Charging Up on Lithium - the Metal or the Miner?

34 Pages Posted: 16 Apr 2024 Last revised: 9 Dec 2024

See all articles by Lichoo Tay

Lichoo Tay

The University of Western Australia

Dirk G. Baur

University of Western Australia - Business School; Financial Research Network (FIRN)

Jonathan R. Karlsen

The University of Western Australia; Digital Finance CRC

Date Written: April 16, 2024

Abstract

Until the recent introduction of lithium futures, there was no direct way to invest in the lithium commodity itself. We find that an indirect way to invest via a portfolio of lithium miners provides full exposure to lithium price movements. However, the miner portfolio has higher average returns and volatility than the commodity, reflecting the systematic and industry-specific risks of lithium mining. In addition, miner returns lead lithium returns implying that lithium trades at lagged prices in the physical market with negative welfare consequences.

Keywords: lithium, mining, investor exposure, decarbonisation

JEL Classification: C32, G12, Q02, Q42

Suggested Citation

Tay, Lichoo and Baur, Dirk G. and Karlsen, Jonathan R., Charging Up on Lithium - the Metal or the Miner? (April 16, 2024). Available at SSRN: https://ssrn.com/abstract=4793186 or http://dx.doi.org/10.2139/ssrn.4793186

Lichoo Tay (Contact Author)

The University of Western Australia ( email )

35 Stirling Highway
Crawley, WA Western Australia 6009
Australia

Dirk G. Baur

University of Western Australia - Business School ( email )

School of Business
35 Stirling Highway
Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Jonathan R. Karlsen

The University of Western Australia ( email )

35 Stirling Highway
Crawley, WA Western Australia 6009
Australia

Digital Finance CRC ( email )

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