Investing In The Lithium Oligopoly

Summary

  • Overview of applications and technologies that are driving the next wave of lithium investment.
  • Snap shot of the geographically regions where the top producers operate.
  • A summary of the producers dividends, geopolitical risk, price to earning and an ETF focused on lithium.

Since Sony Corp. (NYSE:SNE) launched their lithium ion battery in the early 1990s the world has been moving towards an increasingly mobile society where consumer electronics have dominated the retail and consumer markets. Everything from laptops, tablet PCs, mobile and smart phone, consumer gadgets and digital cameras have all benefited from the rapid advancements in the lithium ion battery.

Demand for lithium is taking flight

Today, lithium ion batteries are now in demand more so than ever due to an increase in the number of consumer products that are being sold. For example, low cost mobile phones are being widely deployed in third world and developing parts of the world. Next, the numbers of product applications which utilize lithium ion batteries are increasing and several emerging products are demanding more lithium per unit sold. A mobile phone requires a small amount of lithium carbonate while an electric vehicle requires a significant amount of the white metal. In addition to electric vehicles, automotive manufacturers are rolling out various hybrids and plug in hybrid vehicles. Stationary energy storage systems are also gaining significant traction, primarily in mature solar PV markets such as Hawaii, Germany, California, and Japan. As the cost of solar PV plus battery systems fall and electricity rates increase the economic model for these types of stationary storage systems become more feasible without government incentive.

In addition to solar PV self consumption markets there are a number of other applications that are consuming lithium ion batteries such as frequency regulation, battery backup and demand charge management amongst others. A paradigm shift is taking place regarding how the world produces, stores and distributes energy as the cost to produce solar PV has fallen below the cost to procure electricity from grid providers in select regions of the world.

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November 2019
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