Lithium, also known as “white gold,” is making waves across business and financial markets due to its status as a key component in rechargeable batteries. Lithium has long attracted attention for its use in charging smartphones, but recently there has also been interest in its role as a power source for electric vehicles.
Not all news coming out of the EV market will boost lithium's fortunes in early 2024. Increased supply of lithium mined in Africa and Australia is pushing prices down, while reports of lower consumer demand for EVs in the US and China could push lithium prices higher. Further down.
There are also recent reports of a new material discovered using artificial intelligence in a collaboration between Microsoft and Pacific Northwest National Laboratory that could reduce lithium usage by up to 70%. The solid electrolyte, known as N2116, is in the prototype stage and must be more thoroughly tested before it can be released commercially. However, the report says the use of lithium, which is used to charge EVs, phones and other products, may decline in the coming years.
Meanwhile, the benchmark lithium exchange traded fund (ETF) has been underperforming recently. Consider that the $2.1 billion net worth Global
How will the latest news impact the biggest lithium stocks in 2024? Here's a look at the six most promising lithium stocks and ETFs and how they've fared as of mid-January. Let's. These battered stocks and lithium-focused ETFs are particularly well-positioned to benefit from a rebound when demand eventually rises and supply tightens.
| Lithium stocks/ETF | Year-to-date returns as of January 16th | 3 month return as of January 16th |
| Albemarle Corporation (ALB) | -12.8% | -24.7% |
| Mineral Resources Co., Ltd. (OTC: MALRY) | -18.6% | 0.2% |
| Alkadium Lithium PLC (ALTM) | -69.8% | -70.3% |
| Lithium Americas Corporation (LAC) | -18.6% | -44.2% |
| Horizons Global Lithium Producer Index ETF (HLIT.TO) | -17.6% | -20.8% |
| Global X Lithium & Battery Tech ETF (LIT) | -9.8% | -12.8% |
Like the lithium ETF, shares of Charlotte, North Carolina-based Albemarle fell 12.8% in the first two weeks of January and are down 47.8% over the past year.
A big part of the issue affecting ALB and other battery stocks is declining demand from consumers, with Tesla Inc. (TSLA), Ford Motor Co. (F), General Motors Co. (GM), Rivian・It is affecting EV car manufacturers such as Automotive. (RIVN) Curtail production. Furthermore, Toyota Motor Corporation (TM) has revised down its EV sales forecast for 2024 by 40% due to declining demand in China.
This is a significant concern for Albemarle, which specializes in developing, manufacturing and marketing chemicals used in applications such as consumer electronics and battery charging units. However, with the long-term question being when, not if, EV sales will increase, the decline in battery demand may only be temporary, and growth-oriented investors are likely to see significant declines in long-term You will be able to buy stable lithium stocks.
ALB still has a huge contract to sell 100,000 tons of lithium hydroxide to Ford for use in batteries starting in 2026. A similar agreement is currently being concluded with major construction equipment manufacturer Caterpillar Corporation (CAT).
Considering the $623 million in subsidies announced by the U.S. Department of Transportation on January 11 to strengthen the U.S. charging network, and the EV industry's revenue expected to exceed $623 billion in 2024. It may not be a good idea to ignore one or the other. Contributing to the regeneration of the world's largest lithium battery.
Mineral Resources Co., Ltd. (OTC: MALRY)
The Perth, Australia-based mining and processing mineral resources company is one of the more robust dividend bets in the lithium market, with a solid forward yield of 3.1% and a focus for income-focused investors. It may be enough to collect.
Additionally, stock prices may start to rise in 2024. The FactSet consensus estimate from 18 market analysts has an Overweight rating on MALRY, with a price target of $70.41 per share. (MALRY stock closed on January 16th at $40.04 per share.)
One reason for the positive outlook is that MALRY has successfully partnered with industry leaders to develop more mining opportunities. Exhibit A is Mineral Resources' investment agreement with lithium business Kali Metals (KM1.AX). The company owns 1,488 square miles of land in lithium-rich Western Australia, much of which is reportedly located on or near lithium deposits with existing infrastructure to extract lithium.
Potash debuted on the ASX exchange in early January to much fanfare with the backing of an Australian billionaire, and Mineral Resources recently acquired a 10% stake in the company.
Mineral Resources has plans to mine even more lithium, but has proven its ability to piggyback on existing mines with a fairly high chance of success in lithium mining.
The company already has an agreement with Albemarle to pay Minerals $380 million to $400 million to expand its partnership in Australia's Wojna lithium mine from 40% to 50%, with Mineral Resources owning the remaining stake. Own 50%. The mine is one of the world's largest known hard-rock lithium deposits, with an estimated mine life of over 30 years, giving Minerals a long runway to capitalize on global lithium demand. I am.
Mineral Resources also owns half of the Mt Marion lithium operation in Western Australia, alongside China-based Ganfeng Lithium Group Co. Ltd. (OTC: GNENF), one of the world's largest lithium miners. I am.
MALRY is worth investors' attention in the promising but volatile lithium market in 2024, based solely on its high dividend and strong trading capabilities.
Alkadium Lithium PLC (ALTM)
The pure-play lithium stock, formerly known as Livent and now called Arcadium Lithium following Livent's all-stock merger with Allkem on Jan. 4, is in the midst of getting its act together as the new partnership develops. This may take some time.
On a positive note, Arcadium holds a 7% market share in the lithium industry and should also benefit from Rivent's previous agreement with General Motors (GM), which will see it expand from 2025 onwards. Supply of lithium oxide is scheduled to begin.
Livent also has an 11-year agreement with Ford Motor Company (F) to supply 13,000 tons of lithium hydroxide per year and is partnering with Sakuu Corp. to produce 3D printable lithium-ion batteries. are doing. It will be a game-changer for the entire industry.
Industry analysts have already begun reporting on the new ALTM, and the long-term outlook is very positive. For example, BMO Capital issued a “market perform” call on Jan. 10, and Fintel says the consensus one-year price target is $71.40 per share. ALTM stock closed at $5.43 on January 16th, so this indicates significant upside potential.
Once the lithium supplier gains footing, it should become “the world's leading lithium chemicals manufacturer,” as new CEO Paul Graves puts it.
Lithium Americas Corporation (LAC)
The 16-year-old company, based in Vancouver, Canada, is making a new move after a tough final quarter of 2023.
The company holds a major stake in Tucker Pass, one of the largest lithium resources in the United States. Tucker Pass, currently valued at approximately $5.7 billion, is fully permitted and has a 40-year mine life, giving lithium investors qualified long-term investment status in the country. Term investment.
Lithium Americas has partnered with General Motors, which has invested $650 million in the Tucker Pass effort, making it a strong funding partner for long-distance lithium mining projects. Construction on Tucker Pass is scheduled for June 2024, and lithium mining is expected to begin in 2026. The zone has the potential to hold 20 million to 40 million tonnes of lithium, making it the world's largest single deposit.
Horizons Global Lithium Producer Index ETF (HLIT.TO)
ETFs offer a surefire way to play in the lithium production market, offering investors the chance to own multiple companies bundled into a single fund. This scenario provides investors with diversification across individual companies with different fundamentals and geographic concentrations.
If you think the lithium market is headed for a significant uptrend, lithium ETFs are also worth a bet. The data shows that this scenario will continue to be the case.
According to Fortune Business Insights, the global lithium market was $22.2 billion in 2023 and is expected to increase to $89.9 billion by 2030. Additionally, global lithium production is expected to increase from 964,000 tonnes in 2023 to $1.2 million in 2024, suggesting further increases in overall lithium industry activity.
The Horizons Fund, launched in June 2021, aims to take advantage of this situation by targeting global companies that mine or produce lithium, lithium compounds, and lithium-related components.
The company's largest position is in mineral resources, accounting for 12.2% of its portfolio, followed by Pilbara Minerals Ltd. (OTC:PILBF), owner of the Pilgangula lithium project, one of the world's largest hard rock lithium operations. ) follows. 11.4%. The fund also owns shares in Albemarle, Arcadium, and Sigma Lithium Corporation (SGML), which account for 9.2%, 8.8%, and 6.6% of the ETF's portfolio, respectively.
The fund, which trades on the Toronto Stock Exchange, had an expense ratio of 0.89% and an annualized dividend yield of 3.1% as of Jan. 16. It's small for an ETF, with net assets of $27 million.
Global X Lithium & Battery Tech ETF (LIT)
Global
LIT holds key positions in leading companies in the industry, including Albemarle (9.6% of the portfolio), Tesla (4%), and Mineral Resources (4.4%). All of these companies are benefiting from billions of dollars in funding released by the recently enacted CHIPS and Science and Inflation Control Acts.
ETFs like LIT can spread assets across different parts of the lithium supply chain, helping to cushion lithium price volatility. For example, a fall in price is bad for producers, but good for companies that buy lithium to make value-added products.
Global and “beyond traditional sector and geographic definitions,” the fund's website says.
So lithium ETFs can be a great way to invest in high-growth industries that produce what Tesla CEO Elon Musk calls “new oil.”
The ETF expense ratio is 0.75%.
