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Lithium Mining Companies


Lithium mining stocks, like many strategic metals, got beaten down a bit in 2011.

Following the tough year, lithium stocks saw a mixed year through 2012.

A look at a chart of the most recognizable names in the business — China BAK, Exide, Johnson Controls, Maxwell Technologies, etc. — illustrates this perfectly:

lithiumstocks2012

And though the battery manufacturing sector was down 11% in 2012 as a whole, the same was not true for the miners and processors of the materials necessary to make lithium batteries...

Besides their well-known use in the expanding electric vehicle market, lithium is also essential for cellphones, laptops, and other electronic devices that require long-lasting battery power. It is also used heavily in ceramics and glass products.

While you can play lithium in many areas, like battery manufacturers and developers, those companies must first get their hands on the raw material itself...

The ever-increasing demand for storage capacity is leading some analysts to predict increases in lithium prices for the foreseeable future — which could mean an even bigger jump in lithium mining companies.

Lithium carbonate hovered around $2,000 per tonne from 2000 to 2004, but then started rising with demand. By 2009 it was at $5,000 per tonne — and is expected to hit $6,000 per tonne this year.

That's where companies that mine lithium (or lithium mining companies) come in...

There's only a handful of lithium mining companies that are publicly traded.

So let's start off in Chile, "the Saudi Arabia of lithium.” In fact, a single Chilean lake bed holds 27% of the world's reserve base of lithium.

Sociedad Quimica y Minera (SQM):

Chile is home to Sociedad Quimica y Minera, (Chemical & Mining Co. of Chile Inc.), the largest lithium mining company in the world.

If you are looking to avoid the volatility of the smaller cap miners, SQM is a safe bet.

Sociedad Quimica y Minera produces lithium carbonate for use in “batteries, frits for the ceramic and enamel industries, heat-resistant glass, primary aluminum, lithium bromine for use in air conditioner equipment, and continuous casting powder for steel extrusion, pharmaceuticals, and lithium derivatives.” 

Western Lithium (TSX: WLC; OTC: WLCDF.PK)

If you wanted to make a bigger gamble and try for some higher returns, you could turn your eye to Western Lithium, operating out of Nevada.

Though Nevada's deposits are in decline, with the right investment and backing, this could be reversed...

The company filed a preliminary feasibility study on Stage 1 of their King's Valley Lithium Project in early 2012. The study evaluated two different scenarios: Case 1 based on mining and processing ore at a rate of 2,100 tonnes per day (13,000 tonnes per annum lithium carbonate) and Case 2, which doubles production (26,000 tonnes per annum lithium carbonate) four years after the start up.

The project has a well-developed local infrastructure in a U.S. state with a long history in the metals and industrial mineral mining industry.

The company recently submitted the Kings Valley Clay Mine Plan of Operations and Reclamation Permit Application to the Bureau of Land Management and the Nevada Division of Environmental Protection. Agency approvals are expected in the first quarter of 2014.

If you'd rather go the ETF route, Global X Lithium ETF (LIT) is your best bet...

Though it was down 37% in 2011 and 2.6% in 2012, it may be battered down enough for a buy:

lithiumetf2012

Here are a few of the lithium mining companies included in the Global X Lithium ETF:

  • Sociedad Quimica y Minera (SQM), mentioned above.
  • FMC Corp (FMC), which underwent an 30% expansion in their lithium division in 2012.
  • Talison Lithium Ltd. (TSX: TLH), a leading producer of lithium with projects in Australia and Chile.
  • Rockwood Holdings (ROC) a producer of specialty chemicals whose Chemetall holding just completed a butyl-lithium production facility in Gujarat, India. ROC is are working towards supplying lithium to India and other markets in the region.

Wealth Daily will be keeping an eye on the lithium mining market and lithium mining stocks as this supply-demand story plays out — and we'll be bringing you even more ways to play it.

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