COLUMN-Lithium – the commodity winner you can’t buy – by Clyde Russell (Reuters U.S. – May 12, 2016)

May 12 Lithium is the hottest commodity around these days, enjoying spectacular price gains and a blue-sky outlook that’s the envy of the natural resource sector.

There’s just one problem though. It’s extremely difficult, and somewhat risky, to gain exposure to the sector. Lithium isn’t traded on any major exchange, and doesn’t have futures contracts or swaps, thereby cutting out one of the main ways investors gain exposure to a commodity.

This means the best way to access lithium’s story is through equities, but this isn’t as straightforward as it may seem. But before looking at how to get into lithium, it’s worth asking what the hype is about, and whether it’s justifiable and sustainable.

Lithium prices in China have risen from about $7,000 a tonne to over $20,000 recently, according to research by consultants CRU, while industry website Asian Metal says lithium carbonate, the compound used in batteries, has jumped by 76 percent in the past 12 months.

Basically, lithium’s positive story can be put down to the so-called Tesla effect, namely that the rapid growth in electric vehicles will boost demand for the light metal beyond the current level of supply.

Certainly, Tesla Motors has ambitious plans to boost the number of vehicles it produces using lithium-ion batteries, and it’s not the only maker of electric vehicles with rapid growth projections.

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