Energy Business

Investing in Lithium Gets Easier, Finally an ETF (LIT, SQM, FMC, ROC, AONE, XIDE, ABAT, HEV, ULBI, CBAK, VLNC)

Investing in global Lithium demand trends just became much easier. An ETF is coming out this week called the Global X Lithium ETF.  It is not a commodity fund but it does track the components of the Solactive Global Lithium Index.  The index tracks the performance of the lithium industry, which is companies that mine or explore for lithium, sell and distribute lithium, and those which are big end-users of lithium battery production.  Some of the big or recognized stock and ADR names that comprise this ETF are Chemical & Mining Co. of Chile Inc. (NYSE: SQM), FMC Corp. (NYSE: FMC), Rockwood Holdings Inc. (NYSE: ROC), A123 Systems, Inc. (NASDAQ: AONE), Exide Technologies (NASDAQ: XIDE), Advanced Battery Technologies, Inc. (NASDAQ: ABAT), Ener1, Inc. (NASDAQ: HEV), Ultralife Corp. (NASDAQ: ULBI), China BAK Battery, Inc. (NASDAQ: CBAK), and Valence Technology Inc. (NASDAQ: VLNC).

This Lithium ETF from Global X is expected to launch on Friday, July 23, 2010 and will trade under the “LIT” ticker on the New York Stock Exchange.  These are not all of the names, but these are the names of stocks that actively trade in the U.S. which are components in the ETF.  We have included the initial weighting in the proposed ETF, although that will change through time.  Weightings will be as follows:

  • Chemical & Mining Co. of Chile Inc. (NYSE: SQM) 20.00%
  • FMC Corp. (NYSE: FMC) 17.24%
  • Rockwood Holdings Inc. (NYSE: ROC) 7.25%
  • A123 Systems, Inc. (NASDAQ: AONE) 4.75%
  • Exide Technologies (NASDAQ: XIDE) 4.75%
  • Advanced Battery Technologies, Inc. (NASDAQ: ABAT) 4.75%
  • Ener1, Inc. (NASDAQ: HEV) 4.75%
  • Ultralife Corp. (NASDAQ: ULBI) 2.92%
  • China BAK Battery, Inc. (NASDAQ: CBAK) 2.81%
  • Valence Technology Inc. (NASDAQ: VLNC) 2.22%

The Solactive Global Lithium Index tracks the price movements in shares of the largest and most liquid companies whose main business operations are in exploration and/or mining of Lithium or a closely related activity or production of Lithium batteries. The index is calculated as a total return index in USD and adjusted semi-annually.  As it adjusts semiannually, so will the weighting of its components.

An inquiry into the company notes that the official launch will be the same seed capital as all Global X ETF products, which is 100,000 shares at a launch price of $15.00.  With the sector being difficult to invest in and with the actively traded U.S.-listed stocks (some are foreign ADRs) above having an initial weighting of more than 70%, it seems likely that investors will have far more interest than an initial size of 100,000 shares.

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