The Battle for Lithium Supply Has Just Begun

Jan 31, 2023

The battle for lithium is heating up.

Just this morning, General Motors said it would invest $650 million in Lithium America (LAC) to help develop a lithium deposit in Nevada.   

According to Barron’s, “The mine, referred to as Thacker Pass, is projected to begin lithium production in the second half of 2026. GM’s investment will be split into two portions and is contingent on Lithium Americas meeting certain conditions. The Thacker Pass investment should amount to all the lithium GM needs to meet its goal of selling 1 million EVs in North America by mid-decade.”

Earlier this month, Piedmont Lithium amended its agreement with Tesla for lithium. In fact, Piedmont has agreed to deliver approximately 125,000 metric tons of SC6 to Tesla beginning in H2 2023 through the end of 2025.

With automakers racing to secure even more supply, we’re likely to see many more deals 

Should that happen, investors may want to keep an eye on:

Global X Lithium & Battery Tech ETF (LIT)

With an expense ratio of 0.75%, the LIT ETF  invests in the full lithium cycle, from mining and refining the metal, through battery production. Some of the ETFs top holdings include Albemarle, BYD Co., Tesla, LG Chem Ltd., Livent Corporation, and dozens more, offering solid diversification among top lithium names.

American Lithium (AMLI)

Or, take a look at American Lithium (AMLI), which was just recently added to the NASDAQ. 

“The Vancouver-based explorer is developing projects in Peru and Nevada as demand for lithium soars. The CEO said he sees plenty of ‘positives’ for the industry, driven by ongoing demand for battery metals and electric vehicles, that should bode well for American Lithium,” says Bloomberg.

Albemarle (ALB)

Even at $272, Albemarle could easily see higher highs. 

Helping, management just forecast massive growth.  In fact, from $7.3 billion in 2022, the company expects for revenue to range from $17.6 billion to $19.3 billion by 2027.  It also expects for EBITDA to rise from $3.5 billion in 2022 to between $7.2 billion and $8.5 billion by 2027, as well. Better, it expects to see cash from operations range from $6.6 billion to $7.1 billion over that time frame.  That’s massive.

Analysts love the ALB stock, too.  Mizuho analysts, for example, raised their price target to $325 from $300. Deutsche Bank raised its price target to $305 from $290. Oppenheimer raised its from $461 to $497. Piper Sandler even initiated coverage with an overweight rating, with a price target of $310.

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