Lithium-ion batteries power everything from cellphones to laptops to electric vehicles, and demand for the metal is certainly on the rise. Many companies and investors have been drawn in by news of Elon Musk and Tesla Motors’ (NASDAQ:TSLA) lithium-ion battery gigafactory.
However, Tesla’s isn’t the only lithium-ion battery megafactory out there, and there’s more to lithium and the lithium market than electric vehicle batteries. Investors new to the space will want to get a handle on a few basic lithium facts before jumping in.
Here’s a look at five basic lithium facts investors should know.
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1. It’s the lightest metal on the periodic table
Lithium is the lightest, or least dense, elemental metal. It is about half as dense as water.
The metal also has a high specific heat, making it useful in the production of heat-resistant glass, while its electrochemical potential makes it useful in batteries.
2. It can be found in brines, hard-rock deposits and clays
Lithium is found all over the world, in both hard-rock deposits and evaporated brines.
The world’s largest hard-rock mine is the Greenbushes mine in Australia. Most of the world’s lithium brine production comes from salars in Chile and Argentina. Bolivia is thought to hold the world’s largest lithium reserves, and the prolific lithium triangle spans all three South American countries.
Several companies are also looking to develop clay-based lithium deposits. For example, Lithium Americas (TSX:LAC) holds the King’s Valley lithium deposit in Nevada, while Bacanora Minerals (TSXV:BCN,LSE:BCN) and joint venture partner Rare Earth Minerals (LSE:REM) are advancing the Sonora lithium project in Mexico.
3. It’s not just for batteries
While batteries have been getting most of the attention in the lithium space lately — and while demand for lithium from the battery sector is certainly on the rise — it’s worth noting that other sectors continue to account for a healthy proportion of lithium demand.
Citing data from Roskill, a report from Stormcrow Capital notes that in 2013, rechargeable batteries made up 29 percent of lithium demand, while the remainder of the market was mostly made up by various industrial end uses. For 2015, that proportion increased to 35 percent, as per the USGS, but sizeable portions of the market were still made up by ceramics and glass (32 percent, lubricating greases (9 percent) and other industrial uses.
Lithium is also used in pharmaceuticals, lubricants and heat-resistant glass.
4. There are many different types of lithium products
After lithium is extracted from a deposit, it is often processed into lithium carbonate, lithium hydroxide or lithium metal. Battery-grade lithium carbonate and lithium hydroxide can be used to make cathode material for lithium-ion batteries. Most contaminants must be removed in order for either material to be considered battery grade.
Hydroxide tends to be more expensive, but can produce cathode material more efficiently and is actually necessary for some types of lithium-ion battery cathodes, such as nickel–cobalt–aluminum oxide (NCA) and nickel-manganese-cobalt oxide (NMC).
In addition to battery-grade materials, there is also a market for technical-grade lithium. Technical-grade lithium products, such as technical-grade lithium concentrate, sell for a cheaper price than battery-grade products, and are used in applications such as glass and ceramics. Technical-grade lithium products must have very low concentrations of iron.
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5. Prices can be hard to find
Like most critical metals, lithium is not traded on any public exchange, and the world’s top lithium producers don’t often give out stats. For a long time, most of the world’s lithium was produced by an oligopoly of producers often referred to as the “Big 3,” which included Rockwood Lithium (now owned by Albemarle (NYSE:ALB)), Sociedad Quimica y Minera de Chile (NYSE:SQM) and FMC (NYSE:FMC).
Producers in China have grabbed a larger share of the lithium market in recent years, but the lack of information on pricing has continued.
However, interested investors can look to experts in the lithium space for market reports and price forecasts. For example, the report from Stormcrow Capital mentioned above includes a detailed forecast for lithium prices.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
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