Lithium, a vital elemental metal, also dubbed as “white gold”, has gained significant attention as a sought-after commodity. This is particularly due to its crucial role in battery manufacturing for electric vehicles (EVs).
The surge in EV sales has fueled optimism among investors regarding companies involved in lithium production and refinement. Despite being a common substance, lithium prices experienced an astounding 1,000% increase from 2021 to the end of 2022. This exceeds the previous highs set in 2017.
However, the landscape changed in 2023.
An increasing supply of lithium from mines in Africa and Australia is putting downward pressure on prices. Plus, reports of lower consumer demand for EVs in the U.S. and China may further contribute to a decline in lithium prices.
Lithium Carbonate (CNY) Price
Following the unprecedented boom of 2021/2022, stocks of lithium producers have faced significant declines due to a continued plunge in lithium prices.
As with all commodity stocks, lithium stocks are intricately tied to supply and demand dynamics in the underlying materials they deal with. The future trajectory of lithium prices and associated stock values will likely be influenced by the continued demand for EVs.
Investing in top lithium stocks follows a similar process to investing in any other type of stock.
Here are our top picks for lithium stocks that are worth each penny of consideration.
Albemarle Corporation (ALB)
Market cap: US$15.1 billion
Enterprise value: US$17.1 billion
Albemarle Corp. stands prominently among the largest lithium stocks and is a key player in lithium mining. With a market value comparable to other major commodities such as Barrick Gold Corporation (GOLD).
The company’s substantial scale and the optimistic long-term forecasts for EV demand position Albemarle as one of the top lithium stocks in the current market. Albemarle has embarked on a significant production expansion initiative in South Carolina, projecting an annual capacity of about 225,000 metric tons of lithium.
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The American lithium giant anticipates this capacity to triple by the 2030, aligning its growth plans and expectations for the growing EV sector.
But recently, it redirected efforts towards its Kings Mountain lithium-spodumene mine resource in North Carolina, in response to softer market conditions.
Albemarle had warned of potential market share loss to Chinese producers after its unsuccessful takeover bid for Australian lithium producer Liontown Resources. The $4.2 billion merger was abandoned.
The largest producer of lithium for EV batteries has also revised its annual forecast downwards at the end of last year. They further reported a lower-than-expected quarterly profit due to declining prices for lithium.
Still, Albemarle now anticipates a 30% increase in lithium sales volume for the year. But with prices expected to rise only 15%, falling short of market expectations for robust growth.
The reduction in demand from consumers has led major EV manufacturers like Tesla, Ford Motor, General Motors, and Rivian to scale back production. Additionally, Toyota Motor has cut its EV sales forecast by 40% in 2024 due to lower demand in China. This reduced demand is impacting the lithium market and related stocks.
Albemarle’s peers have experienced similar declines. For instance, shares of Sociedad Química y Minera de Chile S.A. are down -39.4% YTD.
Sociedad Química y Minera S.A. (SQM)
Market cap: US$15.1 billion
Enterprise value: US$16.1 billion
Chile, globally recognized for its mineral wealth, features Sociedad Química y Minera de Chile (SQM) at the core of its mining industry. While SQM engages in the production of various minerals, its significance in lithium extraction is paramount.
Alongside diversified mining counterparts like Albemarle and Ganfeng, SQM maintains robust double-digit operating profit margins, substantial cash reserves for expansion, and minimal debt.
In 2022, SQM achieved its highest-ever corporate revenues, surpassing $10.7 billion in sales. A substantial 76% of this revenue was derived from lithium and related products.
SQM’s pivotal role goes beyond its economic contributions, as it stands as the largest taxpayer in Chile. Recent discussions about the government potentially increasing its stake in the company have emerged and raised eyebrows.
Such a move introduces the inherent risks associated with government ownership, including the possibility of political interference. Some investors don’t find it a favorable development.
The trajectory of SQM’s shares showed positive momentum until late 2022, when a decline followed. This is largely due to weakened lithium prices and concerns about the company receiving a fair valuation for the anticipated increased government stake.
The impending nationalization raises uncertainties about state control of lithium. Once this pushes through, it may impact SQM’s profitability.
Looking forward to a long-term demand for lithium to exceed supply, SQM has strategically invested in expanding its production capacity. These developments position the company to augment its market share in the lithium supply chain, particularly for EV batteries.
Li-FT Power (LIFT; LIFFF)
Market cap: US$168.5 million
Enterprise value: US$163.4 million
Given the insufficient domestic lithium reserves to meet demand, the U.S. is in a challenging position. With the need for a domestic supply, Canada is positioned to contribute to meeting U.S. lithium requirements. This is where a junior lithium company, Li-FT Power (LIFT: LIFFF), based in Vancouver, British Columbia, perfectly comes into the picture.
Li-FT has acquired promising lithium assets in Canada, starting drilling on their flagship project in June last year. The company’s investment thesis revolves around the aggressive exploration and expansion of high-grade lithium pegmatites to define world-scale resources in a proven mining jurisdiction.
The company’s strategy focuses on consolidating and advancing hard rock lithium pegmatite projects in Canada, particularly in known lithium districts. Li-FT Power aims to apply modern systematic exploration techniques to unveil value in these projects that historical work hasn’t fully realized.
The project portfolio includes assets in the Northwest Territories and Quebec, with flagship projects like the Yellowknife Lithium Project and the Pontax Project, which has revealed an 8km long lithium anomaly.
The company is well-financed to progress its projects, cementing its commitment to advancing the exploration and development of high-quality lithium assets in Canada.
LIFT strategically positions itself to take advantage of weak industry sentiment, allowing for the acquisition of shares at discounted valuations.
The Lithium Deficit Looms
While those top lithium stocks are making waves in 2024, projections indicate that lithium prices will further decline due to:
- increasing supplies of the battery metal, and
- subdued demand from China.
In China, lithium carbonate prices have plummeted from an all-time high of $81,360 per tonne in November 2022. This is the lowest level in two years at $20,782 per tonne in the current month. As lithium carbonate prices have fallen by 67% year-on-year, Chinese refining companies are responding by cutting production or suspending operations.
This represents a nearly 75% correction due to a series of negative catalysts that have suppressed lithium prices. The situation is even more challenging for lithium hydroxide markets, primarily due to the sluggish performance of the nickel cobalt manganese battery sector compared to the lithium iron phosphate battery sector.
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Australia, which contributes 40% of global lithium production, expects a decline in the spot price of spodumene from around $3,840 per tonne in 2022 to $2,200 per tonne in 2025.
Lithium miners are adjusting to the sharp drop in demand for EVs in China by reducing costs and scaling back production expansion plans.
This response aligns with the challenges faced by lithium producers globally as the market grapples with oversupply and weakening demand for EVs.
The inability of China to meet its own demand for lithium, despite being the world’s 3rd-largest producer, has significant implications for other countries that rely on Chinese lithium. This is why the US aims to develop its own lithium supply chain that doesn’t depend on China.
- RELATED: Lithium-Ion Wars: US Battery Imports Soar by 66%, Setting New Record as Domestic Production Ramps Up
The Inflation Reduction Act, in particular, specifically promotes onshoring of clean energy manufacturing, including EVs, within the U.S. And that also means to reduce or cut off import of lithium from China.
Corinne Blanchard, Deutsche Bank’s director of lithium and clean tech equity research, is among the analysts predicting a future shortage in the lithium industry. Despite forecasting supply growth, she believes that demand will outpace it at a much faster pace.
Blanchard anticipates a “modest deficit” of around 40,000 to 60,000 tonnes of lithium carbonate equivalent by the end of 2025, but she foresees a much larger deficit of 768,000 tonnes by the end of 2030. This forecast aligns with the broader industry expectations of increasing demand for lithium, particularly driven by the growing EV market.
2024 unfolds with challenges for the lithium market, witnessing stock declines post 2023’s meteoric rise. Despite the setback, top players like Albemarle, SQM, and Li-FT Power strategically position themselves. As global trends hint at a Chinese lithium market decline, industry experts see a future lithium deficit, driven by the relentless growth in the EV market.
The post Top Lithium Stocks Making Waves in 2024 appeared first on Carbon Credits.
The accounting differences that decide whether your nature investment shows up in inventory, in BVCM, or nowhere at all.
The question reaches a procurement team about three weeks before the next sustainability committee meeting. Someone has read about insetting. Someone else has just signed off on an offset purchase. The CSO wants to know if the two are interchangeable. The answer is no, and the GHG Protocol Land Sector and Removals Standard is the reason why.
This article walks through what each term means at audit-grade specificity, what the standards actually say about how each gets counted, and how to decide which tool fits which target. The insetting vs offsetting question is one of the most-searched in corporate climate strategy, and one of the most poorly answered. By the end of this piece, you should be able to brief a committee on the difference without notes.
The two definitions, in plain English
Offsetting means buying carbon credits generated outside your value chain and retiring them against your residual emissions. The reduction happens somewhere else, financed by you, and the credit is the receipt.
Insetting means investing in emission reductions or removals inside your own value chain, typically with suppliers, where the reduction is directly linked to the products and services you buy. The reduction happens inside the boundary of your Scope 3 inventory, and the accounting treatment is fundamentally different.
The shorthand from the University of Oxford’s Nature-based Insetting Initiative is useful: insetting is what you do with the supply chain you have; offsetting is what you do with the supply chain you do not have.
What the GHG Protocol Land Sector Standard actually says
The GHG Protocol Land Sector and Removals Standard, finalised in 2024 after a multi-year pilot, sets the rules for how land-based emission reductions and removals enter corporate inventories. The Standard distinguishes between inventory accounting (Scope 1, 2, and 3) and project or intervention accounting (a separate methodology for crediting).
For insetting, the practical implication is that supplier-level interventions, when properly measured and attributed, can reduce your Scope 3 category 1 (purchased goods and services) emissions in your inventory. The reduction is not a credit retired against the inventory; it is a lower inventory number, period.
For offsetting, the credit is retired separately. It can be reported as a contribution toward a net-zero claim under the SBTi Beyond Value Chain Mitigation framework or as part of a VCMI Carbon Integrity claim, but it does not lower the inventory number.
A practical consequence: if your Science Based Target requires a 50% absolute reduction in Scope 3 emissions by 2030, insetting moves you toward the target. Offsetting does not. This single point of difference reshapes the procurement decision.
When insetting counts toward Scope 3 (and when it does not)
Insetting counts toward Scope 3 only when several conditions are met:
- The intervention must occur with an entity in your value chain.
- The emissions reduction or removal must be measured against a defensible baseline.
- The reduction must be attributed to your share of that supplier’s output, not double-counted with other buyers.
- It must follow the inventory accounting rules in the GHG Protocol Land Sector Standard, not the project accounting rules used to generate credits.
The most common failure mode is double counting. If your supplier sells the same reduction as a credit on the voluntary market and also reports it to you as a Scope 3 reduction, the math breaks. The Standard requires you to address this risk, typically by purchasing and retiring the supplier-issued credit as part of your inventory or by contractual provisions that prevent the supplier from selling the reduction twice.
When insetting does not count toward Scope 3: when the intervention sits with a supplier you do not buy from, when the baseline is not defensible, when the attribution is unclear, or when the documentation does not survive audit. Those cases default to Beyond Value Chain Mitigation, which is still useful but operates on a different ledger.
The procurement and supplier engagement question
Insetting is harder than offsetting. That is the unfashionable truth most buyers eventually confront. Offsetting is a transaction; insetting is a relationship.
To run an insetting program, you need supplier mapping precise enough to know which farms or facilities sit at which Scope 3 boundary. You need an engagement model that gets suppliers to participate, which usually requires multi-year commitments and shared economics. You need an MRV architecture that measures the right things and produces audit-ready documentation. And you need a contractual structure that prevents double counting and protects both sides.
The trade-off you receive in return is significant. Reductions count against your inventory rather than your residual. Supplier relationships deepen, which protects sourcing continuity. Yield and quality improvements often follow regenerative interventions, which reduces your input cost over time. And the regulatory file, under CSRD, CSDDD, EUDR, and the SBTi FLAG Guidance, is materially stronger.
Choosing the right tool for the right target
A practical decision rule. If your target is a science-based Scope 3 reduction and you operate in a FLAG sector or source FLAG commodities, insetting is the structurally correct tool. If your target is a net-zero claim that includes neutralising hard-to-abate residual emissions outside your value chain, BVCM via high-integrity offsets is the structurally correct tool. Most companies with material Scope 3 exposure need both, in different proportions, sequenced over time.
The sequencing matters. Insetting takes longer to stand up but produces a permanent reduction in the inventory. Offsetting can be transacted faster but does not change the inventory and now sits under tighter claim restrictions. Treat them as complementary tools with different jobs, not as substitutes. The Accountability Framework Initiative and the IUCN Global Standard for Nature-based Solutions both provide useful guardrails for the insetting side, with biodiversity, human rights, and benefit-sharing requirements that go beyond carbon math.
If you are mapping a Scope 3 reduction roadmap and need to scope which interventions count toward your inventory versus which sit in Beyond Value Chain Mitigation, the carbon and sustainability experts at Carbon Credit Capital can help you structure a nature-based supply chain investment program that fits your FLAG exposure, your target architecture, and your audit horizon. Schedule a consultation.
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