The 5 companies leading the lithium market, the mineral of the energy transition
Lithium is used in the production of various items including the aluminum, glass and ceramics industries, air conditioning systems and, more recently, lithium batteries used in cell phones and electric vehicles.
As the lightest metal in the world and because of its electrochemical potential, lithium is currently considered the “white oil” and its role in the energy transition trend is already undoubted.
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Lithium is found on all continents. The largest reserves are found in Bolivia (millions of tons), Argentina (19 million tons), Chile (9.8 million tons), Australia (7.3 million tons), China (5.1 million tons) and the United States (1 million tons), according to data from the U.S. Geological Survey.
There are three types of lithium deposits: brines, hard rock deposits (also known as pegmatites, of which spodumene stands out) and sedimentary rocks. Brines represent about 66% of the world’s resources, hard rock deposits account for 26% of the world’s lithium and sedimentary rocks contain 8%, according to the Mexican government.
Amid the transition to a more sustainable global economy and the growing demand for electric vehicles, lithium has become a vitally important mineral. Lithium is expected to remain the main raw material for batteries for the foreseeable future, according to McKinsey, and is now considered strategic for the energy transition.
Analysts expect lithium demand to increase from 500,000 metric tons of lithium carbonate equivalent in 2021 to between 3 and 4 million tons in 2030. Thus, the supply of this metal must also increase and in this process foreign investment by lithium producing companies in countries with reserves plays an important role.
The following are the 5 lithium producing companies identified by Forbes Advisor as having the best stock market values in July 2023.
1. Albermarle Corporation
In first place is the US company Albermarle Corporation with a market capitalization of USD $25 billion, an enterprise value of USD $29 billion and a 3-year rate of return of 178%.
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The company currently mines lithium in four locations around the world: in the Salar de Atacama in Chile; in Clayton Valley in Nevada (United States); in the Talison Lithium mine in Australia; and in Kings Mountain (North Carolina, United States).
The company expects to expand its operations in Chile and implement direct lithium extraction technology by 2028. It also has investment plans in South Carolina for the construction of a lithium processing plant, with which it hopes to become the cornerstone of the growth of the electric vehicle industry, considered key to achieving the energy transition.
2. Sociedad Química y Minera S.A. (SQM)
In second place is the Chilean company SQM, which has a market capitalization of US$22 billion. The company is valued at USD $22 billion and has a 3-year return of 212%.
The mining company exploits lithium in the Tarapacá and Antofagasta regions. In addition to its presence in Chile, SQM also has operations in Australia at the Mount Holland project, which includes a lithium mine and processing plant.
3. Gangfeng Lithium Group Co., Ltd.
In third place is China’s Gangfeng Lithium Co. with a market capitalization of USD $16.7 billion, an enterprise value of USD $18 billion and a 3-year rate of return of 55%.
The group covers several links in the lithium battery production chain, from battery extraction, refining, processing and manufacturing to battery recycling. The raw material is extracted in China, Mongolia, Australia, Argentina, Mexico, Ireland and Mali. The processing and manufacturing plants are all located in China.
4. Pilbara Minerals Limited
In fourth place is the Australian company Pilbara Minerals, which has a market capitalization of USD $10.2 billion. The company is worth USD $9 billion and has a 3-year return of 1.68%.
It owns the world’s largest hard rock mine, located in the Pilbara, Australia, where the Pilgangoora project is being developed. The operation has two processing plants: Pilgan and Ngungaju.
5. Mineral Resources Limited (MALRY)
In fifth place is the Australian company MALRY, which has a stock market value of USD $8.9 billion. The company is worth USD $9.8 billion and has a 3-year return of 196%.
The multinational owns and operates lithium in two of the largest hard rock lithium mines in the world, located in Western Australia: Mt Marion and Wodgina. It also owns 40% of the Kemerton lithium hydroxide plant.
The growing importance of lithium in the energy transition processes and the exponential increase in the use of electric energy has led to a high demand for this mineral. To meet this demand, it is necessary to increase the supply of lithium, which will mean significant investments by companies and countries. So far, the five lithium-producing companies with the best share price are from Australia, the United States and China.It is worth noting that, during 2022, Australia (61,000 tons) and Chile (39,000 tons) were the leading countries in lithium production worldwide, followed by China (19,000 tons), Argentina (6,200 tons), Brazil (2,200 tons) and Zimbabwe (800 tons). Surprisingly, the United States did not find itself in the top six positions, despite being the sixth country with the largest reserves.
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