5 companies taking a share in the growing Lithium-ion batteries market
Faster charging, longer battery life — many rechargeable products rely on the quality of their battery packs as one of their major value proposition. Lithium-ion (Li-ion) batteries have become popular in the past years, mainly due to the continuous development of portable devices such as smartphones, MP3 players, digital cameras, and laptops. Today, the demand for Li-ion batteries increases at a faster rate, and one of the driving forces is the growing electric vehicles market.
According to Frost & Sullivan — as reported in Nasdaq — in 2016, the lithium industry grew to $22.5 billion from $11.7 billion in 2012, largely driven by consumer electronic goods and automotive sectors. The global Li-ion battery market is projected to grow three times of that and reach $67.7 billion by 2022. Meanwhile, the electric vehicles market will hit $750 billion by 2027. The automotive sector’s share in the Li-ion battery market last year was at 25 percent compared to 14 percent in 2012.
A Li-ion battery is a rechargeable type of battery where lithium ions move from negative electrode to positive electrode during discharge and from positive electrode to negative electrode when charging. Li-ion batteries can be found in a number of home electronics and consumer goods, as well as in military and aerospace applications.
Li-ion batteries play a vital role in electric vehicles and they can account for as much as 50 percent of the total cost of an EV. To meet the demand for Li-ion batteries, giant factories are being built around the globe — for instance, Tesla is building a $5 billion Gigafactory with a $1.6 billion investment from Panasonic.
The need for a gigafactory, such as Tesla’s, highlights the supply shortage in the fast-growing Li-ion energy storage revolution. In order to answer this demand and produce huge quantities of Li-ion batteries, the need for its raw materials also surge and these include lithium, graphite, and cobalt.
While a number of companies and miners attempt to position themselves as the solution for the supply deficit in Li-ion batteries and its materials, only a few truly prove to be reliable in both quality and quantity. Here are some of the tried and tested companies in the Li-ion battery sphere poised to grow exponentially along with the industry.
FMC Corp.
FMC Corp. (NYSE: FMC) is an American manufacturer of chemicals based in Philadelphia, Pennsylvania. It sources its lithium from its own mine in Salar del Hombre Muerto in Argentina, and it has been quickly expanding its production capacity. It also owns processing and production facilities.
FMC’s lithium mining business can be traced back to the 1940s. From traditional mining methodologies, the company has developed a proprietary extraction process that fast-tracks lithium production. Today, FMC is the largest specialty chemical company and the second-largest lithium chemical supplier.
FMC’s stock currently trades at $94.42 and is a №2 (Buy) on the Zacks Rank. Over the past year, the company’s shares gained 77 percent. It saw a 110 percent year-over-year growth in its lithium segment in its most recent quarterly report. FMC has a market capitalization of $12.68 billion and a dividend yield of 0.70 percent, per Nasdaq.
Albemarle Corp.
North Carolina-based chemical company, Albermarle Corp. (NYSE: ALB), is the largest producer of lithium in the world. Albermarle accounts for about 35 percent of the world’s lithium, according to Bloomberg estimates. Its lithium comes from Salar de Atacama, Chile; Silver Peak, Nevada; and Talison Lithium in Western Australia. As a vertically integrated company that extracts and produces its own specialty products, the company ensures consistent supply to customers.
Currently trading at $136.70, Albermarle has a market capitalization of $15.10 billion. Its dividend yield is at 0.94 percent. The company’s stock, which grew over 172 percent in the past year, is also a №2 (Buy) on the Zacks Rank.
Tesla
Elon Musk-led company Tesla (NASDAQ: TSLA) is a leading player in the electric vehicles market. It decided to build a gigafactory in Nevada worth $5 billion in order to meet its needs for lithium-ion battery packs. Tesla projects its lithium-ion battery production from the gigafactory, which began earlier this year, to hit 35 gigawatt-hours.
Tesla’s stock is now trading at $317.81, and its market capitalization has reached $53.41 billion. Its shares gained 47 percent since the beginning of 2017. Analysts’ average rating for Tesla’s shares is a “hold,” via MarketWatch.
Elcora Advanced Materials Corp.
Elcora Advanced Materials (TXSV:ERA, OTC:ECORF) is a vertically integrated graphite and graphene company headquartered in Halifax Canada. The company mines in Sri Lanka, where it also owns a graphite processing plant. The company uses proprietary technology to produce the highest quality graphite powder for anodes, which are also used in lithium-ion batteries. In fact, there is eight times more graphite in Li-ion batteries than lithium. Elcora is scaling up its production capacity in order to meet customer demands, particularly those that manufacture batteries.
As a graphite mining company, Elcora is positioned to take advantage of the growing demand for Li-ion batteries. It has signed a 10-year contract with ThyssenKrupp Metallurgical Products where the company exclusively distributes Elcora’s high purity graphite products to customers in the EU, Russia, the US, Turkey, and Canada. Lockheed Martin also recently signed a strategic partnership deal with Elcora to further develop the latter’s Li-ion anode technology. Both agreements highlight Elcora’s ability to provide a consistent and high-quality supply of graphite materials to big companies.
Elcora’s stock is currently trading at CA$0.42, and the company has a market capitalization of $38.98 million. Its stock has a strong momentum potential and increased volatility, according to Dasher Business Review, as its Average True Range edged higher in the past 10 sessions. The company has a yearly EPS of 0.34, a Price to Earnings ratio of 25.93, and a Return on Equity of 88.89.
eCobalt Solutions
eCobalt Solutions (TSX: ECS) is a Canadian mineral exploration and mine development company. It is positioning itself in the growing rechargeable battery and renewable energy sectors by providing battery-grade cobalt salts that are ethically produced and environmentally friendly. Its Idaho Cobalt Project in Lemhi County is expected to produce an average of 2.4 million pounds of cobalt a year, in addition to copper and gold.
eCobalt’s stock is now trading at $1.16 and it has gained 114.81 percent in the past year. The company has a market capitalization of $143.47 million.
