Lithium Mining Companies

Lithium mining stocks --  like many strategic metals --  got beaten down a bit in 2011. This looks likely to change in 2012 as major producers have announced price increases.

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

The ever-increasing demand for storage capacity is leading some analysts to predict at least a 20% jump in lithium prices by the end of the year... which could mean an even bigger jump in lithium mining companies.

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

There are only a small 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, then 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, who operate in Nevada.

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

The company just filed a preliminary feasibility study on Stage 1 of their King's Valley Lithium Project. 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 startup.

The project has a well developed local infrastructure in a US State which has a long history in the metals and industrial mineral mining industry.

If you'd rather go the ETF route, Global X Lithium ETF (LIT) is your best bet. Though it was down 37% in 2011, it may be battered down enough for a buy:

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) who are undergoing 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 speciality chemicals whose Chemetall holding just completed a butyl-lithium production facility in Gujarat, India. They 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 the year progresses, and we'll be bringing you even more ways to play it.

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