What Are the Best Lithium Investments for 2017?
In the race for the electric car, the first goal is to boost range. The only way to do that is to improve battery capacity. Lithium is the key fuel for the batteries that are powering the next transportation revolution. Many investors might be wondering how to cash in from lithium stocks. As it happens, they can already profit from the technological innovation that is happening now by taking advantage of lithium investing.
They can invest in lithium battery stocks. Or, for those more attuned to commodities, they can invest in lithium mining companies’ stocks. You cannot cash in from lithium by investing in the same way you do with gold or silver. Lithium simply isn’t that kind of commodity. It’s neither traded over the counter, nor is it subject to the daily whims of commodity exchanges.
How to Cash in From Lithium Investing?
To stay ahead in this market, note that Tesla Motors Inc (NASDAQ:TSLA) and Panasonic Corporation (ADR) (OTCMKTS:PCRFY) are building a giant plant (930,000 square meters in area) to make batteries near Reno, Nevada for an estimated cost of $5.0 billion. Tesla’s partner, Panasonic, plans to invest $1.6 billion in the project.
Japan has been at the forefront of lithium battery manufacturing—technically lithium-ion (li-ion) —committing sooner to the hybrid and electric vehicles, electronic gadgets, and phones that use those batteries. Panasonic even manufactures solar panels, which can also generate electricity to recharge the lithium-ion. But there are no specific lithium stocks in Japan. To start getting some lithium investing benefits, you need to look closer to Canada and South America.
The great hope of investors is that people in Europe, the U.S. and the Far East will make a steady shift toward electric cars. An electric car battery, for example, can contain as much as 100 lb of lithium. And lithium batteries are not cheap. Without real technological advances and more sources for technology metals like lithium, the electric car revolution will fail to rise. But that’s where lithium stock’s profit potential comes into play.
The current amount of lithium carbonate (LCE) that is being produced worldwide, no more than 100,000 tonnes, might be sufficient to address current electric car production demand. (Source: “How Much Lithium Does A Battery Really Need?,” EV World, March17, 2010.) But that will soon not be enough, considering that lithium carbonate is used in batteries powering anything from cellphones to toys, as well as cars.
What Are the Best Lithium Investments of 2017?
There is one concern in the long term. Unlike crude oil, lithium is a metal, which can be recycled and reused. But demand for raw lithium over the next few decades will rise exponentially. Current electric automobile production is a fraction of a one percent of all automobile production. In a decade, that percentage will be closer to 20%. If you buy lithium stocks today, you don’t need to worry too much about recycling just yet.
As for lithium stocks, you should be ready to absorb some South American risk. This is because there is a high regional concentration of lithium there. Some 70% of lithium reserves are located in the “Lithium Triangle” between Chile, Bolivia, and Argentina. The salt lakes known as Salar de Atacama, Salar de Uyuni, and the Salar de Hombre Muerto form the largest reservoir.
Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM) is working on a lithium project in Argentina’s Salar de Cauchari. The expected lithium production from this deposit alone is about 40,000 tonnes throughout a 30-year period. (Source: “Chilean SQM’s Argentina joint venture project to cost up to $600 mln,” Reuters, May 5, 2016.)
FMC Corp (NYSE:FMC), a major mining concern, is also producing lithium. The problem here is that FMC has its feet in many other businesses, which can affect the company beyond any contribution from lithium. FMC has suffered in the past four years of a dearth in commodity profits, but lithium has been one of the drivers of a more bullish outlook recently. (Source: “FMC strikes supply deal; accelerates expansion plans,” Industrial Minerals, Jul y26, 2016.)
Finally, there is strong potential for some lithium deposits right here in the United States. These deposits are strategically located in Nevada, benefiting from the expected surge in demand from Tesla Motors’ li-ion “Gigafactory.” Lithium Americas Corp (TSX:LAC) is an emerging lithium miner with strong potential, thanks to its association with SQM (noted above) in one of the largest lithium salt deposits anywhere.
The Bottom Line on Lithium Stocks
If you want to profit from the coming boom in lithium investments, these are the lithium stocks you’ll want to start with. Without this critical metal, the electric car revolution that the environmentalists like to talk about couldn’t exist.
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