A year ago, the spot price of a metric ton (tonne) of battery-grade lithium was around $13,300. Today, that same tonne is selling for around $68,800. Nearly 75% of global lithium production makes its way into batteries for electric vehicles, electricity storage, portable power tools and dozens of other products.
According to the U.S. Geological Survey (USGS), worldwide lithium production rose to 21% to 100,000 tonnes in 2021, not including production from U.S. mines. For competitive reasons, the USGS does not publish U.S. production data.
Global reserves of lithium total 22 million tonnes of the metal that “have a reasonable potential for becoming economically available within planning horizons beyond those that assume proven technology and current economics.” Identified resources (reserves plus inferred reserves) worldwide total about 89 million tonnes. Currently, Chile (9.2 million tonnes), Australia (5.7 million) and Argentina (2.2 million) have the largest reserves. Countries with the most identified resources are Bolivia (21.0 million tonnes), Argentina (19.0 million) and Chile (9.8 million). U.S. identified resources total about 9.1 million tonnes, with known reserves today totaling 750,000 tonnes.
Three of the world’s five largest lithium mining companies trade on U.S. exchanges. China’s Jiangxi Ganfeng Lithium, with a market cap of nearly $33 billion, is the world’s largest lithium miner and trades over the counter in the United States. Another China-based company, Tianqi Lithium, with a market cap of around $23 billion, is the third-largest producer and does not trade in the United States.
While lithium prices are inching down, they remain only about $1,000 from their annual high. Two of the three have already announced March-quarter results, and the third should be reporting earnings by the end of this month. Which one appears to offer the best opportunity for investors? Or will it be one of the other four U.S.-traded lithium miners we have included? The answers may depend on an investor’s risk appetite.
Albemarle Corp. (NYSE: ALB) reported quarterly results last week that beat the consensus earnings per share (EPS) estimate by $0.75 and the consensus revenue estimate by 9.3%. Revenue was 36% higher compared to the first quarter of last year. Last Friday, five brokerages lifted their price targets on the stock by an average of nearly 30%. Half of the 22 analysts covering the stock have a Buy rating and two more have Strong Buy ratings. Albemarle’s market cap is around $26.6 billion.
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