40% to over 3 million vehicles. This figure represents an encouraging 4% market share of new car sales. By early 2021, estimates of passenger EVs on roads around the world exceeded the 10 million mark.
Additionally, forecasts for future growth are nothing short of astonishing. The International Energy Agency (IEA) predicts that by 2030 this number may be 125 million. If governments adopt more aggressive policies to fight climate change and greenhouse gas (GHG) emissions, the number of EVs could be around 220 million.
Read more: How to invest in electric cars
How to trade or invest in lithium stocks with us
With us, you can take a position on an awarded trading platform* and back whether you think lithium stocks will rise or fall in value. ‘Go long’ (buy) if you think they’ll increase in value, or ‘go short’ (sell) if you think they’ll decrease in value.
To take a position, follow these steps:
- Create a trading account or log in
- Type the name or the ticker of the lithium stock you want in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
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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 producers to watch
The following five shares are the five largest lithium-dedicated stocks in the world. 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.
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.
Reflecting the collapsing lithium market in 2023, the company saw first quarter sales fall 47% to $1.4 billion (from $2.6 billion in the same period in 2022), while net income collapsed to $2.4 million from $1.2 billion in the previous year. Sales slumped due to lower energy storage pricing, while lower lithium market pricing also hit earnings, combined with reduced equity earnings from its Talison joint venture. Meanwhile, Albemarle expects sales to fall to between $6.9 billion and $7.6 billion in 2024 even at its highest projected lithium prices.
Meanwhile, the company abandoned its $4.2bn takeover of Liontown in October 2023 after billionaire Australian mining magnate Gina Rinehart built a stake in Liontown.
Market capitalisation: $14.4 billion
Sociedad Quimica y Minera de Chile
US-listed Sociedad Quimica y Minera de Chile has major operations in the Atacama Desert in Chile, where it has exclusive access to huge reserves of caliche and brine, which allows it to produce a wide array of commodities. SQM’s caliche bears the likes of iodine and nitrate, while its brines contain lithium and potassium.
The company boasts that its brines ‘contain the highest concentrations of lithium and potassium’ in the world, and it also produces other commodities like sulphate and boron.
Lithium is one of the smallest parts of the business, but SQM is committed to rapid development in anticipation for a spike in demand as electric vehicles take off. It’s aiming to dramatically expand lithium sales by the end of 2023, and is growing its ability to make both lithium carbonate and hydroxide.
This is reflected in its expansion into hard rock operations in Australia back in 2017 under a venture with Kidman Resources — alongside a plan to buy Azure Minerals alongside Gina Rinehart.
In the first quarter of 2024, the company saw revenues more than halve to $1.1 billion from $2.3 billion in the same period last year, due to the fall in lithium prices. SQM made net losses of $869.5 million compared to a profit of $750 million in 2023. This was despite a 30% increase in lithium volumes during the period.
However, CEO Ricardo Ramos says he believes that 'strong demand growth in lithium market seen since the beginning of the year could continue for the remainder of the year, with total lithium demand surpassing 1.1 million metric tons during 2024.'
Market capitalisation: $13.4 billion
Tianqi Lithium
Tianqi Lithium is the other key Chinese company in the lithium market. The company has rapidly expanded by buying up and investing in lithium projects, and boasts resources across Australia, Chile and China.
This includes a 51% stake in the world’s largest lithium mine, Australia-based Greenbushes, which it operates in partnership with Albemarle.
It is also developing the Kwinana lithium hydroxide plant in Australia that’ll be supplied by Greenbushes. Commercial production began in late 2022 from Train 1 of the plant, and Train 2 is expected to be commissioned during this year. The hydroxide facility will have a production capacity of 48,000 MT per year once both trains are online.
It took a sizeable stake in SQM back in 2018, when it invested over $4 billion into the Chilean firm.
Market capitalisation: $8.2 billion
Ganfeng Lithium
China-based Jiangxi Ganfeng Lithium Company is listed in Shenzen and Hong Kong, and offers the broadest exposure to the lithium supply chain. It mines lithium predominantly from four hard-rock projects: Ningdu Ganfeng in China, and Mount Marion, Pilbara and Altura in Australia. However the company also has interests in smaller operations, including purchasing Bacanora Lithium in 2021, a 50% stake in a mine in Mali, and a 49% stake in a promising salt lake project in China.
However, it has expanded into brine and even clay operations by investing in or partnering with other firms operating in Argentina, Mexico and Ireland. Ganfeng also has extensive midstream operations in China producing lithium carbonate and hydroxide.
Its unique selling point is that it also produces batteries and provides a recycling and recovery service, meaning it gives exposure to the value across the entire supply chain. It’s already a key partner to battery makers like BYD and electric car makers such as Tesla.
Market capitalisation: $8 billion
Mineral Resources
Mineral Resources is an Australia-based lithium and iron ore company, which owns 50% of the Mount Marion joint venture with Ganfeng Lithium — where it is operator, with a 51% share of output from the mine.
In June 2023, the pair mutually agreed to terminate a prior agreement to convert spodumene produced from the project into lithium battery chemicals. However, Mineral Resources is still selling its lithium to Ganfeng — and is continuing to ramp up operations despite the current market environment.
Mineral Resources also has a MARBL joint venture with Albemarle covering Wodgina, which restarted from care and maintenance in May 2022. Having made several payments, MinRes now owns 100% of the on-site Kemerton lithium hydroxide plant.
The company may be attractive investment for investors looking for some diversification and the safety offered by joint venture expense splitting.
Market capitalisation: $9.9 billion
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. 39.8% of its investments are exposed to China, with 18.9% allocated to the US. Its top ten holdings as of 24 May 2024 were as follows:
| % of Portfolio | |
| Albemarle | 10.10% |
| Mineral Resources | 5.59% |
| Pilbara Minerals | 4.89% |
| Quimica Y-sp Adr | 4.65% |
| Tesla | 4.51% |
| Samsung SDI | 4.83% |
| LG Energy Solution | 4.14% |
| Byd Co Ltd-h | 4.06% |
| Quimica Y-SP ADR | 4.01% |
| Naura Tech Gr -a | 4.00% |
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 24 May 2024 were as follows:
| % of Portfolio | |
| HD Hyundai Electric | 3.64% |
| Canadian Solar Inc | 3.59% |
| Wartsila | 3.53% |
| ABB | 3.5% |
| TDK | 3.48% |
| Mineral Resources | 3.48% |
| Enersys | 3.46% |
| Volkswagen AG Participating Preferred | 3.42% |
| Sigma Lithium Corp | 3.40% |
| Renault | 3.34% |
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 a 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.
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