How to Invest in Lithium

Article Summary

Although there isn’t a futures market for lithium, as there is for copper or gold, you can invest in lithium by buying stocks (or ETFs) in companies that work directly with lithium. These companies may mine for the metal or use it to produce things like lithium-ion batteries.

Lithium is a versatile and valuable metal primarily used in portable and rechargeable batteries. With the modern demand for lithium-ion batteries, lithium prices have skyrocketed. But lithium, surprisingly, doesn’t have a futures market. So how can you still be a part of the current lithium boom?

Fortunately, there are several stocks and ETFs available that allow you to invest in different companies involved in lithium. This may be a lithium mining company or a producer involved in processing lithium for other products. Keep reading to learn how you can invest in lithium and whether this metal is a good addition to your stock portfolio.

What is lithium?

Lithium is a metal that, like other metals, is mined from the Earth’s crust. It has unique physical properties that make it very light. The only lithium mine in the U.S. is located in Nevada, with Chile and Australia serving as the largest lithium producers. Chile in particular has some of the largest lithium reserves in the world.

Lithium uses

The most important use for lithium is for rechargeable, lithium-ion batteries. These batteries provide power to electric vehicles, cell phones, laptop computers, and digital cameras. It’s also used in some non-rechargeable batteries for things like heart pacemakers and toys.

Lithium also has some industrial applications. For instance, this metal is an ingredient in heat-resistant glass and ceramics, lubricants, and additives for iron, steel, and aluminum production. However, lithium batteries are by far the largest use.

How to invest in lithium

Although investors can’t invest in lithium directly since it isn’t traded on the stock market, there are still ways to put money into it. Primarily, you can invest in lithium stocks or ETFs.

Lithium stocks

Lithium stocks are acquired through the shares​ of companies that engage in the mining or processing of lithium. Unlike other precious metals such as gold, traders are not able to invest in lithium as a commodity​. Instead, they must gain exposure through investing in publicly traded lithium companies, similar to buying uranium stocks instead of physical uranium.

Traders can invest in the stocks of companies that mine lithium, as well as companies that produce lithium batteries.

Pro Tip

Investing in mining companies that produce metals and chemicals such as lithium can be a volatile experience for investors. Stock prices can sharply increase or decrease because of fluctuations in the market price of the material. Because of this, be sure you invest wisely by working with a brokerage that excels in such volatile stocks.

Lithium ETFs

ETFs are another way to invest in lithium that isn’t doesn’t contain as much volatility as the stock market. Lithium ETFs are geared more toward long-term investors who are seeking broad exposure to the lithium market.

Global X Lithium Battery Tech ETF

This ETF is a bundle of more than 40 holdings that invest in lithium as a commodity. This can be a useful fund to invest in if you are seeking broad exposure to the lithium market. The goal of the ETF is to create a fund that mimics the success of the lithium market as a whole.

The fund builds its portfolio out of assets linked to lithium, such as producers and heavy users of the product. For example, Albemarle Corp. is one of the fund’s top holdings, along with assets from certain Chinese companies we discuss below.

Solactive Global Lithium Index

This ETF, primarily located in Germany, tracks the performance of the largest and most liquid listed companies active in lithium exploration and lithium mining, as well as in the production of lithium batteries. It is made up of about 40 holdings, including Albemarle Corp. and Livent Corp.

Pro Tip

When first investing in lithium-focused ETFs, it’s a good idea to hone in on established lithium producers that have large, low-cost operations and startup companies that have identified a low-cost lithium resource.

If you’re interested in investing in lithium ETFs but aren’t sure where to start, check out the below brokerages. They all provide ETFs as an asset on their platforms.

What is the best lithium company to invest in?

You can find attractive investments all around the globe. However, there are only a select few that really stand above the rest. This is not investment advice, but the following publicly-traded lithium companies are worth considering if you are interested in companies in the lithium business.

Albemarle Corp.

Based in Charlotte, North Carolina, Albemarle Corp. is the world’s leading lithium producer. Panasonic is one of Albemarle’s biggest customers, using lithium to manufacture batteries for products ranging from small consumer devices to electric vehicles.

Albemarle has a stable mining operation that has helped it grow to become one of the top lithium companies in the world. They generate consistent profit margins and have minimal long-term debt.

Ganfeng Lithium Co. Ltd.

Ganfeng Lithium Co. Ltd. is the world’s largest producer of battery-grade lithium. The electric vehicle auto manufacturer Tesla signed a three-year contract with Ganfeng in November 2021 in an effort to ramp up its lithium supply as they prepare to increase production.

Founded in China in 2000, Ganfeng also explores for and sells lithium ores and provides lithium battery recycling solutions in addition to producing battery-grade lithium.

Sociedad Quimica y Minera de Chile

Sociedad Quimica y Minera de Chile (SQM) is based in Chile, which is home to some of the world’s largest lithium reserves. Like Albemarle, they carry minimal debt and generate consistent profit margins for investors.

Livent Corp.

Livent is another of the more well-established companies in the lithium market. They serve several different markets, including aerospace and pharmaceuticals.

In November 2021, they launched a proprietary lithium metal product called LIOVIX. This product can improve the performance of lithium-ion batteries while reducing manufacturing costs and maintaining environmental sustainability. Livent’s continual development of new technologies makes it one of the best lithium companies to invest in.

Tianqi Lithium Corp.

Tianqi Lithium Corp. is the largest and lowest-cost producer of lithium materials with offices in China and Australia. They also produce a wide range of lithium products, including lithium hydroxide, lithium carbonate, and lithium chloride.

Tianqi acquired a 25% stake in SQM in 2018 in an effort to raise the quality of their lithium materials and gain access to better production sites.

Transparency in lithium prices

Because there are only a handful of lithium producers in the world and lithium isn’t a publicly-traded metal, it’s difficult to pinpoint the true market value. This difficulty stems from a previous lack of transparency regarding lithium prices, making it a risky investment for some.

For example, the only production of lithium in the U.S. comes from a brine operation in Nevada where two companies produce lithium compounds from both domestic and imported lithium. Data on the production of this mine is withheld due to proprietary company data, making it difficult to get a firm grasp on exactly how much output and value the mine creates.


Is lithium a good investment?

With the increasing demand for lithium happening all across the world, many investors are jumping at the opportunity to put their money in the game. However, it’s important to keep in mind that lithium stocks are incredibly volatile, so your best bet may be to invest in a lithium ETF instead.

Is lithium the new gold?

Lithium is enjoying a huge rise in popularity due to its uses in our rapidly-evolving, technology-centered world. Lithium-ion batteries will be used well into the future, especially as the production of electric vehicles ramps up around the world. Because of this, it’s been called the “new gold” by a variety of investors and publications.

For example, the U.S. only has one lithium mine, located in Nevada. Despite that, it’s believed there are billions of dollars worth of lithium contained in the mine. While there may be environmental impacts to expanding lithium mining operations, it seems as though lithium stocks will continue to be a popular investment for now.

Is it too late to buy lithium stocks?

No, it is not too late to buy lithium stocks. While stock prices have fallen as of late, lithium production is likely to increase and lithium prices should recover and begin increasing once again.

Lithium demand will only continue to increase as the world transitions toward electric vehicles, meaning the market should enjoy greater revenues and profits for the foreseeable future. Mining companies will only continue expanding their operations, meaning the lithium industry is one that is here to stay.

Is lithium a smart investment now?

Global lithium demand is projected to outpace supply, which can be a good thing for investors, as it means lithium prices could rise. However, it’s important to note that, due to so many years of strong growth for lithium stocks, the sector has seen stock prices fall.

Investing in lithium, as with any metal, can mean volatility and unpredictable prices. That said, if you feel comfortable investing for the long term, lithium stocks can be a good addition to your portfolio.

Key Takeaways

  • The most important use for lithium is for rechargeable batteries, which power things like electric vehicles, cell phones, laptop computers, and digital cameras. It’s also used in some non-rechargeable batteries for things like heart pacemakers and toys.
  • Global X Lithium Battery Tech ETF is a bundle of more than 40 holdings and invests directly in lithium as a commodity. Solactive Global Lithium Index is another ETF on the lithium market.
  • Albermarle Corp., Ganfeng Lithium Co. Ltd., Sociedad Quimica y Minera de Chile, Livent Corp., and Tianqi Lithium Corp. are four of the best publicly traded lithium companies to invest in.
  • Because there are only a handful of lithium producers in the world and lithium is not a publicly-traded metal, there has historically been a lack of transparency when it comes to lithium prices. This makes it hard to pinpoint its true market value.
  • Global lithium demand is projected to outpace supply, which can be a good thing for investors, as it means lithium prices could rise.
View Article Sources
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  2. Lithium Statistics and Information — National Minerals Information Center
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