Why You Should Consider Lithium Shares to Buy in 2023
Lithium is a key ingredient for making lightweight, power-dense batteries that are essential for electric vehicles (EVs) and renewable energy storage. With the global demand for EVs and clean energy expected to soar in the coming years, lithium prices have also skyrocketed, quadrupling in the 12 months to September 2022.
However, lithium supply is not keeping up with the demand, as there are only a limited number of public companies that mine and refine lithium, plus a host of smaller startup operations that are in the early exploration or development stages of their resources. According to the Boston Consulting Group, lithium demand could outstrip supply and result in “chronic shortages” of the metal by as early as 2025.
This creates a huge opportunity for investors who want to tap into the long-term bullish outlook for lithium. In this article, we will look at some of the best lithium stocks to buy in 2023, ranging from well-established producers to more speculative junior miners.
Albemarle Corp. (ticker: ALB)
Albemarle Corp. is one of the largest and most vertically integrated producers of lithium in the world, with mining, extraction and purification operations under one company. It has operations in Chile, Australia, Argentina and Nevada, and produces lithium hydroxide, lithium carbonate and other lithium compounds.
Albemarle is also expanding its production capacity to meet the growing demand for lithium. In March 2023, it announced a proposal to buy Australian lithium miner Liontown Resources Ltd., which expects first production at its flagship project in mid-2024. However, the junior miner rejected the proposal, saying it undervalued the company.
Albemarle is not a pure play on lithium, as it also produces other chemicals such as bromine and catalysts. However, it offers relative stability and exposure to the lithium market, as well as a dividend yield of about 1%.
Livent Corp. (ticker: LTHM)
Livent Corp. is a purer lithium play, producing lithium hydroxide, lithium carbonate and lithium chloride. It has operations in Argentina, China and the U.S., and supplies its products to major battery manufacturers and automakers such as Tesla Inc. (TSLA) and BMW AG (BMWYY).
Livent is also investing in new technologies and partnerships to enhance its lithium production and quality. In April 2023, it announced a joint venture with Eramet SA (ERMAF), a French mining company, to develop a large-scale lithium extraction project in Argentina. The project is expected to produce up to 24,000 metric tons of battery-grade lithium carbonate per year by 2026.
Livent is a more volatile stock than Albemarle, as it is more sensitive to lithium price fluctuations and market conditions. However, it also offers higher growth potential and exposure to the purest form of lithium used in EV batteries.
Lithium Americas Corp. (ticker: LAC)
Lithium Americas Corp. is one of the most promising junior miners in the lithium space, with two major projects under development: Cauchari-Olaroz in Argentina and Thacker Pass in Nevada. The former is a joint venture with Ganfeng Lithium Co. Ltd. (GNENF), one of China’s largest lithium producers, and is expected to start production in mid-2022 with an initial capacity of 40,000 metric tons of lithium carbonate per year. The latter is the largest known lithium deposit in the U.S., with an estimated resource of 11 million metric tons of lithium carbonate equivalent. The project is awaiting final permits and financing before construction can begin.
Lithium Americas is a high-risk, high-reward stock that could offer huge returns if its projects succeed. However, it also faces significant challenges such as regulatory uncertainties, environmental oppositions, operational delays and cost overruns. The stock is also highly speculative and volatile, as it has no revenue or earnings yet.
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