While battery production is one of lithium's core uses, it's a versatile mineral in many industries. Lithium belongs to a family of metals known as alkali, which are highly flammable and must be handled and stored with care. On the periodic table, lithium's symbol is "Li," and it has the least density of all elemental metals.
Lithium has many different uses. Lithium-ion is used in the fabrication of rechargeable batteries, making it a crucial commodity for electric vehicles, mobile phones and all kinds of electronics. Lithium also fabricates ceramic glazes and glass, high-temperature lubricants and chemical polymers. The pharmaceutical industry even uses lithium salts in bipolar and antidepressant medications.
Mining companies must extract and refine lithium from the Earth to produce lithium. Miners can extract lithium from hard rock or a more liquid substance called brine. As you might assume, this process taxes the environment, so ESG funds exclude many lithium mining company stocks. Additionally, critics of lithium mining cite water and land contamination as threats to local ecologies. There are also concerns about recycling dead batteries and the intense consumption of resources required in the mining process.
Lithium mining is centralized in a few global locations, most notably the lithium triangle of Argentina, Chile and Bolivia. In addition, China and Australia also have significant operations on lithium deposits. With lithium demand expected to only increase over the next decade, investors should have opportunities to invest in lithium stocks, not just for the production of the mineral but also improvements to the mining and extraction process.