Lithium Stocks Explode As Race to Secure Key Supplies for Batteries Heats Up
Lithium has emerged as one of the hottest metals, in high demand, amid the electric vehicle revolution. Likewise, stocks with exposure to the metal have been some of the most volatile, generating significant returns and losses amid increased focus on the segment.
Lithium Miners in Focus
Liontown Resources Ltd has been one of the biggest beneficiaries of the craze, surging by more than 100% year to date. On the other hand, Lake Resources has imploded, tanking by more than 70% after experiencing delays and cost blowouts on its key project in Argentina.
Similarly, investors who bought stakes in lithium stocks have registered significant gains year to date, while others have been on the receiving end amid the heightened volatility in the industry. The extreme volatility has to do with the fact that small and mid-sized firms mainly dominate the segment in the early stages of exploring and developing lithium mines across Australia and other parts of the world.
Companies that have struck large deposits of the precious commodity have been the most volatile, exploding in value. Azure Minerals is among the emerging stars in the segment, having discovered large deposits, consequently exploding by more than 1,100%. The company’s sentiments have improved significantly after rejecting a takeover push by a Chilean Lithium producer, which is also developing one of the largest lithium deposits in Canada.
Pilbara Minerals Ltd is another company that has seen its fortunes improve significantly after transforming from a $500 million junior miner three years ago to a $15 billion miner. The company produces 8% of the world’s total lithium supply. Its stock has risen by over 30% in 2023.
South Korea Hydro Lithium has also exploded by more than 1500% over the past year after changing its name from Korea Se Corp and transitioning into an EV battery-related business.
Auto Companies Lithium Investments
The heightened volatility has to do with highly prospective lithium miners increasingly attracting bids and investments from some of the biggest companies. Demand for lithium is expected to increase as the race to get rid of fossil fuel cars around the globe heats up. Automakers are under immense regulatory pressure to play a pivotal role in curbing carbon emissions. Consequently, most are investing in electric vehicles and looking for ways to secure key lithium supplies.
Tesla is one of the companies increasingly investing in Lithium miners as it looks to secure critical supplies of the crucial metal. The EV giant is reportedly considering acquiring Brazil-based lithium miner Sigma Lithium, valued at about $3 billion.
The automaker is also in the process of investing $375 million to build a new lithium refinery in Corpus Christi as it looks to secure a domestic supply of lithium hydroxide in Canada. The investment is part of the automaker’s push to venture into the mining world to counter the rising costs of key minerals for battery production.
General Motors is another company that has been driving valuations in the Lithium sector after announcing plans to invest $650 million in Lithium Americas. The investment will go towards developing a mine in Nevada, thus allowing the company to secure key supplies needed to produce electric batteries.
Nevertheless, investors are becoming increasingly cautious when it comes to investing in Lithium miners. Most investors and traders want to see clear evidence that a company has discovered massive Lithium deposits that can be turned into a productive mine before investing.