Lithium is traded in various forms, with the most common being lithium carbonate and lithium hydroxide. The specific form traded often depends on end-user requirements. For example, high-nickel cathode batteries typically use lithium hydroxide, while other battery chemistries might prefer lithium carbonate.
Lithium, essential for batteries in various modern technologies, doesn’t have a standardized exchange like gold, oil, or other major commodities.
The source of lithium can affect its market price. Lithium from Australia, primarily mined from hard-rock deposits, might have different costs and prices compared to lithium from South America, primarily sourced from brine deposits.
Lithium Contracts
The bulk of lithium trade happens through direct negotiations between lithium producers (miners or brine extractors) and end-users (typically battery manufacturers, car companies, and other industrial users). These contracts specify prices, volumes, purity, delivery dates, and other terms. Such contracts can vary in length, with some lasting several years, effectively locking in supply for the end-user and providing a guaranteed demand for the producer.
Lithium Spot Market
Besides long-term contracts, there’s a spot market where lithium is traded in single, immediate transactions. While these transactions can provide insights into current market conditions and prices, the majority of lithium is traded through bilateral contracts, making the spot market less indicative of overall market trends.
Lithium Pricing
Given that there isn’t a standardized exchange, several specialized pricing agencies monitor and report on lithium prices. These agencies gather data from producers, consumers, and traders to provide benchmark prices for various lithium products. The prices can vary based on purity, chemical form (carbonate vs. hydroxide), and delivery terms. Examples of these agencies include Fastmarkets MB and Benchmark Mineral Intelligence.
Lithium Investing
While direct trading of lithium might be confined to industry players, retail investors and institutions can gain exposure to the lithium market by investing in stocks of lithium producers or in specialized lithium-focused exchange-traded funds (ETFs).
These companies, among others, have significant stakes in the global lithium market. They typically enter into long-term contracts with battery manufacturers, automotive companies, and other end-users to supply lithium in various forms, such as lithium carbonate or lithium hydroxide. The lithium market landscape is evolving, and as demand for lithium-ion batteries grows, it’s expected that other companies might emerge, and existing companies could expand their operations.
Albemarle Corporation
Albemarle Corporation ALB (NYSE) is an American company headquartered in Charlotte, North Carolina that is one of the world’s largest lithium producers.
The company is one of the world’s leading producers of lithium, a critical component in rechargeable batteries used in many electronic devices, electric vehicles, and renewable energy storage systems.
Founded in 1994, Albemarle has its origins in the consolidation of various chemical industry assets.
Albemarle’s prominence in the lithium market comes from its extensive operations, extracting lithium from both brine deposits and hard-rock mineral deposits. The company has assets in places like the Salar de Atacama in Chile, Greenbushes in Australia, and Silver Peak in the Clayton Valley of Nevada, USA.
Recognizing the critical role of lithium in the transition to cleaner energy sources, Albemarle has emphasized sustainable and responsible production. The company has initiatives to reduce its environmental footprint, manage water resources responsibly (especially crucial in lithium brine operations), and engage with local communities.
As the demand for electric vehicles and renewable energy storage solutions has grown, so too has the demand for lithium. This trend has positioned Albemarle as a major player in a rapidly expanding market, with corresponding impacts on its financial performance and growth strategies.
SQM (Sociedad Química y Minera)
Sociedad Química y Minera de Chile (often abbreviated as SQM) is a Chilean company that is one of the world’s largest and most significant producers of lithium, potash, iodine, and nitrates.
SQM was founded in 1968, and its origins lie in the exploitation of mineral resources in the Atacama Desert, one of the driest places on Earth. Over the years, SQM diversified and expanded its product range and operations but maintains significant operations in the Salar de Atacama.
The extraction process in the Atacama involves pumping up brine from the underground reservoirs and allowing it to evaporate in large evaporation ponds, concentrating the lithium content.
SQM also produces potash fertilizers, which are crucial for various agricultural applications. Their operations provide potassium chloride and potassium sulfate.
SQM plays a vital role in Chile’s economy. The lithium reserves in the Atacama Desert are among the world’s largest, positioning Chile (and SQM) as a pivotal player in the global lithium market, especially with the growing demand for electric vehicles and renewable energy storage.
Ganfeng Lithium
Ganfeng Lithium is a Chinese lithium company that has rapidly expanded in recent years. The company plays a significant role in the global lithium industry, providing lithium products for various applications, especially rechargeable batteries for Chinese-built electric vehicles and consumer electronics.
The company is involved in the entire lithium production chain, from resource extraction to the production of a wide range of lithium products. This includes lithium metal, lithium hydroxide, lithium carbonate, and lithium chloride, among others.
Ganfeng Lithium has aggressively expanded both domestically in China and internationally, securing contracts with various governments of lithium rich countries and entered into partnerships, acquisitions, and joint ventures to ensure a steady supply of lithium.
Ganfeng owns a significant interest in the Greenbushes lithium mine, which is one of the world’s premier hard-rock lithium deposits through the acquisition of shares in Talison Lithium, which operates the Greenbushes mine.
They also have interests in the Mount Marion lithium project in Western Australia.
Ganfeng has invested in lithium brine projects in Argentina’s renowned “Lithium Triangle,” which spans parts of Argentina, Chile, and Bolivia. Notably, they have a stake in the Cauchari-Olaroz lithium brine project.
Recognizing the growth potential of the electric vehicle (EV) industry and the increasing demand for high-purity lithium compounds, Ganfeng has entered into long-term supply agreements with several prominent EV manufacturers and battery producers.
They have a diverse portfolio with assets worldwide, including in Argentina, Australia, and Mexico.
Tianqi Lithium
Tianqi Lithium was founded in 1995 and is headquartered in Chengdu, Sichuan Province, China and owns a significant stake in the Greenbushes lithium mine in Western Australia through its stake in Talison Lithium, a joint venture with Albemarle Corporation.
Tianqi’s activities span lithium extraction, production of lithium concentrates, and manufacturing of a wide range of lithium products, including lithium carbonate, lithium hydroxide, and lithium metal.
Livent Corporation
Livent Corporation originated as a part of FMC Corporation, a diversified chemical company. In 2018, FMC Corporation spun off its lithium segment, which became an independent, publicly-traded company known as Livent Corporation.
Livent focuses on the production of a range of lithium products, including lithium hydroxide, lithium carbonate, and butyllithium, among others. The company emphasizes its capability to produce high-purity lithium compounds, which are essential for specific high-performance battery applications.
One of Livent’s primary lithium sources is the Salar del Hombre Muerto, a salt flat located in Argentina, known for its lithium-rich brine reserves. The company extracts lithium from this brine through an evaporation process.
In addition to its operations in Argentina, Livent has manufacturing, technical, and research facilities in various parts of the world, including the United States, China, and England.
Orocobre
Orocobre is an Australian mineral resource company that specializes in the exploration and production of lithium that was Founded in 2007.
One of Orocobre’s flagship projects is the Olaroz Lithium Facility, located in northern Argentina’s Jujuy Province. This facility produces lithium carbonate from the brines of the Salar de Olaroz, a large salt flat. The company leverages a low-cost, sustainable brine extraction process and solar evaporation technology at this site.
Orocobre has been involved in strategic mergers and acquisitions to strengthen its position in the lithium market. For instance, in 2021, Orocobre announced a merger with Galaxy Resources, another Australian lithium producer, creating one of the world’s largest lithium companies.
Pilbara Minerals and Mineral Resources Limited (MRL)
Pilbara Minerals is an Australian lithium and tantalum producer focused on the exploration and development of its Pilgangoora Lithium-Tantalum Project, located in the Pilbara region of Western Australia.
This project is considered one of the largest lithium ore (spodumene) deposits globally, also yielding significant tantalum. The project has been developed rapidly, with primary products from the Pilgangoora Project being spodumene concentrate and tantalum concentrate, positioning Pilbara Minerals as a key supplier in the lithium raw material supply chain.
Recognizing the significance of its resources, Pilbara Minerals has established partnerships and off-take agreements with multiple companies in the lithium supply chain, ensuring a consistent demand for its products.
BHP
BHP, previously known as BHP Billiton, is one of the world’s largest and most prominent diversified natural resources companies with a long history and significant operations spanning various commodities.
BHP: The mining giant, primarily known for its iron ore, coal, and copper operations, also entered the lithium market with plans to produce lithium hydroxide based on its assets in Western Australia.
The company’s roots go back to the 19th century. BHP stands for “Broken Hill Proprietary,” which was founded in 1885 to operate silver, lead, and zinc mines in Broken Hill, New South Wales, Australia.
In 2001, BHP merged with the British company Billiton, which had its roots in the Dutch East Indies (now Indonesia) and later expanded into mining operations globally. The merger resulted in the formation of BHP Billiton. However, in 2017, the company reverted to using just “BHP” as its brand name.
BHP’s Nickel West operation in Western Australia, while primarily known for its nickel production, also serves the lithium market.