Investing in lithium

You might know lithium from the lithium batteries that power electric cars. As the world becomes more electric and dependent on lithium, there are more and more opportunities for investment

Open an account

What is lithium?

Lithium is a silver-gray, soft metal and the lightest metal on earth. It even floats on water! Because of this, it can be put into batteries without weighing them down. This is one of the reasons why lithium batteries are popular in the automotive industry.

How is lithium mined?

Lithium is extracted from ore or salt groundwater. It is mined in Australia, and in countries like Chile and Argentina, it is pumped from salt water reservoirs that are deep underground. This water is pumped into large shallow artificial lakes where the sun evaporates the water. Large areas of salt are then left behind from which lithium is extracted.

What is lithium used for?

Lithium is used in the manufacture process of many products. It is processed in glass and ceramics to ensure that these objects can withstand extreme temperatures without breaking. In recent years, the demand for lithium has mainly increased because of its use in batteries. In particular, the demand for electric car batteries has caused the price of lithium to grow significantly.

Advantages and disadvantages of lithium batteries

Lithium batteries are often used in cars and consumer electronics because they have a high energy density and long life. They also contain fewer toxic metals than regular batteries, making lithium batteries less harmful to the environment. Another plus for the environment is that they can be easily recycled.

A major disadvantage of lithium batteries is that they are relatively expensive to produce. They also can catch fire at high temperatures due to overheating. There is even a risk of explosion when a battery catches fire. Fortunately, manufacturers continue to innovate, and new ideas are constantly being implemented to make batteries safer.

What is lithium?

Lithium is a silver-gray, soft metal and the lightest metal on earth. It even floats on water! Because of this, it can be put into batteries without weighing them down. This is one of the reasons why lithium batteries are popular in the automotive industry.

Lithium is extracted from ore or salt groundwater. It is mined in Australia, and in countries like Chile and Argentina, it is pumped from salt water reservoirs that are deep underground. This water is pumped into large shallow artificial lakes where the sun evaporates the water. Large areas of salt are then left behind from which lithium is extracted.

Lithium is used in the manufacture process of many products. It is processed in glass and ceramics to ensure that these objects can withstand extreme temperatures without breaking. In recent years, the demand for lithium has mainly increased because of its use in batteries. In particular, the demand for electric car batteries has caused the price of lithium to grow significantly.

Lithium batteries are often used in cars and consumer electronics because they have a high energy density and long life. They also contain fewer toxic metals than regular batteries, making lithium batteries less harmful to the environment. Another plus for the environment is that they can be easily recycled.

A major disadvantage of lithium batteries is that they are relatively expensive to produce. They also can catch fire at high temperatures due to overheating. There is even a risk of explosion when a battery catches fire. Fortunately, manufacturers continue to innovate, and new ideas are constantly being implemented to make batteries safer.

Reasons to invest in lithium stocks

In the energy transition, there is a lot of focus on electric driving. All of those electric cars being produced need batteries. Each car battery, as you can probably imagine, requires much more lithium than a phone or laptop battery. For example, a 70 kWh battery in the Tesla Model S contains 63 kilograms of lithium. The demand for lithium is expected to continue to grow in the coming years. By investing in lithium-related stocks, you may be able to benefit that increasing demand for this commodity has on its price.

Growth forecast for market share of electric cars

The energy agency International Energy Agency (IEA) expects the number of electric cars sold to increase substantially in the coming years. They base their figures on data from the largest car manufacturers. 18 of the 20 largest car brands say they want to increase production and the number of electric car models available. Some brands, such as Volvo, want to completely and only produce electric vehicles by 2030.

The IEA expects that the number of electric cars sold in 2030 will be over six times higher than in 2022.

The 5 most traded lithium stocks and ETFs

Since investing in lithium is becoming more popular, here are the most traded lithium stocks and ETFs of 2022 via our platform:

Lithium Americas (CA53680Q2071) is a Canada-based company in the lithium business that operates in Argentina and in the US. In Argentina, it has two projects where lithium is mined. In the US, a new project is under construction in the Nevada desert. There, lithium will be extracted on a large scale from an open pit mine. The company says that this facility will generate the largest amount of lithium within the US.

Albemarle (US0126531013) is an American company focused on the production of catalysts, lithium and bromine products. In 2015, the company acquired competitor Rockwood. Thanks to this acquisition, Albemarle has become the largest lithium producer in the world. The company invests heavily in countries such as Australia, China and Chile, where there are many lithium reserves. In Chile, Albemarle is even the only foreign investor with access to these reserves.

Livent (US53814L1089) is a global lithium producer with production facilities in Argentina, China, the US, England and India. Livent's share price plummeted as in 2020 when the Covid-19 pandemic caused the demand for lithium to drop. But the share has since risen sharply again as the economy has recovered. In early 2022, the stock was about 3.5 times higher than at its low point during the pandemic. With a price-to-earnings ratio above 100, investors expect a lot from the company in the future.

Sociedad Quimica y Minera de Chile (US8336351056) is a Chilean company that supplies raw materials to the food, technology and healthcare industries and is one of the largest lithium producers in the world. Partly due to the rising demand for lithium, the company made a substantial increase in profits in 2021 compared to previous years. In addition, the company has good ties with the Chilean government. This can be seen as a great advantage because Chile has by far the largest global lithium reserves.

This last investment product is not a company stock but an exchange-traded fund (ETF) that focuses on the lithium industry. The L&G Value-Chain UCITS ETF (IE00BF0M2Z96) tracks the price of companies that produce lithium and companies that make lithium batteries. By investing in this ETF, you spread your investment among 33 different lithium-related companies. Some of the above companies are also part of the composition of the ETF.

Investing in lithium through DEGIRO

At DEGIRO, there are several ways to invest in lithium. We have a wide range of corporate stocks in the lithium industry. Think of companies that produce the raw material lithium, but also companies that make batteries from lithium. In addition, you can invest in ETFs in which lithium-related companies are included. By doing so, you invest in lithium in a diversified way that helps to spread the risk.

More than 90 international awards

We strive to offer the best product by being innovative and staying on top of safety and security. These awards are proof of this hard work and the reason we are the market leader in Europe.

Best-broker-2023-Cashcow Netherlands

Best Broker

Cash Cow 2023

UK-award United Kingdom

Best Low-Cost Stockbroker

FT & IC 2022

PT-award Portugal

Best stockbroker

Rankia 2022

DE-award Germany

Fairest online broker

NTV 2020

Check our awards >>

Your investment journey starts here

Open a free account and join over 2.5 million investors on our user-friendly platform.

Let’s get you started

Note:
Investing involves risks. You can lose (a part of) your invested funds. We advise you to only invest in financial products which match your knowledge and experience. This is not investment advice.

Copyright © 2023 DEGIRO. All rights reserved

Privacy & Cookies Disclaimer Sitemap

We want to empower people to become the best investors they can be. By offering a universe of possibilities and choices on our user-friendly platform, we are removing barriers to make investing accessible to everyone: beginners or experts. You get access to a wide variety of products on more than 50 global exchanges to have the freedom to invest the way you like. In our world, you also get great value for money. So, without compromising an inch on the quality, security and range of our investment services, we offer incredibly low fees. Prioritising your needs has helped us become the leading European online broker. Our 2.5+ million clients and 90+ international awards are proof of our success.

Logo

Terms and conditions for the €100 transaction fees offer

If you activate your DEGIRO investment account before the 1st of July 2023, DEGIRO will reimburse your transaction fees up to €100. The following conditions apply to this offer:

  • The offer is valid until the 30th of June 2023.
  • During the offer period, new clients who have activated an account will receive up to €100 in transaction fees reimbursed.
  • The first transaction costs and external handling fees up to €100 within the timeframe until the 31st of July 2023 will be reimbursed.
  • Currency handling fees (Auto FX trader and manual trade) are not eligible to be refunded with this promotion.
  • We will reimburse the transaction costs and external handling fees you have spent (up to a maximum of €100) to your DEGIRO account in early August.
  • This offer is only valid for new clients with an Irish DEGIRO account.
  • To be eligible for this offer, the new client needs to make a first deposit to validate the account (minimum deposit is €0.01) and activate their DEGIRO account.
  • New clients who started their registration before the offer period, but activate their DEGIRO account during the offer period, are also eligible for this offer.
  • If an existing account is already linked to the address of the new client, participation is excluded.
  • Each new client can only claim the €100 transaction credit once.

Acceptance of offer conditions

By participating in the offer, the client automatically accepts the offer conditions and terms. DEGIRO may terminate the campaign prematurely or change the campaign conditions. DEGIRO will communicate any changes via the website.

Participation

Participation in the offer is open to all clients who have activated an account at DEGIRO on or before the 30th of June 2023.

icon_close