With General Motors, Volkswagen, and other automakers jumping on the Tesla electric vehicle bandwagon, one industry has seen an unexpected surge in prices: lithium.
The demand for electric vehicles has sparked a rush for the lithium mines, as analysts are expecting a ten-fold increase in lithium production over the next 5 years to keep pace with the production of lithium-ion batteries, which are used for electric vehicles.
The lithium surge is clearly reflected in the rare earth metals industry, where the top players are lithium-producers in China and Australia, two countries that have the largest reserves of lithium mining. MVIS Global Rare Earth/Strategic Index (ticker: MVREMX), which tracks the performance of the largest and most liquid companies that generate at least 50% of their revenue from rare earth and strategic metals or companies that have ongoing mining projects that have the potential to generate at least 50% of their revenue from rare earth and strategic metals, has rocketed due to the lithium demand.
As of September 27th, 2021, MVREMX is up more than 67% year-to-date and 194% in the past year. With demand continuing to increase, the rare earth metals segment appears to have a long runway for growth.
MVIS Global Rare Earth/Strategic Index
28/09/2020-27/09/2021
Source: MV Index Solutions. All values are rebased to 1000. Data as of 27 September 2021.
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