Saturday, July 24, 2010

Will Lithium Be Worth More than Gold?

Lithium, the world's lightest metal, is one of the hottest metals in the investment field, primarily due to its connection to the lithium ion batteries. About 20% of the lithium production is used for batteries, another 20% or so for producing glass and ceramics, 17% for lubrications and greases, about 9% for pharmaceuticals, and the rest for air conditioning, aluminum production, construction, pool chemicals, and alloys.

Here are some interesting facts about lithium:

1. Lithium is used in used in more than 60% of mobile phones.

2. In the 1800's, lithium salts were used to treat gout.

3. Lithium is the leading treatment for treatment of bipolar disorder due to the counteraction of both depression and mania.

4. Communities whose water contained larger amounts of lithium had significantly lower suicide rates.

5. Metallic lithium and lithium hydrides are used as high energy additives to rocket propellants.

6. Major producers of lithium include Chile, Argentina, China, Australia, Brazil, Canada, Zimbabwe and the USA.

7. Lithium deuteride was the preferred fuel in early versions of the hydrogen bomb.

8. Lithium is used in red fireworks.

10. It was used in high temperature grease for aircraft engines in World War II. has come up with a list of over 20 stocks involved in the lithium industry, from the mining companies to the producers of lithium ion batteries. The stocks range from microcaps to large corporations that pay dividends.

For example Sociedad Quimica y Minera (SQM), also known as Chemical & Mining Co. of Chile Inc., is the largest lithium producer in the world. This New York Stock Exchange traded company, which has a market cap of almost $10 billion, has a forward PE of 23.6 and a yield of 1.0%.

FMC Corp. (FMC) has a division based in Argentina called FMC Lithium, which owns the Salar de Hombre Muerto mine, containing 850,000 tons of reserves at up to 70 meters of depth. FMC has a forward PE of 11.5, and pays a small yield of 0.8%.

Advanced Battery Technologies, Inc. (ABAT) is one of the few battery manufacturers generating a profit. The company, which makes rechargeable polymer lithium-ion batteries, has a PE of 9.0.

Another alternative is to invest in the new Exchange Traded Fund called Global X Lithium ETF (LIT), which is designed to track the Solactive Global Lithium Index. This ETF just started trading a few days ago.

To see a list of over 20 lithium companies which can be downloaded, sorted, changed, and added to, go to

Author does not own any of the above.


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