Lithium producer Sociedad Quimica y Minera de Chile (SQM) saw its revenue jump exponentially in 2022, reaching an almost 800% increase despite the inflationary macroeconomic environment.
Adding to the growth was an increase in demand for electric vehicles (EVs). With the global push for carbon reduction, this trend should continue, boosting demand in the short- and long-term horizon.
“Fundamentals behind demand growth are strong, with sales of electric vehicles growing in all the markets, especially in the US market, positively impacted by the Inflation Reduction Act, letting us believe that demand this year should grow more than 20 percent when compared to 2022,” the company said in a statement.
The lithium industry has to essentially increase supply in order to meet demand. This paves the way for opportunity in miners as EV sales continue to push higher.
“As electric vehicle sales continue to grow, we now expect the lithium demand to reach almost 1.5 million metric tons by 2025. This strong demand growth expectations give us confidence as we remain focused on expanding our lithium production capacity,” CEO Ricardo Ramos said.
SQM is one of the top three holdings of the Sprott Lithium Miners ETF (LITP ). If the company continues to see strength ahead as demand for EVs continue, it offers an opportunity for investors to diversify their portfolios with growth in this hot sector.
Get Lithium Miners Exposure in One ETF
Investors looking to get exposure to lithium miners can opt for single stock holdings. However, to get more diversified exposure and avoid over-concentration in one or a few stocks, consider an ETF like LITP.
LITP seeks to provide investment results that correspond generally to the total return performance of the Nasdaq Sprott Lithium Miners Index, which is designed to track the performance of a selection of global securities in the lithium industry, including producers, developers, and explorers. The fund features 45 holdings as of March 3, offering investors broad exposure to the lithium industry’s ancillary services.
In terms of its diversification, this characteristic also extends to regional exposure. In addition to the U.S., the fund incorporates holdings in countries like Australia and Canada.
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