Lithium firms sees four-figure gains
While much focus is given to the mining of coal, the two best-performing miners of the last three years have been focused on lithium – used for batteries and electric vehicles.
Over the three years to 3 November, 2021, the best-performing stock in the ASX Metals and Mining index was Liontown Resources, a company engaged in the exploration of lithium. This returned 9,584% over three years.
The second was Vulcan Energy which described itself as “producing the world’s first, premium, battery-quality lithium chemicals with zero carbon footprint”.
This returned 5,655% compared to returns by the ASX 200 of 39% over the same period.
This compared to returns by Australia’s largest miners, BHP and RIO, of 35% and 48% respectively.
Other popular lithium producers included Mineral Resources, Pilbara Minerals and Piedmont Lithium, although none had seen such extreme gains. Piedmont Lithium was up 553%, Pilbara Minerals was up 190% and Mineral Resources was up 187%.
One way that Australian investors could access lithium was via an exchange traded fund (ETF) with ETF Securities having launched a Battery and Lithium ETF.
This returned 118% over three years to 3 November, 2021 compared to returns of 48.7% by the commodity and energy sector within FE Analytics’ Australian Core Strategies universe.
ETF Securities chief executive, Kris Walesby, said it expected demand for battery production to rise significantly as battery technology was critical to the renewable energy and electric vehicle industry.
Commenting on the rise of lithium, Joel Fleming, portfolio manager at Yarra Capital Management, said: “While the digitisation thematic has unquestionably created a myriad of new industries and company champions over the last decade, we see ESG as the next great acceleration, with significant spend required to address a range of environmental issues in particular.
“The recent strength in the lithium sector is a case in point, with the electrification theme well understood and production shifting to battery powered vehicles to support strong medium term demand forecasts. The major listed lithium companies were all microcaps in the recent past as this broad thematic continued to build.”
AUTHOR
Laura Dew
Recommended for you
With active ETFs becoming the latest choice as fund managers target the retail audience, their high fees may be a detractor as research finds investors are shunning those priced any higher than 50 bps.
The possibility of a dissenting vote from shareholder L1 Capital has led Platinum Asset Management to scrap its conversion plan for the $450 million Platinum Capital LIC into an ETF.
Family office Lederer Group has made an off-market takeover bid for ASX-listed Elanor Commercial Property Fund, with chair Paul Lederer taking exception at the firm’s lack of accountability, oversight and transparency.
Janus Henderson is actively seeking to partner with private wealth firms in Australia as it looks to expand its number of strategic partnerships, as well as focus on retirement income product development.
