Discover lithium mining stocks which are worth looking at
The chemical element Lithium (Li), is nature's lightest metal. It is a soft, silvery material, and happens to be one of the most chemically reactive metals, as a result of its electron configuration. Due to its highly reactive state it is a key ingredient in powering the latest technology.
Lithium, for mining purposes, originates throughout the world in rock deposits, and in parts of South America including Chile, Bolivia and Argentina in brine deposits. It is the latter where the most commercially viable lithium is currently sourced and distributed.
What is lithium used for?
Before we take a deeper look into lithium-based mining companies, it is worthwhile understanding its various uses and thus where the demand is coming from.
Lithium serves an important role within multiple industries. Namely, it is used during the process of creating ceramics and glass, producing certain lubricating greases, pyrotechnics (it’s often used as an oxidizer in red fireworks and flares), as well as other purposes within military, nuclear, and medicine.
However, throughout 2021, batteries comfortably remained the most common use for lithium, thanks to the high demand for electric cars and mobile phones. Rechargeable batteries are crucial for portable technology, and lithium has become the go-to solution thanks to a few simple properties it has:
1. Significant amounts of energy can be packed into a very small space,
2. Recharge times are rapid compared to alternative methods, and
3. They allow for a high number of recharge cycles before losing their ability to store energy.
What are lithium stocks?
Lithium stocks (or lithium shares) are shares in companies that are involved in the mining or processing of lithium. Since it is not possible to invest directly in lithium as a commodity (unlike gold, silver, and other precious metals), investors turn to publicly traded companies that operate in the extraction of lithium as a way of gaining exposure.
Lithium mining and lithium stocks have been continuing to catch the eyes of investors, and for good reason. The long-forecasted spike in demand for the worlds lightest metal has continued to grow as consumer purchasing trends and sentiment surrounding portable technology, electric vehicles, and greener energy solutions keeps improving. Perhaps more significantly, it doesn’t look like this increase in demand will be slowing anytime soon. A report by Deloitte analysts came to the consensus that demand for lithium will double or even triple by 2030, with most of this demand driven by electric car companies.
Numerous data sources expect the global lithium-ion battery market value to reach about $46 billion by 2026, in contrast to $4 billion last year in 2020. Ultimately, what this all points to is a great potential opportunity to gain reward from a market that has seen a rapid rise in demand.
Lithium price changes
Demand over time
The standout recent event that further supported the case for electric vehicles, and consequently lithium, was COP26 in November this year. The agreements signed by all countries involved provides a further push towards renewables adoption. Lithium batteries will play a crucial role towards the reduction of Carbon emissions through the storage of renewable green energy, harnessed from the sustainable wind, solar, hydropower, and tidal.
The US government additionally announced plans for net-zero emissions by 2050. Billions of dollars in funding from President Joe Biden’s bipartisan infrastructure bill will go to build a nationwide network of EV-charging stations, further improving sentiment around electric vehicles in one of the biggest global car markets. Moreover, the Chinese government is setting ambitious goals for EV sales and likewise expanding charging networks to hasten the country’s transformation towards the electric future.
The growth of the EV market in the UK is expected to also accelerate in the coming years as it prepares itself for the 2030 ban on new petrol and diesel vehicle sales. According to the latest vehicle stats, electric passenger car sales increased by 186% throughout last year, and there are now an estimated 300,000 EVs on the road in the UK and 600,000 plug-in hybrids.
Lithium supply changes
Increased demand will drive an increase in supply. It is expected that the supply of lithium will triple by 2025. However, crucially, this still might not be enough to cater for the rising demand. Prices are expected to continue to be supported as a shortfall deficit of Lithium supply worldwide is expected from the beginning of 2022. This deficit is expected to persist to 2030 at the earliest, since there are not enough mines coming online to supply the demand in EV Batteries and Energy Storage systems to 2030.
Analysts expect lithium to be recycled from end-of-life lithium-ion batteries in the future. However, the technology necessary for this is not yet sufficiently developed. In fact, recycling rates are presently 5% or lower. The lack of ability to reuse the batteries combined with a deficiency of new mines to match the increasing demand appears to create a structural shortage of supply.
UK listed lithium stocks to watch
Which companies provide exposure to this Lithium theme? As the demand/supply dynamics remain under pressure, opportunities for lithium mining companies and investors will remain. You can read more detailed broker research notes about them here on Research Tree. We have highlighted below a selection of UK listed lithium mining stocks that could be of interest:
Bacanora Lithium Plc (Market Cap: £257m)
Bacanora Lithium is an AIM listed mining company focused on building a 35,000 tonnes per annum battery grade lithium operation at Sonora in Mexico, in partnership with their cornerstone investor (and the world's largest lithium company by market capitalisation) Ganfeng Lithium. Bacanora owns ten mining concession areas covering approximately 100,000 hectares, and has performed noticeably well in terms of share price across the past year alone, with the stock up 48% (21/12/20 - 21/12/21), this is likely to have been further boosted by the news earlier this year that Ganfeng plans to fully buy out Bacanora Lithium.
The company has implemented a 5-point plan of action strategy in order to achieve their goal of becoming an international lithium production company, which can be read in more detail here on their website.
If you’re interested in discovering professionally produced broker research on Bacanora Lithium then click HERE to view its dedicated page on Research Tree.
Bradda Head Lithium (Market Cap: £24m)
Bradda Head is a lithium exploration Group with a focus on developing high quality projects across the USA. Through its subsidiaries, the Group holds a 100% stake in lithium brine, pegmatite and clay projects located in strategic positions within a lithium belt in the USA.
The Company plans to develop its existing portfolio of lithium-rich assets, and additionally are pursuing to add to their existing portfolio. They aim for this to be achieved through a mixture of acquisitions, partnerships or joint venture arrangements, with target assets or projects being acquired in whole or in part by the Company. To understand this in more detail head over to the corporate strategy page on their website here. Since listing this year in July on the LSE, the stock value appears to have caught the eye of investors and as such risen by 46% (as of 21/12/21).
Want to find out more about Bradda Head lithium? Then click HERE to view its dedicated page on Research Tree, where you can find a mixture of relevant broker research, RNS announcements, videos and podcasts.
Cornish Metals Inc (Market Cap: £58m)
Cornish Metals is a Canadian mineral exploration company focused on building a strategic metals company within the United Kingdom and North America. Their short-term strategy is to focus on exploration and delineation of the near-surface high grade copper and tin mineralization at the United Downs project in Cornwall, UK.
In addition, Cornish Metals believes demand for ethically sourced tin will continue to increase, especially as countries look to transition to carbon neutral economies which should lead to domestic supply chains becoming more prevalent. This is explained in more detail in their investors presentation which can be found here. As it stands, the stock is up 111% compared to this time last year (21/12/20 - 21/12/21).
If you want to find broker research about Cornish Metals, then click HERE to view its dedicated page on Research Tree. You will be able to see broker research, RNS announcements, videos and podcasts all in one centralised place.