In a surprise move that shocked global markets, Chile, which has about 40% of the world’s known lithium reserves, announced it was proposing a plan to nationaliize production of the rare earth metal – a key component in EV battery production.
Almost immediately, lithium mining stocks nose-dived. Albemarle Corp (ABM) shares dropped from $198 to $173 in just two days. Other lithium suppliers have also taken a short-term hit on Chile’s announcement..
- Sigma Lithium Corp (SGML) fell from $40 to $34
- Piedmont Lithium Inc. (PLL) dropped from $59 to $54
- FMC Corp (FMC) fell from $124 to $120
Daily Chart for Albemarle Corp (ALB) – Tradingview
Could this pullback in Lithium stocks signal a buying opportunity?
It’s possible. The demand for lithium continues to spike as Electric Vehicles are continuing to roll off the assembly lines from multiple automakers. The advent of Biden’s push to build a national network of charging stations could also stimulate EV sales.
We will keep a close eye on this sector to see where these stocks go. Stay tuned.