March 28, 2024 5:46 AM

Investing in lithium: What you should know

Politics plays a part in the lithium markets, but consumers continue to demand cleaner technologies and lithium remains a key component of that.

/ Published 5 years ago

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Throughout the layers of the earth, the white silvery base metal lithium lies in rocks and brine. As common as it is in the earth, extracting it takes time and technology. Add in it must make a profit for investors, it makes a person ponder why bother. For the modern era, it has become a necessity since it remains a core component of durable batteries. For some reason, the silvery whiteness and the challenge of extracting stir the imagination of many to create such useful products.

Why lithium?

Lithium has some unique properties that make it especially useful. A necessary mineral in organisms, it acts as a natural mood enhancer and maintains brain function. Though it stabilizes brain function, the nucleus of lithium itself has instability. Classified as a metal a person can cut it with a knife. If lithium converts to helium in a reaction well, it literally goes nuclear as in bomb. It has a massive amount of strength properties and because of that, it becomes added to other metals, making an astoundingly strong alloy. Just from its characteristics, a person can see the possibilities of usage.

The market

Just like the bit of instability in its nucleus, the marketing of it seems to mirror that. A sizable, growing demand for it continues due to the need for Li-ion batteries in clean technologies such as electric vehicles. It continues to not do the usual skyrocketing of the stock price due to demand. If it’s lithium carbonate, then China has 50 percent of that global market far as consumption, and trying to increase that. Lithium comes in several forms with varying purposes and uses. Confusion in the markets happens because in the information given, it becomes described as just lithium. But its value depends on end usage. In the Li-Ion battery markets alone, six types of lithium batteries exist, some of which have just reached the experimental prototype stage.

Projections by several groups state the need for increased lithium production. Growing usage of lithium batteries in electronic devices will double in a decade. Yet in 2018, the price on the stock had a lower value than what was expected. Most of that market involves lithium carbonate which China has a strong influence on. China likes to manipulate and it flooded the market to delay startup mining exploration companies for lithium from gearing up. So, politics, its thermonuclear capabilities, and startup status cause lithium prices to fluctuate but not necessarily soar consistently.

In Digital Journal, a report by GMI Research has an in-depth analysis outline of the market and projections till 2021 by region and by lithium type. A glance at it tells investors they need the specific knowledge to make a good pick in the stock markets. Medical devices and electric vehicles use lithium titanate, lithium iron phosphate, lithium manganese oxide, and lithium nickel manganese cobalt oxide. Mobile phones, laptops and digital cameras use lithium cobalt oxide. Lithium from brine operations hits value-added markets quicker than hard-rock lithium concentrates. The hard-rock lithium has to undergo additional processing adding cost.

lithium
Cobalt paired with lithium presently gives the battery power to mobile phones, laptops and digital cameras. (Source)

Technology

An array of new technologies has hooked on to lithium as a hope to have clean energy for the planet. The American Chemical Society reported lithium batteries can now become 3D printed. For industry use, the power of it has not reached the level necessary, but the possibility exists that the Li-ion batteries do not have to stay rectangular. Lawrence Berkeley National Lab material scientist Gerd Ceder has been charged with using disordered rock salt with lithium to dispense with expensive cobalt in batteries. Quebec Canada, because of Sustainable Development Technology mandates from the government, made a consortium for a lithium recycling project. Its planned 200 tons per year plant will start construction in 2019. Nemaska Lithium (TSE: NMX) in Canada has developed a new electrolysis process for extracting lithium from spodumene ore which promises to do it cleanly and make more profit at the same time. Springpower International (SPI) in Canada received $3.4 million from the government to finish developing an eco-friendly and cost-effective process for the production of lithium batteries. The Canadian government in the last five years through various programs have invested in protocols, procedures, processes and exploration involving lithium.

The Tesla Corporation with its Gigafactory1 facilities and the USA government have been investing in cobalt mines and even letting Canadian mining companies revitalize American cobalt mines in Idaho. Cobalt paired with lithium presently gives the battery power to mobile phones, laptops and digital cameras. One of the hidden markets of lithium at least in the USA remains its use in the cooling agent system of nuclear power plants and in the process of creating other substances for thermonuclear warheads. Some lithium companies, especially in the USA, have a private status for strategic purposes. All of which takes a security clearance to know about.

Conclusion

Lithium production and pricing have a political component that affects the markets in different ways that drive investors and analysts into a frenzy. With the government monitoring markets, buying up lithium or things that combine up with lithium, the markets do not do the usual response. On a grand global scale, the capitalists with entrepreneurs compete with the national security components of governments for the lithium. Capitalism usually wins, forcing nations to find some other way build up arsenals.

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