Lithium, a lightweight metal essential to the latest generation of high-tech batteries, possesses two features most investments lack.
For one thing, future demand is nearly certain to surge as battery-driven vehicles grab an increasing share of the automotive market. For another, a handful of companies now dominate production of lithium.
Combine growing demand with today’s oligopoly of producers and it’s clear why three major U.S.-listed lithium miners have been among the best non-bitcoin investments of 2017. Shares of Sociedad Quimica Y Minera de Chile, the Chilean giant better known as SQM, have surged 80 per cent since January. Over the same period, Albemarle Corp., up 45 per cent, and FMC Corp., up 53 per cent, have also enjoyed dazzling runs.
Are there more profits to come? It seems likely, although investors probably won’t see a repeat of this year’s gains any time soon.
The biggest reason for optimism is the increasingly positive outlook for electric vehicles. “We have a much more bullish demand outlook” for lithium than a few months ago, says Alex Laugharne, a principal consultant for metals watcher CRU. He points to China’s growing push to put more electric cars and trucks on its roads as the primary reason for his optimism.