Lithium prices fell further in the third quarter of 2024, with benchmark lithium carbonate prices dropping 23% for the year through the end of the quarter. Oversupply issues, lower demand for electric vehicles and the Chinese government’s electric vehicle subsidies all contributed to downward lithium prices, which hit a three-year low during Q3.
Industry analysts expect a rebound by year-end, however, as lithium, a key component in battery manufacturing, should benefit from increased demand for EVs in the fourth quarter of 2024. September’s EV global unit sales number rose to 1.7 million, a new high. Those Chinese subsidies may pay off yet, as that country experienced the most significant EV sales gains, with 1.1 million units sold during that month.
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This should put lithium stocks in bounce-back mode as industry supply moderates to meet realistic demand in the fourth quarter. Here’s a snapshot of some of the sector’s leading lights and how they’re performing in late 2024:
| Stock/ETF | YTD Return* | 3-Month Return* |
| Albemarle Corp. (ticker: ALB) | -28.0% | 35.8% |
| Mineral Resources Ltd. (OTC: MALRY) | -50.8% | -27.2% |
| Sociedad Química y Minera de Chile SA (SQM) | -38.1% | 5.6% |
| Arcadium Lithium PLC (ALTM) | -29.1% | 98.5% |
| Ganfeng Lithium Group Co. Ltd. (OTC: GNENF) | -16.2% | 51.0% |
| Global X Lithium & Battery Tech ETF (LIT) | -8.9% | 30.4% |
| Global X Lithium Producers Index ETF (HLIT.TO) | -36.4% | 8.7% |
*As of Nov. 12. Total return based on net asset value for funds.
Albemarle Corp. (ALB)
Albemarle, one of the largest lithium producers in the world, is on the march in the second half of 2024. The Charlotte, North Carolina-based chemical company’s stock has risen 36% in the past three months, yet it is still down 28% year to date.
ALB’s comeback is largely fueled by the company’s admission that it was growing too fast. After Albemarle announced plans to curb lithium production and capital spending, share-price declines stopped as investors stepped back into the market and snapped up shares of ALB stock. Investors seem satisfied that ALB management is pulling in the reins and managing asset and liability issues more adeptly in a volatile lithium marketplace.
Another advantage for Albemarle is that it’s not a pure-play stock, as it also sells bromine and catalysts, which gives it other revenue streams besides lithium.
Add to that a robust balance sheet, a sizable $13 billion market cap and ample cash reserves, and it appears that ALB is one lithium stock that’s on the upswing in Q4. Some analysts concur: RBC Capital boosted its one-year target share price from $108 to $133 and kept its “outperform” rating.
Mineral Resources Ltd. (OTC: MALRY)
This Perth, Australia-based minerals mining company is heading in the opposite direction from Albemarle. Its share price is down 31.6% in the past month as of Nov. 12 and 50.8% on a year-to-date basis.
What’s the ongoing issue with Mineral Resources? For starters, the company appears to be facing significant liquidity issues, as its free-cash-flow margin has slipped to -26.6% against an industry median average of 4%. The company continues to suffer from downbeat lithium prices, as Mineral Resources gets 23% of its revenue from lithium sales.
The company’s strength is its geography. It’s based in Australia and benefits from a mining-friendly jurisdiction that is the world’s biggest lithium producer. Mineral Resources has a 50-50 joint venture with Albemarle at the Wodgina mine in Australia, and it serves as the operator. The mine is one of the world’s largest known hard-rock lithium deposits and has an estimated mine life of 30 years or more.
Mineral Resources also owns half of the Mt. Marion lithium operation in Western Australia along with China-based Ganfeng Lithium Group Co. Ltd. (OTC: GNENF), one of the largest lithium mining companies in the world. This offers some risk mitigation.
If buying at a big dip in what should be a rising lithium sector meets your risk-reward objectives, now’s the time to get in on MALRY at a bargain-basement price.
Sociedad Química y Minera de Chile SA (SQM)
Like Albemarle, Sociedad Química y Minera de Chile has taken a punch or two but is holding its own in late 2024. SQM’s share price is up 5.6% over the past three months as of Nov. 12.
The share-price bump comes largely from a sizable, just-completed share-buyback program engineered by company executives. Overall, the company bought back 4,074 of its basic shares, cutting SQM’s total outstanding shares to 54 million and adding to shareholder value.
Meanwhile, SQM continues to spend on business development. It’s amidst a $1.6 billion capital expenditure plan for 2024, which includes the acquisition of a lithium project via a joint venture in Australia, the acquisition of a plant in China, lithium carbonate and lithium hydroxide capacity expansions in Chile, and nitrates and iodine capacity expansions.
It’s not all green lights, however. In late August, the company reported revenues of $2.4 billion for the first half of 2024, representing a 45% fall from $4.3 billion in H1 2023. In its reporting, SQM cited high North American market risks and poor weather that negatively impacted Australian sales. On the upside, the company also sports one of the most robust forward dividend yields on the market at 5.7%, giving sector investors a good reason to pivot to SQM shares.
Arcadium Lithium PLC (ALTM)
Arcadium Lithium shares have been on a huge upswing over the past 90 days, with the stock rising 98.5% in value for obvious reasons. Arcadium Lithium, formed via a merger between lithium heavyweights Livent Corp. and Allkem Ltd., made big news in October when Rio Tinto, an Australia-based mining company, purchased it in an all-cash deal worth $6.7 billion. The acquisition closed at $5.85 per share, a 90% premium to ALTM’s closing price on Oct. 4.
With lithium spot prices down in 2024, Rio Tinto got ALTM at a significant discount and acquired some ample resources in the bargain.
Arcadium also offers a burgeoning global presence, with lithium brine operations in Argentina, a hard-rock lithium operation in Australia and a lithium hydroxide conversion facility in Japan. Additionally, ALTM produces lithium hydroxide, lithium carbonate and lithium chloride and has supply agreements with General Motors Co. (GM) and Ford Motor Co. (F).
Ganfeng Lithium Group Co. Ltd. (OTC: GNENF)
This China-based lithium manufacturer is building momentum, with its share price up 9% over the past month and 51% over the past three months. The company has big financial plans, with a proposed move to provide guarantees and financial assistance to the company’s subsidiaries and joint ventures. GNENF shareholders will get a chance to vote on the measures at a Nov. 25 meeting at Ganfeng Lithium’s headquarters.
The company is also moving forward on the partnership front, with a lithium production deal in Mali and a one-year-old lithium development deal in Argentina’s Cauchari-Olaroz salt lake project, where GNENF aims to produce up to 40,000 tons of lithium carbonate.
Ganfeng also has an ace that investors should know about. It’s one of those producers with the flexibility to cut back on production when prices slump. It has a substantial geographic footprint as well. Beyond China, Mali and Argentina, the company has mining operations in Australia, Mongolia, Ireland and Mexico.
Global X Lithium & Battery Tech ETF (LIT)
One way to hedge against risks in a market like lithium is to own multiple companies packaged in an exchange-traded fund, or ETF. These funds trade under a single ticker symbol, offering diversification between individual companies with their various fundamentals and geographic concentrations.
This ETF, like its competitor Amplify Lithium & Battery Technology ETF (BATT), offers further diversification by including battery and EV exposure along with pure-play lithium stocks. LIT tracks the Solactive Global Lithium Index and includes Albermarle and EV players like Tesla Inc. (TSLA) and BYD Co. Ltd. (OTC: BYDDY). Note that it charges a relatively high 0.75% expense ratio.
Based on a year-to-date benchmark, LIT appears to be struggling. The fund was down about 15% through the end of the third quarter, but it has bounced back 30.4% over the past three months as of Nov. 12. The fund has returned an annualized 13.3% over the past five years, and if you believe in the lithium industry and EVs, LIT practically blankets the top sector stocks, giving investors a diversified stake in the market.
Global X Lithium Producers Index ETF (HLIT.TO)
Investors looking for more concentrated exposure to lithium producers can consider this ETF, traded on the Toronto Stock Exchange. It invests in companies mining and producing lithium, lithium compounds and lithium-related components. The fund’s biggest holding is Arcadium, at 17% of assets as of Nov. 8, followed by Pilbara Minerals Ltd. (OTC: PILBF), at 9.3% of assets. Pilbara owns all of the Pilgangoora lithium projects in Australia. The company says it’s the world’s biggest independent hard-rock lithium operation.
Otherwise, about half of HLIT comprises lithium companies in Taiwan, the U.S. and Chile.
To be sure, the fund has not performed well in 2024; HLIT is down more than 36% year to date as of Nov. 12. Yet the fund returned 8.7% in the past three months, showing signs of recovery as the lithium market stabilizes in late 2024. That’s the point with lithium funds in 2024: They require the patience of a saint, but it looks like the sector has turned a corner in the past several months.
The good news? You can still get into funds like HLIT and LIT at ground-floor prices.
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7 Best Lithium Stocks and ETFs to Buy originally appeared on usnews.com
Update 11/13/24: This story was previously published at an earlier date and has been updated with new information.
