If the world is running on smart phones and laptops
90% of the laptops and 60% of the cell phones on this planet, all use one singular power source - The Lithium Ion charged power battery. Almost every major producer in smart phone and gaming console industry will vouch for the energy efficiency Lithium provides over any other element known to mankind. Unless there is a major scientific breakthrough that results in a substitute for Lithium, the demand, which is growing at 25% per year, is unlikely to go down.
The unsung hero of the Microchip Revolution is not even a listed commodity and physical exposures are not possible as of now. An investment in Lithium Stocks and Funds has also been an area which a common investor seldom considers.
Lithium demand and prices are constantly rising.
There are no spot prices. Prices of this commodity are decided in the good old way i.e. as per the understanding between miners and the industry. An agreement which stood at US$2000 / ton surged to US$6000 / ton by 2006. The consensus figure is currently hovering around at $6500 / ton.
The demands are rising too, other than electronic mobile devices; a majority of requirement is expected from the increasing number of electric vehicle. At a time when almost every major auto company in the world is working full time to launch a mainstream production model of an electric car.
The projected demand for Lithium from Auto sector alone may result in a 180% growth in consumption by 2020.
Decision makers at Black rock Inc and JP Morgan have been bullish on Lithium company stocks since 2011, when they realized that Lithium exposure can grant the indirect gains from the growing popularity of mobile gadgetry and electric vehicles, particular examples cited for their inference were of Apple Inc.'s Ipad-2 and Toyota's eco friendly flagship model Prius.
Choices are sparse when one ventures out to invest in Lithium ETF and equities. More than 90% of Lithium industry which is pegged at $ 1 billion annually is under the control of Talison Lithium Ltd. [THL], SocQuimica, Minera de Chile, Rock wood Holdings and FMC Corp [FMC]. Major miner Ro Tinto may join the group if the speculation about their newly acquired mine in Serbia holds true.
From a view point of an investor who wants a minor or a balanced exposure to Lithium sector, which is recommended too, direct equity investments are also avoidable due to the complications attached. The major industry players are listed in different global exchanges and a thorough insight is required as to when and at what price the equities should be bought. As a simple solution one can resort to the ETF route where a lone pure play is available in the form of Global X Lithium ETF [LIT].
A worst case scenario for Lithium Investments would be an advanced invention that replaces the lithium batteries; in this case the prices of the mineral will collapse as they are backed by the forecasted demands. Although, a scenario which is quite unlikely to occur in the near future.
An important thing to consider before investing into Lithium companies and funds is to rely on a positive long term outlook. One can start with small investments and expand as per the market antics. Swinging should be strictly left for the professional traders.