8 Finest Lithium Shares & ETFs in 2023


Lithium has turn into probably the most in-demand commodities within the final decade. It was already helpful for lithium-ion batteries for electronics, however it’s actually EVs (Electrical automobiles) that boosted the demand.

One other rising sector is stationary storage, storing electrical energy in giant batteries for properties, trade, and even the entire electrical grid.

China is the biggest market resulting from its concentrate on EVs, which symbolize 1 in 4 automobiles offered there. However an bold plan to ban ICE (Inside Combustion Engines) automobiles by 2035 within the EU and a few US states ought to enhance demand within the West as nicely.

This could improve lithium demand by 3x to 6x by 2030. Lithium costs have been extraordinarily risky not too long ago, going from a low of $7/kg in 2020 to a excessive of $80/kg on the finish of 2022, to the present $25/kg after a precipitous fall.

Finest Lithium Shares

Most fashionable batteries use lithium in a single type or one other. Whereas we are able to talk about if cobalt or different battery metals will nonetheless be wanted in newer generations (strong state, iron phosphate batteries), it’s probably that each lithium and copper shall be required in huge quantities for batteries.

So let’s have a look at the perfect lithium shares.

These are designed as introductions, and if one thing catches your eye, you’ll wish to do extra analysis!


1. Sociedad Química y Minera S.A (SQM)

Market Cap $18.1B
P/E 4.65
Dividend Yield 16.63%
Sociedad Química y Minera S.A stock chart

SQM is the world’s largest lithium producer whereas additionally being lively in a number of different sectors.

Sociedad Química y Minera S.A other sectors

It’s an more and more environment friendly enterprise, planning to cut back lithium brine extraction by 50% by 2030, and water utilization by 50% by 2025.

Most of its manufacturing comes from Chilean mines, with growth plans in China and Australia.

Sociedad Química y Minera S.A - SQM Lithium Capacity Growth

The corporate seems optically low-cost however has been within the highlight resulting from the current proposal in April 2023 of Chile to nationalize the lithium trade, an alarming concept for any mining enterprise. The present licensing contract for SQM might expire by 2030, and lithium miners must settle for private-public partnerships.

So this can be a inventory for worth traders keen to take a big leap of religion that the following 6 years of totally owned manufacturing, and no matter comes after, is justified by the present valuation.


2. Albemarle (ALB)

Market Cap $20.6B
P/E 7.71
Dividend Yield 0.92%
Albemarle stock chart

Abermale is the opposite giant Chilean lithium producer. On account of its lithium licensing contract operating as much as 2043, it’s much less affected by the nationalization plans. The corporate has even declared to be open to an early renegotiation.

The corporate additionally has a little bit extra room for change because it produces lithium in North America and Australia as nicely. Chilean manufacturing was 10,000 tons in 2022 versus 22,000 tons in Australia and a couple of,000 tons within the USA.

Abermale additionally refines lithium, with conversion capability anticipated to triple by 2027.

Its $3.2B debt at a median of 4% rate of interest will be seen as a safety in opposition to inflation and rising charges.


3. Ganfeng Lithium Group Co., Ltd. (GNENF)

Market Cap $17.8B
P/E 4.36
Dividend Yield 0.66%
Ganfeng Lithium Group Co., Ltd. stock chart

This can be a Chinese language firm based in 2000 that has massively benefited from the demand for lithium in China. It’s the largest lithium producer in China and the third largest on the earth. It’s also the second-largest refiner of lithium on the earth.

Most of its income comes from lithium, even when the battery enterprise represents 1/3 of yearly revenues in 2022 (down in percentages from 2021 resulting from exceptionally excessive lithium costs).

1/3 of the corporate’s revenues are made abroad, with the remaining in China.

It’s also growing a recycling exercise that’s poised to continue to grow over the following years, with extra EVs reaching the top of their life cycle.

Total Estimated Size of Recycled Lithium of Retired Motive Power
Batteries in the future (Unit: Ton(s) of LCE)
Supply: Ganfeng Lithium

Its management in China and the Chinese language lithium trade is a power as a result of nation’s significance within the lithium market. It’s also a weak point, with rising tensions and accusations thrown at Chinese language firms, just like the current declaration of Justin Trudeau that “China makes use of slave labor in lithium manufacturing”. So the corporate carries important geopolitical danger, completely different from the nationalization danger of Chilean miners.


4. Piedmont Lithium Inc. (PLL)

Market Cap $1.01B
P/E – N/A
Dividend Yield – N/A

With jurisdiction (Chile) or geopolitical danger (China), some traders will favor to maintain their lithium investing at house. This additionally goes alongside the development of eager to “convey again house” key industries, just like the EV provide chain.

The corporate’s precedence is 2 mines in improvement within the USA, in Tennessee and North Carolina, for a complete of 60,000 tons per 12 months of projected manufacturing. Piedmont additionally has a 50% participation in a mine in Ghana projected at 255,000 tons of manufacturing and a 25% in a Quebec mine projected at 190,000 tons of manufacturing.

The Quebec mine is anticipated to begin manufacturing in 2024, and the opposite mines needs to be producing in 2025-2027. It is going to want additional financing to complete constructing the Tennessee mine.

The corporate expects to have the ability to make a revenue so long as lithium costs keep above their pre-2021 common.

Between mines nonetheless in improvement and comparatively excessive manufacturing prices, Piedmont avoids geopolitical danger however will want excessive lithium costs to remain worthwhile. So that is for traders optimistic concerning the future want for lithium however afraid of worldwide dangers.


5. Pilbara Minerals Restricted (PILBF)

Market Cap $8.4B
P/E 7.58
Dividend Yield 5.23%

Pilbara is an Australian firm proudly owning the world’s largest hard-rock deposit of lithium (in opposition to the brines within the lithium triangle between Argentina-Chile-Bolivia).

The corporate has anticipated reserves of 25+ years. Present manufacturing is 580,000 tons per 12 months, with a progressive growth deliberate to achieve 1-1.3 Mtpa.

The corporate has been distributing a big a part of its 2022 windfall revenue, in addition to utilizing the cash to build up money that can be utilized to finance the deliberate extension. Whereas probably not worthwhile, operations have been cashflow constructive on the depressed costs of 2020.

Rising cash balance – strong production
volumes and operating margin
Supply: Pilbara Minerals

The corporate can be investing in a 43,000 tpa refining facility in South Korea.


6. Vulcan Vitality Sources Restricted (VUL.AX)

Market Cap $739M
P/E – N/A
Dividend Yield – N/A
Vulcan Energy Resources Limited (VUL.AX) - stock chart

Most lithium firms are required for the inexperienced transition. And they’re working laborious at lowering their environmental footprint from water and power consumption to carbon emissions. However few are as “inexperienced” because the idea behind German Vulcan Vitality.

The core concept is to supply power by way of geothermal whereas additionally extracting lithium from the geothermal brines. The warmth power created can be utilized to energy the lithium extraction carbon-free and/or be offered to the market, both as warmth (Germany has numerous district heating amenities) or as energy. You possibly can learn concerning the technical particulars within the devoted presentation.

The mission is positioned within the Rhine Valley, north of Strasbourg. This could produce sufficient warmth/energy for 1 million folks and sufficient lithium for 1 million EVs per 12 months.

In 2022 the corporate secured $76M from Stellantis (Peugeot, Citroen, Opel,…) and $177M from chemical firm Nobian GmbH on April 2023. As well as, offtaking agreements have been signed with LG, Volkswagen, Renault, and Umicore.

The backing of European trade leaders is making the potential lithium miner safer and may flip it right into a key a part of the EU plans to convey house the EVs provide chain. Manufacturing and ramping up ought to begin on the finish of 2025 or 2026.

This can be a good match for traders searching for a very inexperienced lithium producer whose prices are unbiased of each international power costs and whose provide is safely positioned within the coronary heart of European trade.


Finest Lithium ETFs

In a sector rising as shortly and as risky as lithium (it barely mattered a decade in the past), diversification will be crucial. So that you could be keen on ETFs concentrating on the sector as a complete.

1. International X Lithium & Battery Tech ETF (LIT)

This ETF invests in each lithium producers and the primary customers of lithium, battery producers. Its high holdings embrace Albemarle, Panasonic, BYD, Telsa, Samsung, and so on…, with publicity to China for 39% of the ETF and 22% to the USA.

Global X Lithium & Battery Tech ETF (LIT) sectors

2. VettaFi Amplify Lithium & Battery Expertise ETFF (BATT)

Extra centered on batteries, this ETF additionally consists of lithium producers and miners of different battery metals like BHP, Glencore, and Albemarle. It may be enticing for traders searching for publicity to the EV provide chain however wanting to cut back the volatility resulting from lithium worth fluctuations.

Conclusion

Battery demand is right here to remain, with even essentially the most skeptical admitting that EVs, or on the very least hybrid automobiles, are probably the way forward for mobility in the long run. Lithium is on the core of each battery expertise resulting from its distinctive chemical properties, so it’s right here to remain as nicely.

So traders could be to get publicity to this key commodity with a powerful consideration to each valuations and jurisdiction/geopolitical danger.

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