How to Invest in Lithium Step-by-Step Guide

The infrastructure of the lithium industry includes mining companies, battery companies, electric vehicle companies, and other big lithium-using industries like glass and ceramic production. One of the best ways to help the EV revolution is to invest in publicly traded lithium companies by investing in lithium stocks and ETFs. Your investment will go a long way in producing electric vehicle batteries.

If you are curious about how to invest in lithium ETFs, follow our step-by-step guide for a quick and straightforward explanation. This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors. It is universally true that dynamic industries tied to emerging technologies start with a larger number of players before consolidating into a small group of leaders who can operate at scale.

Additionally, the company invested $260 million in the property to seize 100% ownership of the site at the end of last year. If you want complete control over which companies you’re investing in, individual stocks, while riskier, may be more attractive to you. We believe everyone should be able to make financial decisions with confidence. For example, calcium, magnesium, mercury, and zinc are all possible substitute elements for the anodes in certain battery types. And the other main industry that uses lithium—glass, and ceramics—can substitute sodic and potassic fluxes in their production. Even though global production rose from 40,000 tons in 1995 to 86,300 tonnes by 2020, there is expected to be a deficit over the next ten years.

This gap between the supply and demand of lithium is called the “Great Divide,” and you can expect it to make the value of lithium-producing companies go higher and higher until that gap closes. On the demand side, it is worth understanding which industries will drive the demand for lithium production. As you know by now, the lithium industry has such an optimistic projection because of the expected growth of the battery industry, especially as it relates to electric vehicles. While it is unlikely that a new industry will suddenly take over EVs, new industries or young industries may become giant markets. Although lithium atoms exist all over the world, the pure element itself is unstable and more difficult to find. And with the growth of specific industries like electric vehicles, you can expect the world’s reliance on lithium to continue growing.

The “newest” company on this list of the best lithium stocks, Arcadium was formed at the beginning of 2024 through a “merger of equals” between two mid-sized firms, Allkem and Livent. As the company framed it in a press release announcing the deal, the benefits of the merger include vertical integration across various mining processes through chemical manufacturing and other downstream functions. This expansion has been information security analyst jobs in germany driven by organic growth as well as aggressive acquisitions and joint ventures. For instance, in 2023, Ganfeng entered into a deal with Leo Lithium to invest more than $100 million in a Mali mine. The company also invested $350 million toward a production and R&D facility in China’s Hubei province. These big investments show Ganfeng is looking to the future even amid current oversupply and volatility in the sector.

Lithium-ion batteries typically have up to 6x higher energy density, nearly 2x longer charge and perform better in cold weather environments,5 making them ideal energy storage solutions. Once you have chosen the stocks you wish to own, make sure you have a brokerage account and that you have funded your account. If EVs continue to increase in demand, though, the price of lithium—as well as the prices of stocks for the companies that mine, refine and distribute lithium—could go up again. And while an unproven company does come with risk, ALTM stock also has the benefit of not having a particularly long track record to compare itself against during this admittedly soft spot for lithium stocks.

So, investing in lithium has the potential to be particularly profitable over the next few years. In this article, we will explore everything you need to know so that you can intelligently invest in this valuable metal. One of the younger firms on this list of best lithium stocks, Pilbara was incorporated in 2005 and primarily produces lithium through a wholly-owned project located in a region of Western Australia. That site is billed as the largest independent hard-rock lithium operation in the world, and Pilbara has estimated the mine life at 34 years of output.

1. On the demand side, it is worth understanding which industries will drive the demand for lithium production.
2. Like any basic materials and metals investment, betting on lithium isn’t for the faint of heart.
3. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
4. SQM predicts demand for lithium will outpace supply over the long term, so it has been investing to increase its production capacity.

These risks often are heightened for investments in emerging/ developing markets or in concentrations of single countries. SmartAsset Advisors, LLC («SmartAsset»), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Investing in lithium stocks is the same as investing in any other kind of stock. First, you will want to do your proper due diligence to know which stocks you want to own. This can be accomplished with the help of a number of free and/or paid websites where investors can set up screens to help them select stocks.

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Lithium stocks are commodity stocks that have principal interests in the mining, refining and distribution of lithium. The companies included under the umbrella of lithium stocks may be involved in the production of other metals and minerals, but lithium will be included in their portfolio. To help lessen wild swings in value, consider buying a lithium ETF such as the Global X Lithium & Battery Tech ETF (LIT 1.57%) or invest in a basket of lithium stocks such as the ones listed above.

Best Lithium Stocks Of March 2024

Exchange-traded and mutual funds are another option for getting exposure to lithium equities. For example, there is Lithium ETF by Global X, which invests directly in lithium as commodity. It builds its portfolio out of assets linked to lithium, such as producers and heavy users of the product.

HOW TO INVEST IN LITHIUM

And then, some domains will likely take off as people need to charge their lithium batteries quickly and cheaply. Another way to take advantage of the lithium growth is to invest in solar energy companies, especially portable solar energy storage that allows people to charge their devices and transportation batteries. Besides the more obvious battery markets of smartphones, tablets, and wearables, there are also new products that take advantage of the power of lithium-ion batteries. For example, electric scooters are now planted in many major US cities to give people a quiet and easy way to get around.

There are several ways to invest in lithium as a commodity if you are interested in it. You can pursue the stocks of companies that produce this material, or those that use it in vehicles, batteries and related applications. You can also invest in groups of lithium stocks by what is bitcoin cryptocurrencies explained 2020 buying a stake in funds, like ETFs. Alternatively, you can participate directly in lithium with options and futures. Two of the most common ways to invest in lithium are with stocks, also known as equities, and a type of security that is known, collectively, as derivatives.

It is also worth noting that Albemarle is one of the top holdings in several top lithium funds. For example, it commands a more than 9% allocation in the Global X Lithium and Battery Tech ETF (LIT), which boasts $1.5 billion in assets at present. web application and software architecture 101 learn interactively Therefore, if investors pile into exchange-traded funds, or ETFs, as a way to play lithium, ALB stock will see an outsized benefit from these capital flows. Like a futures contract, in an options contract you trade the value of an asset.

So the value of your contract is based on the difference between the contract price and the asset’s value on the expiration date. Investing in companies that make lithium-ion batteries like Panasonic, Livent and Samsung allows you access to this market, while at the same time allowing you to invest in the companies themselves. That means that if someone does invent a better way of storing power, you are less exposed than you would be by investing in lithium more directly. The South American country’s president recently announced intention to nationalize the lithium industry with a state-owned company.

While any investment in future-oriented technology is a gamble, since someone could invent a better battery tomorrow, for the time being it looks like demand for lithium will remain high. The final component of growing lithium demand is its use in consumer electronics such as laptops and cellphones. Finally, you can invest in lithium directly through the commodities market with futures and options. With these derivatives, as this type of security is known, you can literally buy and sell access to lithium as a material.

However, it is important to note that the commodities market is extremely volatile and extremely risky. This is not a good market for inexperienced investors and you should only participate if you fully understand the costs and risks. As with so many things, however, past performance is no guarantee of future returns. If the environment firms up for lithium stocks, the companies currently trading at rock-bottom prices could bounce back. Forbes Advisor has identified seven of the best lithium stocks available on the market today. These stocks all have seen volatility across the last year but remain the leading options for investing in this key commodity.