Australian Lithium Plays
The lithium sector is hot worldwide. There are dozens of companies planning (hoping) to get into production. Most are planning to exploit pegmatite-sourced lithium. A source that is extraordinary common, and often low grade and high cost. The world is already awash with lithium deposits – there is around 1,400 years of supply from existing deposits at current consumption rates. Read more on lithium here.
Nonetheless, punters are bidding up Australian lithium wannabees to stratospheric levels. It is reminiscent of the REE (rare earth element) craze a few years back that left many in tears and portfolios in tatters. Remember – hot sectors always revert, and revert hard. Play, but watch for warning signs of imminent collapse.
This frenzy is based upon the idea that storage of electricity from solar etc. will change the energy landscape. And electric cars are the real thing. Read about my view on “renewable” energy here.
Anyway, if you must be in lithium, here is a list of the main players in Australia (prices 6/4/16).
So, a two billion marketcap for the sector (it will be more as I will have missed some new entrants). Sounds a little pricey to me. But there will be money to be made in the short term. I do not give recommendations, but there are a couple of smaller stocks that are worth a look.
This review is not based on in-depth research and is in no way a recommendation to buy or sell shares. The reader is advised to do their own research and/or consult with their broker.