I have followed a group of 57 Australian lithium stocks for the past 18 months. This is not a definitive list of companies involved in lithium, the cut-off date for inclusion was July 2016. Several companies have effectively moved onto other metals, while still retaining lithium interests.

The headline refers to stock price movements over the past 12 months. Most stocks peaked in the September quarter and remain on a downward trajectory. In fact, I very much doubt that we are near the bottom for the lithium sector.

There are already huge lithium resources in the world, and lithium ion as a battery technology is a little dated. Think of yesterday’s nickel metal hydride, once the king. There are many competitors. For example, vanadium redox batteries are far superior to lithium ion batteries for fixed storage. Read more here.

I have written about, and invested in, the lithium space. Previous posts:

The chart below shows the performance of each stock in the table. Not a pretty sight. This represents something like a $3.5 billion loss in asset value, in a very small sector, over the past year. Nonetheless, most companies are still trading substantially above their market cap of 2-3 years ago.

This is why I like the Australian exploration sector; while there are crooks and stupids galore in management, many companies weather the storm, and the investor in at the right time wins.

However, the lithium sector is done for now. I expect that the next downward leg for lithium will be caused by bad news on the development front.

More on the sectors to watch coming up, particularly lithium’s rather shaky successor – cobalt. Unlike lithium, this sector seemed to start on nonsense. For example, calling 0.1% cobalt high grade, with no copper, nickel or other redeeming minerals.

 

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31 May 2017 Commodities 71 Comments