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The Complete Guide to Investing in Lithium and Why it is the Future of Energy Storage

Introduction: What is Lithium and How does it Work as a Precious Metal?

Lithium is a chemical element with symbol Li and atomic number 3. It is a soft, silver-white metal that belongs to the alkali metal group of chemical elements.

It’s also perhaps one of the most exciting investment opportunities available today, which is why savvy investors are buying up lithium stocks before it’s too late. Lithium is used in a variety of applications across multiple industries, from batteries to lubricating oils. This makes it an important raw material for companies involved in manufacturing these products.

In addition to its use in batteries, lithium is also used as an anti-depressant drug, a mood stabilizer, and a treatment for bipolar disorder.

Why Lithium Will Be Your Next Precious Metal Investment

Lithium is a rare metal that’s extracted from brine and rock deposits. It’s naturally found in seawater — but because of its high demand, it’s also produced from brine, which is a mixture of water and minerals. Lithium is an alkali metal, and when used in battery applications, it’s usually mixed with materials such as cobalt and graphite. It has the ability to produce a large amount of energy for its size, and it can be recharged and reused almost endlessly. Lithium is also a highly recyclable resource; it can be reformed from used batteries and other materials. It’s a valuable metal that can be used for many other products and services, including glass and ceramics, nuclear weapons, and fertilizer. The price of lithium carbonite, the compound from which most of the lithium is mined, is currently $7.25 per kilogram.

Supply and Demand

In general, demand for lithium is expected to rise as the world moves away from carbon-based fuels. This includes gasoline and diesel, which are currently the primary fuels used in vehicles. With the international effort to decarbonize, the demand for lithium is expected to grow substantially — particularly as countries begin enacting legislation to ban carbon-based fuels and switch to a more sustainable source of energy. Cars that rely on electric batteries rather than a gasoline engine will require a significant amount of lithium in the coming years, which is why analysts expect demand for lithium to rise. When it comes to supply, about 40 percent of the world’s lithium is produced in Argentina; another 30 percent is produced in China. As other countries begin to adopt electric vehicles, they will need to secure their own supply of lithium, which could lead to an increase in lithium prices.

How to Invest in Lithium

Shares of businesses involved in lithium mining or processing are known as lithium stocks. Lithium cannot be traded as a commodity, unlike other precious metals like gold and palladium. They could instead increase their exposure by making investments in publicly traded lithium companies. This is comparable to uranium stocks and physical uranium.

What is the Current Price of Lithium on the Market?

Lithium hydroxide continues to trade at very high prices on the global market, around $80,000 per ton for small spot market volumes in Europe and North America. This year, the demand for lithium-ion batteries is expected to increase by 36%. The rapidly expanding use of lithium-ion batteries is the primary cause of the lithium market’s explosive demand growth and price increase.

Top Lithium Producing Countries
In response to the demand for lithium-ion battery applications, the world now produces an estimated 35,000 tons of lithium annually.

Rank Country Annual Production(tons)
1 Australia 14,300
2 Chile 12,000
3 Argentina 5,700
4 China 2,000

Bottom line: Why lithium will be your next precious metal investment

Lithium is an exciting investment because it’s used in so many different industries. It’s also an environmentally friendly resource that’s not expected to run out anytime soon. Although there are some unanticipated risks in investing in lithium. Therefore, it entirely depends on market demand in the future as well as several other variables.