A Big Holding in Lithium ETF is Looking to Boost Output | ETF Trends

Albemarle Corp. (NYSE: ALB), the second-largest holding in the Global X Lithium & Battery Tech ETF (NYSEArca: LIT), is looking to increase lithium output in Chile. That could be a sign producers are expecting lithium demand to increase.

LIT, which is nearly nine years old, tracks the Solactive Global Lithium Index. One of the oldest thematic ETFs, LIT is designed to provide exposure to “the full lithium cycle, from mining and refining the metal, through battery production,” according to Global X.

“Albemarle Corp said on Thursday it is moving forward on a project it claims will boost its Chilean lithium production by 30 percent without extracting more brine from the environmentally sensitive Salar de Atacama, the world’s driest desert,” reports Reuters. “The company, the world’s largest producer of the white metal used to make electric vehicle batteries, has teased the industry for more than a year that it has production-enhancing technology. The lack of details, though, has irked some investors and Chilean authorities.”

Shares of Albemarle represent 14.50% of LIT’s weight. Only FMC Corp. (NYSE: FMC) commands a larger percentage of the lithium ETF’s roster.

What’s Next for Lithium?

“Albemarle said on Thursday it plans to produce 40,000 tonnes of lithium in Chile this year, roughly flat with 2018 levels. Albemarle has authorization to produce in Chile the equivalent of up to 80,000 tonnes annually of lithium through 2043,” according to Reuters.

Electric vehicles are in the early innings of development and there are signs that there is a lot of pent up demand among consumers whom want to embrace the technology. In 2017, electric vehicle sales represented 1.7% of all vehicle sales globally, exceeding 1 million for the first time and rising 51% year-over-year. The rate could continue to accelerate as a result of EVs becoming more economical than gas-powered cars and as a result of a pro-climate regulatory changes pushing to ban gas-powered cars.

“Charlotte, North Carolina-based Albemarle said on Thursday that commissioning of its La Negra III and IV lithium carbonate facilities in Chile would not happen until at least the fourth quarter due to delays in shipping of equipment,” reports Reuters.

LIT is modestly higher on a year-to-date basis.

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