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Summary
- Lithium is predominantly used as a key component in batteries that power smartphones, tablets, electric cars, and scooters
- Today, more than fifty per cent of all Lithium is used in rechargeable batteries
- The greatest momentum to Lithium demand is from the rise in electric vehicles
Lithium as an Opportunity in the Current Market
The greatest momentum to Lithium demand is from the rise in electric vehicles. Today, more than fifty per cent of all Lithium is used in rechargeable batteries, which is expected to increase as more electric vehicles and portable devices enter the market in the coming time. Demand for Lithium has more than doubled over the last decade, and the need for batteries are rising due to the increase in electric vehicles. Light-weight batteries which last longer and charge quicker are being constantly developed by the battery developers. Companies like Tesla have been constantly trying to improve the range of batteries it can deliver.
The automotive industry is facing problems due to the coronavirus outbreak as people are travelling less. The overall sales in the automotive industry have fallen in 2020, but industry experts forecast that the sales of electric vehicles would go up in the coming future. In the long-run, it is believed that the virus could actually fasten the speed with which the electric vehicles are adopted since countries are looking to ‘build back better’ by investing in green technologies.
This has created severe pressure on the prices of Lithium since the beginning of 2019 and has continued in 2020 due to the coronavirus pandemic. Though the recovery of the world economy remains highly uncertain, but the metal has a strong long-term fundamental, so long as the world continues to gradually adopt electric vehicles.
How is Lithium Produced?
There are primarily two different sources for Lithium
- Mining hard rock- It is conducted in a more traditional manner by being taken from a Lithium-bearing mineral called spodumene, or
- Extracting it from brine deposits- Accumulations of groundwater are essentially known as Brine deposits that contain Lithium. It is extracted as salt from there.
Different Types of Lithium
Various types of Lithium are into existence, and they are meant for different purposes. There are predominantly two types of Lithium- carbonate and Lithium hydroxide.
Lithium hydroxide is considered to be a premium product used for the production of battery. Spodumene-mined Lithium can be turned into either hydroxide or carbonate. But Lithium that is extracted from brine must be turned into carbonate before it can be converted into hydroxide. This is basically the main reason why there is a growing consensus that hard-rock Lithium operations are more suitable for supplying the electric vehicle market.
Let’s have a look at the Lithium market and figure out some Lithium stocks to watch:
Mkango Resources LTD
Mkango Resources LTD is an exploration and development company in the field of rare earth element and minerals. The Company is working on two of its assets in the Republic of Malawi, Africa, which includes the Phalombe exploration license and the Thambani exploration license.
In mid-September 2020, the company announced the results of a shallow soil sampling and auger programme, which was conducted in its Mchinji licence (EPL 0544/19) in Mchinji district, Malawi, spread over an area of 869 square kilometres. It was held by MKA Exploration Ltd, Mkango's 100 per cent owned subsidiary.
Mkango Resources LTD (LON:MKA) stocks last traded at GBX 6.00 on 25 September 2020, up by 0.67 per cent from its previous close. The 52-week low/high price was GBX 2.75/8.80. It was having a market capitalisation (Mcap) of £7.98 million.
Rainbow Rare Earths LTD
Rainbow Rare Earths is an exploration and extraction company based in St. Peter Port, Guernsey. It mainly carries out its operations through its Gakara asset, which is one of the main rare Earth projects globally and is the only producer in Africa. Subsidiaries of the company include Rainbow Burundi SPRL and Rainbow International Resources Limited.
The company announced the placing of ordinary shares, raising £1.25 million at 3 pence per share.
Rainbow Rare Earths LTD (LON:RBW) stocks last traded at GBX 3.35 on 25 September 2020, down by 1.47 per cent from its previous close. The 52-week low/high price was GBX 1.45/4.15. It was having a market capitalisation (Mcap) of £14.35 million.
Kodal Minerals PLC
Kodal Minerals PLC is a company based in the UK, focused on Lithium projects. The company is having a stake in Bougouni Lithium project in Southern Mali and the gold projects in Cote dIvoire and Mali.
On 22 July 2020, the company released its FY 2020 results for the period ending 31 March 2020. The Company completed the feasibility study of Bougouni Lithium project, and in January 2020, lodged a mining application with the Mali government. Kodal Minerals had secured financing facility through a share subscription for £0.5 million and linked equity sharing agreement in April 2020. In July 2020, the Company entered into a convertible loan agreement for US$ 1.5 million.
Kodal Minerals PLC (LON:KOD) stocks last traded at GBX 0.07 on 25 September 2020, up by 3.70 per cent from its previous close. The 52-week low/high price was GBX 0.03/0.13. It was having a market capitalisation (Mcap) of £7.65 million.
Savannah Resources PLC
Based in the United Kingdom, it is a multi-commodity and multi-geographic development company, functioning broadly in two primary segments, namely, Oman Copper and Mozambique Mineral Sands. The Company is in the process to growing its gold and copper portfolio in Oman, to begin with the production.
On 16 September 2020, the Company conditionally placed 130,011,270 ordinary shares at the 1.8 pence per ordinary share to raise gross proceeds of £2.34 million cash.
Savannah Resources PLC (LON:SAV) stocks last traded at GBX 1.80 on 25 September 2020, down by 1.64 per cent from its previous close. The 52-week low/high price was GBX 0.85/3.00. It was having a market capitalisation (Mcap) of £26.12 million.
