Business

Tesla Could Get Into Lithium Mining And These Stocks Are Falling


Tesla Corporation
TSLA,
-3.63%

is said to be looking to start its own lithium mining company, and losses are piling up on shares of lithium producers.

Shares of Albemarle Corp.
ALB,
-5.75%

fell more than 4% on Tuesday, after falling nearly 10% on Friday. The Lifet Group
LTHM,
-3.13%

stocks extended their losses on Tuesday, falling more than 3% on Tuesday after falling 9% on Friday.

Rounding out the main publicly traded U.S. lithium producers, Piedmont Lithium
PLL,
-1.48%

fell more than 2% after dropping 12% on Friday.

According to a Bloomberg report late Friday, Tesla is considering a potential bid for Canadian miner Sigma Lithium Corp.
SGML,
+16.94%

The report says Sigma Lithium is one of “many mining options” being explored.

Tesla has been eager to mine its own metal, a key ingredient in electric vehicle batteries.

In September, the EV manufacturer filed documents related to a proposed lithium refinery in Texas, This will further increase Tesla’s presence in the state. That would also follow the advice of CEO Elon Musk, who likened lithium mining to “printing money”.

The Financial Times reported in October that Tesla was holding talks to buy a stake in commodities giant Glencore PLC.
GLEN,
-3.16%
,
But those talks failed.

Lithium prices peaked about a year ago, and have since dropped. Mineral Intelligence benchmark lithium price index down 1.7% this year, but up 34% year over year.

The index is tied to the weighted average prices of lithium carbonate and hydroxide, the two main chemicals of lithium.

Tesla has proposed the lithium production facility, near the port of Corpus Christi, would be the first of its kind in North America, Tesla said.

Construction could reach “commercial operation” by the end of 2024, Tesla said in a tax relief application filed with the Texas Comptroller’s Office.

Last month, General Motors Co.
GM,
-4.23%

announced a $650 million investment in Canadian miner Lithium Americas Corp.
lost,
-3.76%

Also putting pressure on the lithium miner’s stockpiles was the news that Chinese battery maker Contemporary Amperex Technology Co. Ltd.
300750,
-1.30%
,
or CATL, is reportedly offering discounts mainly to local electric vehicle manufacturers on their batteries “to win more orders as lithium prices dwindle,” Deutsche Bank’s Emmanuel Rosner said in a statement. note.

Despite recent losses, shares of the three lithium miners have outperformed the broader market index over a one-year period and year-to-date.

Over the past 12 months, Albemarle and Piedmont are up 30%, while Livent is up slightly more than 3%. That contrasts with the S&P 500 index’s roughly 8% drop
SPX,
-1.80%

in the same time period.

So far, the outperformance has been sustained for the year, with Albemarle up 14%, Livent up 18% and Piedmont up 43%. That compares with a gain of about 5% for the S&P.

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