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Lithium stocks to watch

Published on: 26/01/2022 | Modified on: 23/01/2023

Lithium is a soft, silver-white alkali metal probably best known to most people as an integral component in the production of rechargeable batteries, but it also has countless other applications including the creation of ceramics and glass, as well as medicines to manage mental health disorders. This makes lithium an increasingly popular precious metal for traders to gain exposure to.

Read on to discover how this can be done through the rise of lithium companies and ETFs, and how you can trade on them via spread bets and CFDs on our award winning* Next Generation trading platform.

KEY POINTS

  • The compounds of lithium have numerous industrial applications
  • Its light weight and effectiveness in conducting electricity makes it the go-to component for the world’s largest tech firms
  • Lithium reserves are mainly found in spodumene mines or underneath salt flats in Australia, South America and China
  • You can’t access the commodity directly in physical form, like other precious metals such as gold and silver
  • Instead, traders can gain exposure by speculating on the price movements of lithium shares stocks and ETFs
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What is lithium?

Lithium is a type of precious metal within the commodity market​. It’s the world’s lightest metal and the most effective at conducting electricity. These factors make it a leading component in electronics, manufacturing and medicine.

Where is it mined and who are the biggest producers?

Lithium comes from two main sources: spodumene, a mineral mined mainly in Australia, and from brine extraction, an industry concentrated mostly in South America. The salt flats of Brazil, Argentina and Chile are known as the ‘lithium triangle’ because they are thought to contain more than three-quarters of the world’s supply.

However, there is also a high concentration of lithium in salt lakes in China’s Sichuan province, with the country’s leading lithium manufacturers urging the government for support to accelerate its extraction to make China less reliant on foreign imports for its technology. Lithium is also found in Europe in much smaller quantities. There are believed to be sufficient UK lithium reserves in Cornwall, which could significantly increase the country’s reserves and global supply.

What is lithium used for?

Lithium is the primary ingredient that powers rechargeable batteries in a vast range of electronic items, from phones and laptops to electric vehicles and solar power storage. Its numerous applications also include electric toothbrushes, vaping devices, e-bikes, electric wheelchairs, pacemakers, tools, remote car locks and many other products.

However, lithium also has a range of industrial applications. Lithium metal is made into alloys with aluminium and magnesium, making them stronger and lighter. Aluminium-lithium alloys are used in aircraft, car manufacturing, bicycle frames and high-speed trains, while magnesium-lithium alloys are used for armour-plating. Lithium oxide is used in special heat-resistant glass and ceramics. Lithium chloride is a key component of in air conditioning and industrial drying systems.

Lithium also plays a vital role in medicine. Lithium carbonate, also known as lithium salts, is used in medicine to stabilise mood disorders, and as a treatment for manic or depressive behaviour and conditions such as bipolar disorder, although its effect on the brain is not yet fully understood.

And that’s not all. Lithium stearate is used as an all-purpose and high-temperature lubricant and lithium hydride is used as a means of storing hydrogen for use as a fuel.

What forms does the commodity appear in?

The two main types of lithium produced by companies are:

  • Lithium carbonate

  • Lithium hydroxide

The greatest use of lithium is the electric vehicle market​. The production of lithium-ion batteries accounts for 80% of all lithium demand. This figure could well grow further in the current socio-political landscape. Wood Mackenzie analyst Jiayue Zheng predicts that demand for lithium-ion batteries will increase by around 500% between 2022 and 2030 as governments seek to reduce emissions.

Why is lithium important?

As a precious metal, lithium’s wide ranging use cases means that it’s not only a fundamental component within digital devices such as smartphones and laptops; it’s also a vital part of the broader energy transition to cleaner energy by powering the batteries for electric vehicles because of its energy density.

As a result, the overall race for lithium is forecast to expand the global lithium market from $3.83bn in 2021 to $6.62bn by 2028, at a compound annual growth rate (CAGR) of 8.1%, according to Fortune Business Insights.

How to trade lithium

As lithium is not directly investable, traders can instead gain access to the precious metal through financial assets like stocks and exchange-traded funds (ETFs). Derivative products such as spread bets and contracts for difference (CFDs) allow you to speculate on the underlying price movements of lithium-related equities from some of the biggest exporting countries and miners.

Below are some tips to nudge you in the right direction.

  1. Research to find the right stocks for you. You could also keep track of news about lithium and the overall industry.
  2. Determine your strategy. Decide your entry and exit points based on whether you’re using a long- or short-term trading strategy​​. Depending on how the instrument’s price fluctuates, you may decide to ‘go long’ and buy or ‘go short’ and sell.
  3. Manage your risk. Before placing your trade, make sure you have understood and followed risk-management guidelines​.
  4. Determine your position size and place the trade. After determining how much capital you are able or willing to lose, apply any relevant risk-management controls, such as stop-loss orders, and confirm your trade.
  5. Monitor your position and close your trade. If you’re making a profit on your position, you may wish to consider sticking to your trading plan and close out when the target price is reached.


Still interested? Open a live account to get started on the live markets, or if you’re apprehensive about the risks that stocks bring, you can open a risk-free demo account to practise with £10,000 worth of virtual funds before depositing funds.

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Why add lithium companies to your portfolio?

Lithium stocks are the shares of companies that engage in the mining or processing of lithium. They can be separated into the following categories, which each provide benefits and drawbacks.

  • Lithium mining stocks, which are shares of companies that are involved in the mining of lithium.

  • Lithium battery stocks, reflecting companies that develop the batteries.

  • It is also possible to trade shares of companies that are involved in both activities, from major blue-chip to penny stocks.


As the science continues to develop, some traders may be concerned by possible volatility in the market, but the reliance on lithium by such huge tech firms as Tesla, Apple and Microsoft has led to a rapid rise in demand.

Lithium stocks to watch

US-based Albermarle is one of the largest providers of lithium for batteries that power electric vehicles. It produces both carbonate and hydroxide, as the company sources lithium through its brine and rock mining operations within several countries. As well as being immensely successful in the electric car industry, the company also produces more than 100 lithium-based products for a range of other industries. In order to protect itself from any great potential losses from volatility in the market, this lithium mining stock also benefits from the success of its bromine segment.

Chilean chemical company Sociedad Química y Minera de Chile is one of the world’s largest lithium producers. Founded in the late 1960s, the company benefits from the fact that its home country has one the largest reserves in the world. Given the fast-growing demand within the electric vehicle industry, Sociedad Química y Minera de Chile expanded its production of lithium to both the main types: carbonate and hydroxide, which it produces in the Salar de Atacama in the Atacama Desert of Northern Chile. The company also benefits from its production of potassium nitrate and iodine.

Allkem is an Australian mineral resources company that formed from the merger of Orocobre and Galaxy Resources in 2021. The Brisbane-based company focuses on lithium carbonate and other mineral mining operations within Argentina. Allkem is in partnership with Toyota Tsusho, and they are looking to grow their Argentinian-based flagship project, the Olaroz Lithium Facility. The capacity of this facility has increased to over 17,000 tonnes per annum of lithium carbonate. The two companies are also looking to construct a plant in Naraha, Japan, in order to expand their production of lithium hydroxide.

Livent is a US company. It owns and operates a mine in Argentina, which is the key to the company’s success in terms of output and production of lithium hydroxide. As well as supplying lithium for products with special performance requirements, Livent also produces other types, which can be used in pharmaceutical products and non-rechargeable batteries. The company is one of Tesla’s main suppliers of lithium. With the aim of expanding its presence in Europe and North America, Livent became a part owner of mining company, Nemaska Lithium, which owns and operates a large mine in Canada.

Ganfeng, the largest related company in China, describes itself as the “world’s leading lithium eco-enterprise”. It has operations in Australia and Chile and its business integrates lithium refinement and processing, battery manufacturing and recycling. Its patented inventions around extraction technologies and recycling lithium waste, which it claims gives it a high energy conversion rate. It supplies lithium to Volkswagen and in late 2021 signed a three-year deal to supply Tesla.

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What are some lithium ETFs?

An alternative method of gaining access to lithium is by spread betting or trading CFDs on ETFs. Exchange-traded funds (ETFs) provide exposure to underlying share prices of lithium-related companies, and due to the fact that the risk is spread across multiple securities at the cost of only one trade, many consider ETFs to be a low-risk trade.

However, remember that leveraged ETFs are complex financial instruments that carry significant risks. Certain leveraged ETFs are only considered appropriate for experienced traders. Below are some examples of lithium ETFs to watch right now.

This ETF covers the entire journey of lithium battery manufacture, from mining and refining to battery production. Almost all of its holdings are in basic materials, industrials or consumer goods and typically include mining companies such as Albemarle, SQM and Ganfeng. It also covers firms that apply the technology, such as Tesla, Samsung and Panasonic.

This product, launched in 2018, invests at least 80% of its assets in securities comprising the EQM Lithium and Battery Technology Index, which provides exposure to global companies associated with the development, production and use of lithium battery technology. Its holdings are drawn mainly from companies concerned with the extraction and refinement of the commodity and the application of its technologies.

Please note that past performance is not a reliable indicator of future results.

How can I trade with CMC Markets?

When you trade with us, you don’t take ownership of the physical asset but instead speculate on its price movements using our derivative products. We offer the following:

  • Spread betting – a tax-free method** where you agree to exchange the difference in price (positive or negative) between when you open and close your position. The more the instrument moves, the more you gain or lose, depending on which way you bet.

  • CFD trading – works in the same way as spread betting but the key difference between the two products is the way they are taxed. CFD profits are liable to capital gains tax, as well as commission fees for lithium shares.


We have a wide range of educational tools and market insights to support your trades. Whether you’re using our website or app, our platform guides section takes you through the features and tools available, including news and charts, different order types, and we also offer a live help chat service too.

Why not sign-up for our risk-free demo account? We allow first-time traders to practise with £10,000 worth of virtual funds before accessing the live markets.

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FAQs

Can you invest directly in lithium?

Lithium is not a traded commodity, meaning that you cannot invest directly in the physical chemical or metal. Instead, traders can gain exposure to lithium through companies involved in the mining or processing of lithium for commercial purposes. This is similar to other commodities such as uranium, where traders must instead speculate on the price movements of uranium stocks.

Can I trade lithium ETFs?

You can trade on lithium ETFs on our platform with CMC Markets, which include the Global X Lithium & Battery Tech ETF and the Amplify Lithium & Battery Technology ETF. Read more about ETF trading.

What are lithium stocks?

Lithium stocks are the shares of companies that engage in the mining or processing of lithium. With our Next Generation trading platform, you can invest in lithium by spread betting or trading CFDs on lithium stocks.

What are examples of lithium stocks?

Some examples of lithium stocks are Sociedad Química y Minera de Chile and Albermarle, which are two of the largest providers of lithium for batteries powering electric vehicles. Browse more instruments in order to discover further lithium share prices.

What is lithium used for?

A diverse element, lithium can be used in many industrial applications, such as aircraft, batteries, flux additives and heat-resistant glass. In particular, lithium-ion batteries are used in electric vehicles, which is a rising trend. Read about popular electric car stocks to watch right now.


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CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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