Investing in lithium

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

Lithium is mainly sourced from spodumene mines or extracted from brine deposits. As one of the world’s largest producers of lithium, Australia contains the most spodumene mines. Brine production is mainly concentrated in South America. The two main types of lithium produced by companies are lithium carbonate and lithium hydroxide.

As expectation grows, developers are focused on trying to create lighter and faster products and are concerned about the types of lithium used in the production of their products. Where renewable technology is growing rapidly and huge companies like Tesla are relying on lithium as a key ingredient of its products, the demand for lithium has increased greatly. Where some traders are worried by possible volatility in the market, other traders view investing in lithium as a great opportunity to gain potential reward from a market that has seen a rapid rise in demand.

Traders can invest in lithium mining stocks, which are shares of companies that are involved in the mining of lithium, and lithium battery stocks, reflecting companies that develop the batteries. It is also possible to trade shares of companies that are involved in both.

Investing in lithium involves the traditional method of purchasing shares of companies within the industry and holding them for a long period of time in the hope of making a profit. Alternatively, you can trade on the underlying price movements of lithium shares through spread betting or CFDs. Spread betting is a tax-efficient** way of speculating on the price movements of the underlying assets without taking ownership. CFDs allow traders to buy or sell a number of units for an instrument, with the difference in price being exchanged at the end of the contract.

An alternative way of investing in lithium is by trading lithium ETFs. Exchange-traded funds (ETFs) are investment funds that consist of a compilation of assets; in this case, multiple shares of lithium-based companies. With our Next Generation platform, you can trade on the following ETFs:

In summary, given that lithium is a key component of producing rechargeable technology, the demand for the precious metal has grown rapidly. With the hope that the demand will continue to rise, many traders view lithium as an attractive investment right now.

Register for an account to start spread betting and trading CFDs on lithium stocks or ETFs. Understanding the risks of trading with derivatives is important, and can be understood further by reading more about leveraged trading.

You can take advantage of our Next Generation platform filtering feature by focusing on specific types of stocks. The example below shows how traders can narrow their focus down to viewing ‘mining’ stocks on our Product Library, which may help to highlight companies related to lithium. Users can also enter terms such as ‘lithium’ directly in the search function to discover more relevant stocks and ETFs that are available to trade on.