As widespread economic turmoil in the first decade of the 21st century resulted in the broad destabilization of many traditional investment products and venues alternative investment options began to realize an increase in popularity among investors who may not have otherwise strayed from established investment practices under previous markets. Speculation in metallic or base Lithium is an example of such a trend. Speculators hope to make a viable play on a perceived growth in demand for lithium metal due to the widespread adoption of lithium batteries in emerging technologies. Lithium batteries have become a preferred power source for energy-hungry devices such as cell phones because they are more efficient and scalable than previous-generation nickel-metal hydride batteries thus they are in high demand in support of automobile and electronics manufacturing. Factors that could result in limitations affecting overall lithium supply are seen by some as prescient; with predicted supply chain volatility potentially overpowering other market factors and becoming the primary price driver, essentially resulting in a seller's market and thereby making the metal a profitable investment. However this model tends to disregard the influence of other factors outside basic supply/demand curves such as market regulation and the increased tendency for more costly components to be targeted for replacement by new technologies. That being said, current projections of the global market for lithium-ion batteries range from $26 billion in 2023 (Navigant Research) to a very optimistic $33 billion in 2019 (Transparency Market Research).
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Metal
Lithium metal is an extremely soft, highly reactive, and flammable element. It is most frequently found in deposits such as spodumene and pegmatite minerals, with larger resources in the U.S., Canada, Australia, China, Zimbabwe, and Russia. Lithium possesses a unique chemical profile making it the lightest metal in the periodic table and the least dense solid element. Its atomic number is 3 (right behind helium at 2 and hydrogen at 1), and its density is just 0.53 kg/L. This alkali metal is probably best-known for its wide use in lithium batteries common in all sorts of electronics devices. Other industrial applications include manufacturing heat-resistant glass and ceramics, high-performance alloys used in aircraft, and lubricating greases. Lithium deuteride is used in staged thermonuclear weapons as a fusion fuel. Compounds of lithium are also used as mood stabilizing drugs in psychiatry. The breakdown of the global end-use lithium markets is estimated as follows: ceramics and glass, 31%; batteries, 23%; lubricating greases, 9%; air treatment, 6%; primary aluminum production, 6%; continuous casting, 4%; rubber and thermoplastics, 4%; pharmaceuticals, 2%; and other uses, 15%.
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Global resources and production
The global production of lithium is to triple this decade, from 200,000 tons in the year 2000 to over 600,000 tons in 2020. Mining lithium metal is not expensive, especially at high mountain plateaus, where lithium is collected from brine ponds evaporated by the sun. Brine excavation is probably the only lithium extraction technology widely used today, as actual mining of lithium ores is much more expensive and has been priced out of the market.
Identified lithium resources total 5.5 million tons in the United States and approximately 34 million tons in other countries, so lithium is not, in fact, a rare commodity. Identified lithium resources for Bolivia and Chile are 9 million tons and in excess of 7.5 million tons, respectively. Identified lithium resources for Argentina, China, and Australia are 6.5 million tons, 5.4 million tons, and 1.7 million tons, respectively. Canada, Congo (Kinshasa), Russia, and Serbia have resources of approximately 1 million tons each. Identified lithium resources for Brazil total 180,000 tons.
The world's top 3 lithium-producing countries from 2014, as reported by the US Geological Survey.
Australia
In 2014, Australian companies delivered 13,000 tons of metal, an increase of 300 tons from the year prior. The country develops the Greenbushes lithium project, which is owned and operated by Talison Lithium. Greenbushes is the world's largest known single lithium reserve and has been operational for over 25 years. The location also provides easy access for Asian electronics companies, which are the global top lithium consumers.
Chile
In 2014, Chilean mines delivered 12,900 tons of lithium, providing the second-highest amount of lithium and is poised to take back the Chilean position as number-one producer in the future. Overall, Chile possesses the largest confirmed lithium reserves in the world, with over 7.5 million tons of the element. By that estimate, the country hosts roughly five times more lithium than Australia, which features the second-largest reserves. In particular, the Atacama salt flat is the most significant source of country's massive lithium production, and it has been reported that one project alone encompasses approximately 20% of the world's total lithium. While Australia extracts lithium from traditional hard-rock mines, Chile's lithium is found in brines below the surface of salt flats. These brines are collected and treated in order to separate the element from wastewater.
China
In 2014, China mined 5,000 tons, trailing the world's largest producers by a sizable margin. That amount represents a 300-ton increase from 2013 output. The country's large electronics industry makes the country also the world's largest consumer of the commodity. Currently, the majority of Chinese lithium output comes from the Chang Tang plain in Western Tibet. The US Geological Survey indicates that the country's reserves is 3.5 million tons.
The Lithium Triangle
The intersection of Chile, Bolivia, and Argentina make up the region known as the Lithium Triangle. The Lithium Triangle is known for its high quality salt flats including Bolivia's Salar de Uyuni, Chile's Salar de Atacama, and Argentina's Salar de Arizaro. The Lithium Triangle is believed to contain over 75% of existing known lithium reserves.
Investment vehicles
Currently, there are a number of options available in the marketplace to invest in the metal. While buying physical stock of lithium is hardly possible, investors can buy shares of companies engaged in lithium mining and producing. Also, investors can purchase a dedicated lithium ETF offering exposure to a group of commodity producers.
Lithium Index
The performance of the global lithium industry is covered by Solactive Global Lithium Index. The index is composed of companies that are primarily engaged in some aspect of the lithium industry such as lithium mining, exploration, and lithium-ion battery production.
Mining companies
There are many companies relying on lithium for a substantial portion of their revenues. Examples include:
- Advantage Lithium (TSX-V: AAL), a Canadian based lithium explorer with a large-scale development asset located in the Cauchari basin in Argentina;
- Sociedad Quimica y Minera (NYSE: SQM), a Chilean producer of specialty plant nutrients and chemicals that runs large-scale lithium production operations. The main production facilities are located in the Atacama Desert;
- FMC Corporation (NYSE: FMC), a Philadelphia-based diversified chemical company also focusing on this commodity;
- Albemarle Corporation (NYSE: ALB), yet another industrical company producing lithium chemicals;
- Bearing Resources (TSXV:BRZ), a Canadian miner developing a lithium brine project in Chile and the highest-grade undeveloped project
- Bacanora Minerals (TSX: BCN), a Canadian miner developing a lithium mine in Mexico, Sonora, first to enter in a conditional supply agreement with Tesla (NYSE: TSLA)
- Lithium Americas Corp (OTCQB: LACDF), a Canadian/Argentinian miner, producer and supplier of lithium, with large-scale assets located Argentina and Nevada, USA.
- RB Energy (TSX:RBI), a Canadian company developing The Quebec Lithium Project, filed for creditor protection in 2014, according to the Financial Post
- MGX Minerals (CSE: XMG/ FKT: 1MG/ OTC: MGXMF), a diversified Canadian mining company engaged in petrolithium projects in western Canada and the United States.
- Kodal Minerals (LSE: KOD), a small-cap mining and exploration company that currently focuses on its large lithium project in Mali.
Exchange traded funds
- Global X Lithium ETF (NYSE: LIT), an ETF trading since 2010 and holding the above listed lithium producers as its top holdings. LIT is a passive ETF seeking to replicate Solactive Global Lithium Index.
See also
- Sprott Molybdenum Participation Corporation
- Uranium Participation Corporation
- Traditional investments
- Alternative investments
- Minor metals
Rare materials as investments
- Diamonds as an investment
- Palladium as an investment
- Platinum as an investment
- Silver as an investment
- Gold as an investment
References
External links
- Global X Lithium ETF
- Lithium Mining in Bolivia's Salt Flats on YouTube
- The growing demand for lithium on YouTube
- West Africa growing lithium production on YouTube
Source of the article : Wikipedia
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