In this article, we will be taking a look at the 14 largest lithium producers in the world. To skip our detailed analysis, you can go directly to see the 5 largest lithium producers in the world.
There is a huge demand for various minerals by different industries, but it wasn’t that long ago that lithium was near the bottom of the list based on importance. The demand was mainly concentrated on more valuable and comparatively rarer elements such as gold, silver and platinum. However, lithium plays a very important part at a time when the world is at a crossroads with regards to climate change. 2022 has been a sobering year for those who’ve been stressing the disastrous impacts that climate change will bring, with evidence already being seen across the world. Consider the devastating floods that hit Pakistan in summer after monstrous floods due to unusually high rain resulting in the deaths of more than 1,700 people and directly affecting 30 million people. That is more than the population of most medium-sized European countries. Meanwhile, a UCLA study confirmed that the drought being experienced in the American West and Southwest is the worst drought in the past 1,200 years.
Realizing the impact of climate change, which will continue to worsen in coming years, most developed nations have started to take steps to try and counter human contribution to climate change. Europe especially has given this due importance and realizing that the usage of non-renewable resources is one of the main contributing factors, has worked on implementing alternative methods, which is where lithium comes in.
79% of crude oil consumption is used to power cars, planes and ships. We already possess the technology which enables us to replace 50% of the aforementioned crude oil consumption through battery-powered vehicles. Lithium-based batteries allow for energy which is generated through renewable energy resources to be stored at a high density. Before this, using non-renewable energy to power vehicles wasn’t as effective and this has been a game changer, driving the growth of electric vehicles almost singlehandedly. As the most important part of a lithium-based battery, the demand of lithium has rocketed and is an integral part of ensuring that renewable energy resources overtake and make fossil fuels obsolete at least for powering vehicles. Of course, lithium isn’t just used for lithium-based batteries in vehicles but is also used for cell phones, though of course the vast majority of its demand is from electric vehicle manufacturers.
Photo by Kumpan Electric on Unsplash
Nowadays, electric vehicles are among the fastest growing segments in the car manufacturer industry. Initially, companies barely invested in electric vehicles, not treating it very seriously. However, it is now a major priority for most auto-manufacturers as the biggest car vehicles producers have pledged to become carbon neutral in the next few decades and one of the most important parts of that commitment is to produce more electric vehicles. Volkswagen alone announced in 2016 its “Strategy 2025” where it stated that it aimed to launch at least thirty models which be powered purely through a lithium-based battery and also expecting that a quarter of the total number of vehicles sold by 2025 would be fully electric. This is a major commitment from the biggest car producer in the world with 10.8 million vehicles sold every year.
Of course, easily the biggest electric vehicle company in the world right now is Tesla, Inc. (NASDAQ:TSLA) whose market cap is bigger than the other four top car producers combined. Tesla, Inc. (NASDAQ:TSLA), whose CEO Elon Musk is in the news nowadays for a controversial takeover of Twitter, is considered to be a pioneer in selling electric vehicles. Its vehicles are more expensive than those from other companies but the demand for Tesla, Inc. (NASDAQ:TSLA) products is still quite high.
When we mentioned that the demand for lithium has rocketed, we weren’t engaging in hyperbole. The demand for lithium increased at least 30 times between 2000 and 2015 and is expected to increase by another 1000% by 2025 as compared to 2015. However, obtaining lithium isn’t as easy especially because of geopolitical concerns and sour relationships between China and the West. China has the biggest lithium deposits in the world and dominates the lithium landscape. In 2015, China developed a strategic plan to become a global technological powerhouse, and lithium aims to play a major role in that, becoming a major national priority. On the other hand, China has also been cracking down on companies to reduce emissions as several cities in the most populated country in the world would regularly top the list of most polluted cities in the world before the crackdown.
As mentioned earlier, Europe has imposed strict regulation on carbon emissions while simultaneously encouraging the use of electric vehicles through subsidies and tax breaks. However, people are still reluctant as adapting to change is not something that most people easily accept. There are various reasons for the reluctance such as lack of charging stations, limited driving range on a single charge and the cost of changing a battery after a few years which can be exorbitantly high.
The biggest lithium producers in the world have been the beneficiaries of a major price increase as lithium carbonate prices jumped to $11,000 per tonne which is an increase of more than 58% as per the BP Statistical Review of World Energy. Production also registered an increase in 2021 which was 27% higher than 2020. In 2022, prices of lithium carbonate increasing significantly more with a 400% increase registered resulting in a new price of $54,000 per tonne, which is the highest level recorded for lithium carbonate prices.
However, there is now controversy about whether lithium-based batteries are actually improving the environment or further hindering it. In May 2016, in the Tibetan town of Tagong, protestors gathered and threw dead fish on the streets, fish which was gathered from the Liqi River which was the site of a toxic leak from Ganzizhou Rongda Lithium mine. You can easily see pictures online of tonnes of death fish on the stream’s surface while carcasses of animals such as yaks and cows floating along the stream, dying from drinking water from the contaminated river. This is part of the impact on the environment cause by lithium mines. While most countries and companies are focused on reducing the impact of fossil fuels, they are ignoring or underestimating the impact of extracting lithium.
In this article we will be focusing on the biggest lithium producing companies in the world. However, if you are interested in the biggest lithium producing countries, the rankings are pretty straightforward. Australia accounted for 52% of global lithium production in 2021 and was the #1 lithium mining country in the world. Chile ranked #2 with its 24.5% share followed by China’s 13.2% share. Overall, Australia, Chile and China produce 90% of lithium production in the world. Argentina is the fourth largest lithium producing country with 5.6% market share and Brazil ranks 5th with 1.4% global lithium mining share. Portugal and US share the 6th spot each with 0.8% global share.
In South America meanwhile, some of the world’s largest lithium deposits are located in one of the world’s driest regions. The issue behind this is, to extract lithium, miners have to drill a hole in the salt flats which results in the pumping of salty, mineral-rich brine to the surface, which is then left to evaporate, a process which can take several months. The entire process results in 500,000 gallons of water being used for just one tonne of lithium, with Chile’s Salar de Atacama region seeing 65% of its total water supply being used for mining activities. This of course has a really negative impact on the farmers of the area. The combination of the volume of water used in addition to potential toxic leaks means that lithium may not be the perfect solution that it is being considered as, though the biggest lithium producers in the world won’t want to admit it. So, who are these companies? Let’s take a look at our rankings, based on Forbes and Investing News, starting with number 14:
14. Grupo Mota, Felmica
Grupo Mota, Felmica operates the biggest lithium mine in Europe. This mine is expected to produce lithium for the next 30 years. Portugal is estimated to have 60K tons of lithium reserves, vs. 9200K in Chile and 750K in the US.
13. Piedmont Lithium Inc. (NASDAQ:PLL)
Piedmont Lithium Inc. (NASDAQ:PLL), according to its website, is “developing a world-class integrated lithium business in the United States, enabling the transition to a net zero world and the creation of a clean energy economy in America. Our location in the renowned Carolina Tin Spodumene Belt of North Carolina, the cradle of the lithium industry, positions us to be one of the world’s lowest cost producers of lithium hydroxide, and the most strategically located to serve the fast-growing US electric vehicle supply chain”. Piedmont Lithium Inc. (NASDAQ:PLL) was recently selected by the United States Department of Energy for Tennessee Lithium Project, receiving a grant worth $141.7 million. Piedmont Lithium Inc. (NASDAQ:PLL) aims to build a lithium supply chain in the United States that will support the electric vehicle manufacturing industry. Here is what we said about PLL in a recent article:
In late June, Cowen analyst David Deckelbaum maintained an Outperform rating on Piedmont Lithium Inc. (NASDAQ:PLL) stock with a price target of $90, noting that the firm was a best small mid-cap, catalyst rich name, and a North American lithium growth story.
At the end of the second quarter of 2022, 11 hedge funds in the database of Insider Monkey held stakes worth $30 million in Piedmont Lithium Inc. (NASDAQ:PLL), compared to 20 the preceding quarter worth $73 million.
12. Savannah Resources
Savannah Resources is the biggest lithium producer in the United Kingdom and aims to supply lithium in Europe based on estimates that the European Union will require 18 times more lithium in 2030 than it did in 2020 and 60 times more in 2050. The company produces lithium from its Barroso Lithium Project in Portugal. The company says that this mine has Europe’s most significant resource of hard rock spodumene lithium and can produce enough lithium to supply 500K electric vehicles per year.
11. Baconara Lithium
Founded in 2008, Baconara Lithium is currently focusing on building a 35,000 tonnes per annum battery grade lithium operation at Sonara in Mexico. The completed feasibility study revealed a net present value of $1.25 billion at an IRR of 26%. The company claims that its costs of $4,000 per tonne are among the lowest in the industry.
10. Allkem
Allkem is an Australian lithium mining company which was renamed as Allkem in 2021, priorly being known as Orocobre Limited. Allkem was formed after Orocobre Limited and Galaxy Resources Ltd. combined last year. Galaxy Resources has several operations and projects under its belt including a hard-rock mine in Western Australia, a hard-rock spodumene project in Canada, and a brine project in Argentina. Galaxy Resources was also working to develop its flagship project in Argentina, Sal de Vida.
9. Pilbara Minerals
The Australian lithium mining company is one of the leading lithium producers in the continent while recording revenue of $176 million in 2021.
8. Lithium Americas Corp. (NYSE:LAC)
Lithium Americas Corp. (NYSE:LAC) raised $1 billion in equity and debt while targeting an initial 40,000 tpa lithium carbonate capacity at Thacker Pass and Cauchari-Olaroz, where its already planning to increase capacity by at least 20,000 tpa.
In its Q1 2021 investor letter, Massif Capital, an asset management firm, talked about Lithium Americas Corp. (NYSE:LAC). Here is what the fund said:
“Lithium Americas Corp. (NYSE:LAC): The volatility noted above in LAC has resulted in solid returns via our options trades around our core equity position. At the current time, we are short calls on LAC, as we have done multiple times throughout the position’s life, expiring on May 21, 2021, at a $17.5 and $22.5 strike price. The volume of contracts sold at each strike corresponds to the size of the equity position we want should the calls expire in the money, and the underlying equity gets called away from us. The thought process behind this trade construction is that if we know the size of the position we want at a particular price point, there is no reason not to accumulate additional returns by pre-selling the stock we would have sold anyway.
High levels of volatility positively impact the price of options, increasing the premium we can earn from selling covered calls. To date, we have sold covered calls on LAC that have expired worthless four times, yielding a roughly 7% return on the equity position’s current value or 71bps for the portfolio overall. The outstanding covered calls appear to be trending towards a similar worthless expiration. If they do, the covered call trades on LAC will result in us owning the shares with committed capital of -$0.28 per share.
Although we believe in the fullness of time LAC warrants a $30+ valuation, the prices achieved in early January of this year were not justified by the underlying fundamentals. Some will argue we should have sold down our position. We had already established our option positions and believe LAC is an emerging major in the lithium mining industry. Thus, we decided to maintain the position unchanged. Although still relatively high, the current $15 per share valuation is not crazy compared to where we think the firm should be trading based on fundamentals, so we are no longer overly concerned with the position as is..(click here to read more)
7. Livent Corporation (NYSE:LTHM)
Livent Corporation (NYSE:LTHM) is a world leader in lithium technology. Livent Corporation (NYSE:LTHM) is an important supplier of lithium to electric vehicle manufacturers and mobile devices. Livent Corporation (NYSE:LTHM) has been in the lithium sector for more than six decades.
First Pacific Advisors made the following comment about Livent Corporation (NYSE:LTHM) in its Q3 2022 investor letter:
“Livent Corporation (NYSE:LTHM) is an integrated, low-cost lithium miner and processor that was spun out of FMC Corporation in 2018. Lithium is an essential component of electric vehicle batteries, is chronically undersupplied and spot Lithium Carbonate continues to hit new highs even as other commodity prices have come down. 10 Livent is currently running at roughly breakeven profitability, but our work suggests they will benefit from rising Lithium prices and credible capacity expansion plans. This is an unusual investment for us – we are generally wary of our ability to forecast commodity markets and we have sized the Livent position commensurately.”
6. Sichuan Yahua Industrial Group Co. Ltd.
While primarily engaged in the production and supply of explosives, Sichuan Yahua Industrial Group Co. Ltd. is still one of the leading lithium producers in China.
Please click to continue reading and see the 5 Largest Lithium Companies in the World.
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Disclosure: None. 14 largest lithium producers in the world is originally published at Insider Monkey.