Lithium Craze: Comparing Arianne Phosphate To Top Companies

From powering electric vehicles to storing solar and wind energy, lithium plays a critical role in the transition to a greener world. So it’s not surprising demand for Lithium-Iron-Phosphate (LFP) batteries is exploding – as are the market values of its key publicly traded producers.  

With energy and food prices still high and weather-related calamities occurring far too often, everyone from companies to consumers is looking for greener alternatives across the board. Electric vehicles have driven a lot of the demand, but lithium is also used in storing captured wind and solar for the power grid and residential solar power systems. 

LFPs Gaining Traction 

For years, North American EV makers relied on lithium-ion batteries made of lithium, cobalt and nickel to power this greener vision. But cobalt and nickel are scarce and expensive – not to mention controversial. 

Companies looking for an alternative have turned to LFPs. These batteries are highly stable, longer lasting, and more resistant to heat degradation. They also require less lithium. 

In 2022, about 737,000 tons of lithium was produced globally. That’s expected to increase to 964,000 tons in 2023, reaching 1.17 million tons by 2024. The LFP market is projected to exceed $50 billion by 2023. And, in a recent report, Wood Mackenzie predicted that lithium iron phosphate will become the leading battery chemistry for EVs by 2028.

Beyond EVs, there’s another big opportunity for LFPs: energy storage systems and powerwalls. These are designed to store energy from solar or the grid to be used later. Some are portable while others are connected. Tesla, Inc. TSLA is increasingly using LFPs in its energy storage products, which bodes well for the industry.

Northern Exposure 

Evidently, this isn’t lost on investors, and many investors are watching publicly traded lithium companies keenly. Some of the key players include Albemarle Corp. ALB, Sociedad Química y Minera S.A. SQM, Ganfeng Lithium Co., Ltd. GNENF and Mineral Resources Ltd. MALRY. 

But they aren’t cheap. Albemarle currently trades at around $168 per share. In dollar terms, that’s more expensive than General Motors GM, Ford F, and even Amazon AMZN. Meanwhile, SQM sports a $15.85 billion market valuation. 

Fortunately, there are cheaper ways to get exposure to the lithium battery market, such as through the miners that provide the minerals needed to make batteries. Arianne Phosphate DRRSF, one such company hailing from Quebec, Canada, provides a key ingredient for LFP batteries and is cheaper than the aforementioned lithium stocks in dollar terms. 

But, as its phosphate is snapped up by producers of everything from EVs to solar storage systems, that may not be the case for long.

Deposits Set it Apart 

Arianne’s Lac à Paul project in Quebec could become a key resource for manufacturers. The geology of the deposit is igneous and thus very rare, with less than 10% of all phosphate coming from ore bodies of this nature. Arianne’s deposit can produce a purer concentrate, higher than over 90% of the world’s phosphate. Further, aside from the phosphate content, Arianne reports that its deposit does not have any issues with deleterious elements (radioactive, heavy-metal) that are found in most of the world’s phosphates. From an ESG perspective, Arianne’s mine also adheres to strict environmental, social and corporate standards that set it aside from most other deposits.

There is also pro-mining legislation that helps companies like Arianne. The White House’s American Battery Materials Initiative is aimed at securing a reliable and sustainable supply of critical minerals used for power, electricity, and EVs. Meanwhile, the Department of Energy is awarding $2.8 billion from the Bipartisan Infrastructure Bill to boost domestic manufacturing. Lastly, Quebec has shown itself to be aggressive in attracting and advancing battery initiatives and is expected to play a significant role in Arianne’s advancement.

Judging by how the market is moving, LFPs could well be the future. A cheaper way to play this exploding market is with phosphate, of which Arianne appears to be a well-positioned producer.

Featured photo by Tom Fisk on Pexels.

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