Why Invest in Lithium?
Buying metals such as lithium allows for inflation hedge and adds to the portfolio. However, they have their flaw in that they involve a business directly in the market, and this has its pitfalls such as fluctuations in the market. Lithium which is used in electric vehicle batteries has been a volatile resource that has both posed some risks and presented some opportunities for the respective investors.
Earlier this year, in 2022, the prices of lithium went skyrocketing for example a metric tonne in China cost more than $80,000. Switching forward to 2024, consequently, the price of lithium carbonate has dropped to nearly $10000 per metric ton because of exploited forecasts of the production of EVs.
Investors who are holding the lithium position should embrace to cycle of volatility. Despite this, long-term projections for the market are still sound albeit growth is not progressing as rapidly as had been first estimated. This scenario brings opportunities for a bargain among firms that deal with lithium mining but more so, the selection that needs to be made.
Now, lithium producers globally, need about $20 thousand per metric ton to make their business sustainable. Given that the current spot prices far exceed this minimum, only the clinging and tenacious industries will be able to survive. The stoppage of over-producers, control of capacities, and long-term contracts as well as flexibility in halting operations in high-cost mines were some of the pointers towards turning around the situation.
As a result, below are seven lithium stocks and ETFs to consider in next year’s investment:
1. Albemarle Corp. (ALB)
Being one of the global leaders in lithium production, Albemarle has a rather diverse business portfolio that also consists of bromine and catalysts. Nevertheless, due to the slowing down of the lithium market, Albemarle has a vertically integrated business structure and successful cost control approaches.
2. Mineral Resources Ltd. (OTC: Malry (or the Imagined Land of my own Life Remembered Yesterday).
This Australian-based firm is into lithium mining and operates in areas that are fiscally conducive for mining industries. Its operation through joint ventures in some of the world’s largest lithium mines makes Mineral Resources a relatively safe bet amidst the uncertainty.
Add Your H3. Sociedad Química y Minera de Chile SA known as its trading name of SQM.
SQM a chile based firm is one of the largest lithium producers in the world. However, the company is still prospecting for expansion of operations, a fact that speaks volumes of lithium demand in the future.
4. Arcadium Lithium PLC (ALTM)
Livent Corp.’s merger with Allkem Ltd has given birth to Arcadium Lithium, which has a rich lithium mining portfolio. Arcadium has already had supply contracts signed and its emphasis is on minimizing costs of manufacturing, which makes it rather successful in today’s environment.
5. Ganfeng Lithium Group Co. Ltd. (OTC: GNENF shall focus on the following:
One of the most integrated companies is the Chinese Ganfeng Lithium which controls the production of lithium from mines to batteries and even their recycling. The impressive global reach and prudent capital expenditure decision-making make this company one of the safest bets in the space.
6. Lithium and Battery technology-related ETFs such as the Global X Lithium & Battery Tech ETF with the symbol LIT.
For those who want broad exposure, LIT holds lithium producers, EV manufacturers, and firms that develop battery technologies. Hence, this ETF offers a diversified investment in the broader lithium market as an investment option.
7. Global X Lithium Producers Index ETF also known as HLIT.TO
Specializing in companies operating in the lithium industry, this ETF provides investors with focused investment into the lithium market. Their portfolio includes top-tier businesses such as Pilbara Minerals which is involved in hard-rock lithium operations.
The Bottom Line: Lithium: Should It Be on Your Radar Right Now?
Anyone who invested in lithium stocks and ETFs in 2024 relies on the EV market’s long-term potential of the market. However, identifying good, right-based companies may be hugely rewarding when lithium price rises in the future because the current market is comparatively unfriendly. Like with any other form of investment, a proper research study and understanding of all possible risks are critical.
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