Lithium shares in Australia

Lithium stocks are all the rage, so is it a good time to invest?

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With the world transitioning to net zero, the demand for lithium is soaring, but is it the cash cow investors are hoping for?

Lithium remains one of the hottest investment trends. Following strong gains in 2020 and 2021, lithium is off to a solid start in 2022. In fact, the price of the underlying asset is up 77%, with many of the shares following.

Australia is one of the world's biggest lithium producers and home to several listed lithium miners. As such, Australian investors are well placed to cash in on the latest hot stock. However, like any trend they'll be major winners and losers along the way.

Read on to find out what you need to know about lithium shares.

Lithium shares

Lithium stocks are companies in the lithium industry. There are 2 main types of lithium companies: lithium producers and companies that rely on lithium as a raw material.

Companies that produce lithium can either mine hard rock or harvest lithium-brine deposits. Mining removes lithium from a mineral using a drill, while harvesting brine deposits extracts lithium that has dissolved in groundwater through evaporation. The brine technique takes approximately 18 months, which is slower than traditional mining.

On the other hand, companies that use lithium generally focus on lithium-ion batteries and devices. For example, electric vehicles rely on lithium as the basis for their green technology. Many of the major car manufacturers have been announcing partnership with Lithium miners. So price fluctuations and changes in the lithium market can directly affect company stocks that use lithium as a raw material.

Some examples of Lithium miners or producers include:

Lithium ETFs

If you like the trend but are not sure how to get started, taking a basket approach might be a sound strategy.

Some exchange-traded funds (ETFs) follow the full lithium cycle from mining through battery production, while others specialise in the battery industry. To date, there is only 1 ASX-listed pure play lithium ETF:

Buy lithium stocks online

You’ll need a brokerage account to buy lithium stocks or ETFs. Compare options in the table below.

1 - 10 of 10
Name Product Standard brokerage fee Inactivity fee Markets International
eToro (global stocks)
US$0
US$10 per month if there’s been no login for 12 months
Global shares, US shares, ETFs
Yes
Zero brokerage share trading on US, Hong Kong and European stocks with trades as low as $50.
Note: This broker offers CFDs which are volatile investment products and most clients lose money trading CFDs with this provider.
Join the world’s biggest social trading network when you trade stocks, commodities and currencies from the one account.
ThinkMarkets Share Trading
$8
No
ASX shares
No
Exclusive: Sign up through Finder and get 3 months of free trading up to 50 trades. Offer available to new customers only.
Following your first three months, enjoy $8 flat fee CHESS sponsored brokerage as well as free live stock data all from the convenience of an easy-to-use mobile app
Tiger Brokers
$6.49
No
ASX shares, Global shares, US shares
Yes
Exclusive to Finder: Sign up to Tiger through Finder and on completion of your first deposit of any amount or transfer of shares receive 1 extra free GoPro share. T&Cs apply.
Get started with $0 brokerage on ASX and US stocks for the first 3 months upon completion of your first qualifying deposit. Also receive a free Apple share if you deposit $3,000 or more.
SelfWealth (Basic account)
$9.5
No
ASX shares, US shares
Yes
Trade ASX and US shares for a flat fee of $9.50, regardless of the trade size.
New customers receive free access to Community Insights with SelfWealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.
IG Share Trading
$8
$50 per quarter if you make fewer than three trades in that period
ASX shares, Global shares
Yes
$0 brokerage for US and global shares plus get an active trader discount of $5 commission on Australian shares.
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, plus get access to 24-hour customer support.
Superhero share trading
$5
No
ASX shares, US shares, ETFs
Yes
Sign up & fund your account with A$100 or more and receive US$10 of Tesla stocks on Superhero. T&Cs apply.
Enjoy $0 brokerage on US stocks and buying ETFs as well as a flat $5 fee to trade Australian shares.
CMC Markets Invest
$0
No
ASX shares, Global shares, mFunds, ETFs
Yes
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, ETFs and managed funds, plus access up to 15 major global and Australian stock exchanges. Plus, buy Aussie shares for $0 brokerage up to $1,000. (Limited to one buy order per stock per trading day).
GO Markets Share Trading
$7.70
No
ASX shares, Forex, CFDs, ETFs
No
Zero Brokerage on your next 50 trades!
Simply transfer an existing HIN before 30 June and pay no fees on your next 50 transactions. Alternatively, transfer your existing shares and receive 5 transactions at zero cost for each shareholding transferred, once again up to 50 free trades. T & Cs apply
Saxo Capital Markets (Classic account)
$5
No
ASX shares, Global shares, ETFs
Yes
Access 19,000+ stocks on 40+ exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
Bell Direct Share Trading
$15
No
ASX shares, mFunds, ETFs
No
Get $300 free brokerage until 30 June when you move to Bell Direct. T&Cs apply.
Bell Direct offers a one-second placement guarantee on market-to-limit ASX orders or your trade is free, plus enjoy extensive free research reports from top financial experts.
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Compare up to 4 providers

Important: Share trading can be financially risky and the value of your investment can go down as well as up. Standard brokerage is the cost to purchase $1,000 or less of equities without any qualifications or special eligibility. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Why invest in lithium?

Lithium is set to become one of the major commodities needed for a modern world.

While lithium has been traditionally used in ceramic and glass production, it’s now more popularly used in rechargeable batteries in smartphones, laptops and electric cars.

Lithium also strengthens other metals. For example, lithium alloys, such as aluminium-lithium, are used in bicycle frames and aircrafts. And in the pharmaceutical industry, lithium is used to balance neurotransmitters in the brain to treat bipolar disorder.

The world is progressively more technology-driven and this in turn increases our need for materials such as lithium. Rechargeable lithium-ion (Li-ion) batteries have multiple applications – from consumer smartphones and laptops to military voice and data radios. Lithium plays an essential role across mobile technologies, with the demand for lithium-ion batteries poised to triple by 2025, according to an analysis by S&P Global.

A lot of this growth will come off the back of electric vehicles (EVs). The Australian Department of Industry, Science, Energy and Resources forecasts EV sales to grow from around 5 million units in 2021 to 30 million by 2030. Deloitte agrees, stating EV sales are set to reach 11.2 million in 2025, then 31.1 million by 2030 at 32% of total market share.

Risks of investing in lithium stocks

Although the demand for lithium is soaring, lithium stocks have been drowning in a surge of new lithium producers from Chile, Argentina and Australia. When supply grows faster than demand, it can trigger a sharp price drop and cause stocks to become undervalued.

Lithium-ion batteries also require cobalt to produce. Unfortunately, two-thirds of the world’s cobalt is mined in the Democratic Republic of Congo, making its supply susceptible to political instability. And since global cobalt mine supplies are also at risk of disappearing, there may not be enough cobalt to manufacture these batteries.

And it doesn’t help that there’s no benchmark price for lithium. So investors in Australia can only base the value of the industry on a handful of companies. You’re flying blind without a full sense of the global market, leaving investors and banks struggling to manage risk.

Bottom line

We can find lithium products in our everyday lives. The increasing demand for lithium-ion batteries in mobile devices and electric vehicles keeps this stock on Australian investors’ radars.

But to invest in lithium, you’ll need a brokerage account. Weigh a few trading platforms to find a brokerage firm that best fits your investing needs.

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