Structural steel

First up is structural steel maker Severfield (LSE:SFR). Severfield’s share price is now down 25% over the past 12 months, at 53p as I write. But in recent weeks, we’ve seen a slight uptick from a recent low of 46.7p.

Any recession is not going to help the construction industry. But I see Severfield as having a defensive advantage for when things pick up. Structural steel is at the core of just about all major construction projects, and that has to be an investing attraction.

The biggest risk I see is that an economic turnaround might be some way ahead, and we might see more share price weakness.

But in the meantime, we’re looking at a forecast dividend yield of 6%. Cover by earnings should be reasonably strong.

Lithium

Shares in Atlantic Lithium (LSE: ALL) climbed in the early months of the year. But from a 68p peak in April, the price has been on a slide. At the moment it’s looking relatively stable at 34p.

Atlantic Lithium shares are still up 70% over the past 12 months, and it’s on the back of electric vehicle (EV) technology. Lithium is the stuff that batteries are made of, and the industry can’t get enough of it.

In the current worldwide economic turmoil, EV maker shares have tumbled. Tesla is down 23% over the past 12 months, and NIO has crashed by 70%. No wonder the appetite for lithium stocks has soured.

The biggest risk, I think, is the lack of profit. It’ll be a few years yet before shareholders see any, and there has to be a risk of dilution from any new cash raises. But Atlantic has some very promising assets. And the EV sector will surely pick up again.

Health

Shares in healthcare services firm Totally (LSE:TLY) are down 15% in the past 12 months, at 29p. But it’s another that started the year well and has fallen quite heavily in recent months. Since July, Totally shares have lost 40%.

Some of the fall is probably justified, as Totally had been on a lofty price-to-earnings (P/E) multiple. It’s admittedly hard to value a company when it turns from loss to profit, as it did in 2020-21. But today, a forecast P/E of 13 does not look stretching.

In fact, it looks very attractive when we see forecasts bringing it down to under eight next year. Analysts predict a dividend yield of 3.6% this year, and rising.

How referrals from the NHS might hold up if hospital admissions are dominated by Covid and influenza this winter is very uncertain, and that has to be a risk.

The mining stock has had a very successful year. Its share price rose 100% over the last 12 months. And in its FY21 report, Atlantic said total assets have risen from $42.5m to $72m. This largely results from expanding operations in West Africa, which have generated strong investor interest. 

But with the stock now priced at 42p, some investors may think it’s too late to join the party. I don’t agree. Let’s look at why I’m buying this lithium UK stock now for the long term.

Piedmont project

As said, Atlantic has driven forward operations in West Africa through its Piedmont project. While I have concerns over the project’s stability, I have faith that it can generate robust returns for the business. 

The project has secured 560 sq km of land in Ghana, meaning the company now pioneers lithium mining in the area. This builds upon Atlantic’s overall holding in West Africa, with 774 sq km of land held in Ivory Coast. 

I have concerns however. Mining projects typically span decades — with profits not being realised for a long time. During development, market prices could change drastically — or funding could fall through entirely. 

Indeed, The project’s funding has only just entered stage two, with $23m secured. But a further $70m is still needed from Piedmont Lithium to fund the operation. If funding was withdrawn, this could cause huge disruption to Atlantic’s operation.

I’m not too worried though. The company generated $28.8m in issued shares in FY21. Its recent ASX listing suggests similar generation can be expected this quarter. Also, total cash rose from $7.3m to $19.1m. I’m confident management can ensure project completion over the next few years, and deliver strong long-term returns on my investment.

Mind the market

Investing in lithium stocks has become increasingly popular as the metal’s market price continues to rise. Its use in electric vehicle batteries has caused the demand for lithium to surge as total EV production doubled across 2021-22. This bodes well for Atlantic’s future prospects.

Management intends to capitalise on this demand — funnelling 50% of its Ghanian production straight into the market. Profits are expected to be further bolstered by the company’s indirect partnership with EV manufacturer Tesla. 

Yet it will be a few years until investors see the estimated 30.1Mt of lithium ore turned into hard profit. While the company seems financially strong, a minor operational disruption could considerably hinder progress. Without regular cash flow, the company will have to rely on current financing capabilities to resolve development issues. However, Piedmont’s agreement to purchase 50% of Ewoyaa’s annual lithium output will hopefully stabilise the company’s financial position within the next few years.

It’s clear the Piedmont project has considerable financial backing. The company can begin accessing huge lithium reserves while the metal’s price skyrockets. This leads me to believe that Atlantic is set to deliver strong profits once ore is pulled out. Indeed, I’ll be looking to add this UK stock to my portfolio for long-term returns.

While lithium miners and producers have faced downward pressure due to rising costs and other macroeconomic variables, most analysts in the space refer to a lag between commodity prices and equities. Plus, the long-term dynamics look incredibly positive for lithium developers.

If the International Energy Agency (IEA)’s estimate of over 200m EVs being on the road globally by 2030 is to be believed, then lithium will be required in unthinkably vaster quantities. In fact, the IEA believes lithium demand could increase up to 40 times by 2040.

With this in mind, I’m looking to get in on the market now to leverage this sky-high potential. There are plenty of lithium options on the London market, but I think Atlantic Lithium (LSE:ALL) has one of the most promising growth stories.

Atlantic Lithium

This well-run company is advancing a large-scale hard rock lithium mine through development studies, with the aim of producing Ghana’s first producing lithium mine.

The mineral resource estimate at the Ewoyaa Project has already grown from 21.3 million tonnes to 30.1 million tonnes ahead of a pre-feasibility study (PFS) in Q3, which I will be following closely.

In a December 2021 scoping study, Atlantic estimated a post-tax NPV of $789m and EBITDA of $178m per annum over an initial 11.4-year mine life. But the beauty of Ewoyaa is there is significant upside to grow the resource via drilling.

With an estimated capital expenditure of just $70m, operational expenditure running at $249 per tonne and the payback period lasting less than one year, the economics look highly attractive already. I expect to see a larger resource and even sweeter economics in the upcoming PFS.

The company has been conducting exploration across the property over the past year and will continue to do so with only 13km² of its 560km² tenure portfolio drilled to date.

Atlantic has also received significant backing from a well-known lithium player across the pond. US-based Piedmont Lithium’s $103m investment is helping the company progress through the studies stage and supporting exploration.

Furthermore, Piedmont has agreed to buy 50% of Ewoyaa’s annual lithium production, should certain criterion be met. Given projected future lithium demand, Atlantic should have no issue selling its product, but there’s no harm in securing a trusted buyer now.

It’s important to stress that building mines take time, therefore I’m viewing Atlantic as a long-term investment. Things can go wrong over multi-decade timelines and macroeconomic conditions often dictate the health of smaller mine developers.

But I believe that EVs are part of the clean energy solution, so I will be backing lithium stocks, starting with Atlantic Lithium. If the share price does eventually catch up with the current lithium price, I will be laughing all the way to the bank.

He was quoted (tweeted?!) bemoaning the high lithium price and the cost impact on his Tesla car production. He went on to encourage entrepreneurs to invest in the “printing money business of lithium mining”.

Now, owning shares in a money-printing machine sounds awesome. But is it really a good time for me to buy any of the top lithium shares?

Why have lithium shares skyrocketed?

I can easily understand where Musk is coming from with his comments. Underlying lithium prices have skyrocketed by 600% this year, driving (pun intended) a 20% price rise for Tesla cars.

That price rise is not going to make it any easier to sell a luxury product into a likely upcoming recession. Hence Musk’s encouragement for more investment.

Potential investors may be further encouraged by seeing rocketing share prices of existing lithium companies. Take Atlantic Lithium (LSE: ALL) for example. It’s up over 75% in the last year alone, despite its recent falls.

Atlantic, along with others, has benefited from that eye-watering price rise, driven by demand vastly outweighing supply.

But can that meteoric rise really continue?

Where’s next for lithium share prices?

There’s a split of opinion (as ever) in terms of where next for lithium share prices. Largely driven by the supply/demand balance for the material, a lot hangs on the timing of new supplies.

On the one side – perhaps unsurprisingly – are the lithium miners. They’re confidently pointing to expected demand growth of electric vehicles continuing to rise rapidly.

But both CitiGroup and Goldman Sachs see extra supply coming through in the next couple of years, which will meet that demand.

Goldman stated: “We forecast all three metals to shift into sustained surplus over the next 1-2 years, which means materially lower price levels, in our view.“

Long-term though, despite tight budgets, it’s hard to see governments turning away from supporting the push for electric cars. So, as a long-term investor, I can see a case for lithium exposure in my portfolio.

Yet are higher-risk small lithium mining shares really my only choice for that?

Spreading the lithium price risk

Before I retired early, one of my many hats was as an energy risk manager. It’s second nature to me to want to diversify.

That’s why I’d prefer to buy Rio Tinto (LSE: RIO) shares than pure lithium miners. As a global mining giant, Rio has both the balance sheet and mining experience that could see it become a major player in this space. Especially if it can sort out the political wrangling over its new lithium mine in Jadar.  

Best though is its natural diversification across other commodities. That makes it a less risky way for me to invest in lithium mining. The roughly 10% dividend yield doesn’t hurt either.

It’s also fallen almost 20% over the last year. That means I don’t feel like I’m buying at the top of the market.

It may not satisfy Elon Musk’s immediate demand, but as a long-term play it’s one I’m far happier to hold.

Then some investors took a step back, and started thinking a bit more seriously about the valuations of these shares. The enthusiasm subsided. Share prices fell back. But if a growth sector really does have potential, we often eventually see more sustainable gains setting in.

Looking at the way some UK lithium share prices have started to pick up again, I can’t help wondering if that’s happening right now. After a volatile spell, are we heading for serious growth?

Atlantic Lithium is a good example of the phenomenon. It’s share price climbed as high as 68p in April. Approaching the end of July, it had lost more than half that value and stood at just 30p. Since then, we’ve had a bit of a resurgence. And it’s gained 30% since that recent low, to 39p.

No profit yet

One of the difficulties is that Atlantic Lithium is not profitable. And that means the most common valuation metrics, which are based on profit, can’t apply.

All investors can really go on is news of progress at its Ewooya lithium project in Ghana. The company has upgraded its resource estimates, and is working on drilling plans and feasibility studies.

I think that’s promising, but I can’t quantify it financially. I have no idea how much it will cost for the company to get to profit.

Zinnwald Lithium has also been a favourite with investors. The shares peaked in August 2021, but have fallen in 2022. And despite a modest recovery in recent weeks, the price is still down 67% over the past 12 months. It’s a very small company, this one, with a market cap of just £27m.

Another new rise

European Metals Holdings is another interesting one. Its share price is now down 45% over the past 12 months, at 45.5p. At its 52-week peak, it even reached as high as 110p.

Like Atlantic Lithium, the share price has also been gaining since its low point, in June. But unlike Atlantic, European Metals Holdings is profitable.

The company is only small, with a market cap of £84m. But its Cinovec project in the Czech Republic seems well positioned to serve the motor manufacturing markets of Germany and Eastern Europe.

Asset valuation?

We’re looking at a trailing price-to-earnings (P/E) ratio of around 23, which might be very good value. The trouble is, the stock’s valuation is also based on hopes for the size of its lithium deposits. And that, right now, is a big unknown. It could be potentially huge. But there’s no guarantee.

So are we looking forward to a new surge in the prices of lithium stocks? Well, I’m convinced the lithium market will expand considerably in the coming decades. But I don’t know if recent gains will turn into a sustainable new surge just yet. We’ll have to wait and see.

Why am I bullish on the EV industry?

It is clear to me that EVs are the future of the automobile industry. The top automobile manufacturers in the world have adopted the tech and are busy developing all-electric cars. And further mainstream adoption is already underway. 

Sweden is consistently ranked as the most sustainable country in the world. And the nation just witnessed record-breaking EV sales last month. EVs made up 50.1% of all automobile sales in July 2022. This was a big jump from 2021’s 37.6%. In fact, globally, June saw the highest EV sales in history with 913,479 new registrations in June, which is 54% more than a year ago. This could take global sales past 10m units next year.

And as manufacturing steps up pace to meet the demand, battery metals like lithium and copper have become highly valuable. There are some emerging mining UK shares with a focus on soft battery metals. And I think investing in these companies could boost my growth portfolio returns over the next decade.

UK shares to buy in the EV sector

Elon Musk stated earlier this year that the lack of battery-grade lithium is a major roadblock in EV production today. And Atlantic Lithium (LSE:ALL) is a company looking to address this issue.

The company owns and operated the Ewooya lithium project in Ghana. While still under exploration, the mine is estimated to hold 30.1Mt of Lithium ore. And recent drillings have found deposits much closer to the surface, which reduces the time required to reach extraction. 

Copper is another metal that batteries require. And thanks to the demand, copper prices have gone up by 125% since 2020. Taseko Mines (LSE:TKO) is a copper producer in Canada that owns and operates the Gibraltar Mines. The company produces an average of 130m pounds of copper and 2.5m pounds of molybdenum per year.

While most UK shares in this space are still under exploration, Taseko is an established business. It had its best quarter ever this year, amassing US$38m in revenue, up 61% from Q1 2021.

However, there are some big risks to consider. Mining is a cash-intensive operation and profits are highly dependent on commodity prices. Prices of these metals are currently high but could fall rapidly when demand stabilises, cutting profits.

Atlantic Lithium is yet to reach production, making it highly speculative. But I think its tie-up with Piedmont Lithium, a Nasdaq-listed mining giant, is a huge plus. Piedmont has a deal with Tesla that could make Atlantic Lithium a direct supplier to the most-recognised EV brand in the world.

Both UK shares are well-backed and fit right into the EV supply chain. And this is why I am willing to invest a £1,000 lump sum in these two companies if market performance is positive across 2022. 

The push to develop and manufacture electronic vehicles (EVs) could help cut down our usage of combustion engines and replace power sources with cleaner alternatives. And lithium has taken centre stage as the main driver behind this EV revolution. 

Lithium-ion batteries have been around for a while but the sudden surge in demand has made it a hot commodity. For the investment-savvy, this is an exciting time to explore lithium stocks. The soft metal holds the potential to become a strong, future-focused commodity.

What are lithium stocks?

Lithium stocks are listed companies that mine, refine, trade, or supply lithium to various industries. Although several tech-based firms are working on creating better battery technology, they cannot be classified as lithium shares as they do not produce or sell the soft metal. 

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Top UK lithium stocks

Here we will look at some of the biggest lithium shares listed on the London Stock Exchange (LSE). These companies hold huge reserves of the metal or refine ore to produce battery-grade lithium. 

Although there are many small, promising projects listed in the UK, we will focus on the largest companies. These shares will serve as an introduction to the industry and help investors understand if it’s right for their portfolio. 

Rio Tinto 

The largest and most diversified miner on this list has some promising lithium projects in the pipeline. Rio Tinto (LSE:RIO) is very optimistic about the potential of the EV industry. It has acquired lithium-rich mines in Europe and South America over the last two years.

The company recently purchased the Rincon lithium project in Argentina for $825m. This move came after the Serbian government revoked Rio’s licence to run the Jadar mining project, citing environmental concerns. However, Rio remains optimistic that amendments can be made to make the project viable again. The Serbian mine has the capacity to produce 2.3m tonnes of lithium carbonate by 2040. This would make Rio one of the largest lithium producers in the world. 

Given the company’s financial strength, the mining projects could start producing battery-grade lithium by 2024, making Rio a major supplier to European car factories. The company is also extracting lithium from century-old mining waste, which is much more sustainable than regular mining methods.

And Rio Tinto could effectively cut down European reliance on China and Australia for battery-grade lithium, making it a very important project for the near future. 

Atlantic Lithium

Atlantic Lithium (LSE:ALL) is a lithium-focussed miner with huge holdings in West Africa, a region known for its rich mines. The company owns the Ewoyaa Lithium Project, which is projected to produce over 27m tonnes of high-quality lithium ore. The company expects to produce 1.4m-1.8m tonnes per annum over the next 8-10 years. 

United States-based Piedmont Lithium invested US$102m into the project, which is expected to speed up production activity. With analysts expecting lithium prices to remain high over the next decade, this project could gain a lot of momentum.

The company’s 1,334 sq. km portfolio is strategically located in the Ivory Coast and Ghana, with established routes of trade to Europe. Although the project is new, the company is now well connected to American markets as well. This is a huge positive as most important electric vehicle developments originate there. 

Although this penny lithium share is still pre-revenue in 2022, the company is making some solid moves to secure trade lines in promising regions. This has made it one of the largest listed lithium-focused shares in the UK right now. 

European Metals Holdings

European Metals Holdings (LSE:EMH) is a Europe-focused exploration company with ambitions of establishing direct supply routes with European automobile giants. The Cinovec project that European Metal Holdings owns is the largest lithium resource in the region. The mine is located close to Germany’s automobile belt and other major battery manufacturers in Austria and Czech Republic. 

According to a pre-feasibility study, the Cinovec site has the capacity to produce 25,267 tonnes per year of battery-grade lithium, and a mine life of 21 years. The total value of lithium reserves here is estimated at US$1.1bn. 

Reports show that Europe is the second-biggest battery market in the world behind China. And demand in the region is set to increase at an annualised rate of 40% from 2020 to 2025. These are promising conditions for the company, which is planning to establish its first plant in late 2022 or early 2023.

Kodal Minerals

Kodal Minerals (LSE:KOD) owns and operates the promising Bougouni Lithium Project in Southern Mali. The company also owns the licence to six gold mines in West Africa, all in the exploration phase. It has the potential to become a diversified mining share, much like Rio Tinto.

The Bougouni Lithium Project has already attracted the attention of investors due to its long-term potential. The mine life of the project is estimated at 8.5 years.

The lithium penny stock’s share price has shown there is significant investor interest in the project. The project has received environmental clearance and could begin operations as early as 2024.

The UK’s lithium market

The supply and demand balance for this soft metal right now is very skewed. The rise in EV demand has forced European nations to look for lithium deposits in the region to sustain the industry. And the pioneer behind the popularity of EVs, Tesla CEO Elon Musk, has stated that lithium’s scarcity is one of the biggest roadblocks the automobile industry is facing. 

In the automobile sector, the market share of EVs skyrocketed to 8.3% of all cars sold in 2021 from 2.5% in 2019. Current year-on-year sales growth is estimated at 108% and there are no signs of it slowing down. And the supply still has to increase at a compounded annual growth (CAGR) of 19% over the next six years to meet estimated lithium requirements in 2025. 

Analysts from McKinsey & Company expect lithium carbonate demand to rise from 500,000 tonnes in 2021 to 4m tonnes in 2030. And an estimated 90% of lithium produced could go towards the manufacture of batteries by the end of this decade. 

While miners scramble to secure existing reserves, there are promising mining companies listed in the UK that look like strong lithium shares to buy right now. While companies work to establish themselves in the supply chain, most lithium companies are still in their infancy. But, the potential of the industry is enormous. And even if the demand cools, it is undeniable that lithium-ion batteries will be a crucial component to meeting climate goals set during the COP 26 summit. 

Are lithium stocks right for you? 

The sudden jump in demand for lithium has shed light on several UK shares. However, most of them are still in their infancy and could take years to become profitable. 

And the mining industry is fraught with difficulties. Any one of these projects could be hit with environmental sanctions or production difficulties that would strain share prices. 

The EV market is here to stay and the high demand for lithium is expected to continue over the next decade. But investing in the budding lithium industry might not be for everyone. A lot of fundamental analysis should be done before any investment in lithium mining stocks today. 

For more risk-averse investors, there are other areas within the electric vehicle market like battery manufacturers and R&D firms. Shares of automobile giants like Tesla and NIO give investors exposure to this rising industry and may be safer investments right now.

But given the demand for the soft metal, lithium shares might be worth exploring for future-focused portfolio builders looking for untapped and high-potential UK shares.

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Ever stricter environmental regulations are raising the impetus for the sector. So while I’d invest with a long-term horizon, the profit potential could be tantalisingly close.

Today, I’m looking at a few lithium stocks, and thinking about how they’re performing and what their potential might be.

Share price reversal

Shares in Atlantic Lithium (LSE: ALL) soared in the early part of 2022. But since a peak in April, they’ve been sliding.

The company boasts impressive assets at its Ewooya lithium project in Ghana. In the company’s latest update on 19 July, interim CEO Lennard Kolff said: “We are pleased to report ongoing and significant high-grade pegmatite intervals over broad widths … giving us confidence to deliver future resource upgrades for the project.”

The big risk I see is the time it will take to generate profits. And, as with any company at this exploratory stage, we don’t yet know how much funding it will need to get all the way to profitability.

But the company appears to have reasonable cash-in-hand at the moment. And it’s currently seeking a listing on the ASX market in Australia.

No profits yet

As an example of how lithium shares can fall out of favour with investors, the Zinnwald Lithium share price has fallen more than 50% over the past 12 months. Zinnwald owns a lithium project in Germany, and is working “to deliver a bankable feasibility study“, according to CEO Anton du Plessis.

There’s a handful of other small lithium explorers all working towards profitability, including Bradda Head Lithium, which has assets in North America. These are mainly very small-cap companies though.

Is biggest best?

With any new expanding industry, these pioneering companies face significant risk. If I wanted in, I think I’d be more tempted to go for a major established miner, like Rio Tinto (LSE: RIO).

Its share price has been volatile too, losing 18% over the past 12 months. Rio Tinto doesn’t actually produce any lithium yet. But it’s working on a major project in Argentina, which should apparently produce long-term supplies of battery-grade lithium carbonate.

Yes, it’s another project that is not yet producing. But Rio has the financial muscle to see it through, and I reckon that reduces the risk significantly.

Oh, and the group makes nice profits. And it’s forecast to deliver a dividend yield of more than 10% in 2022.

What would I do?

I have little doubt that some lithium shares are likely to generate good returns for today’s investors. But at the same time, I have no idea which ones they’ll be. I much prefer established companies paying sustainable dividends, so I’ll stay out of speculative lithium explorers.

I do though still expect to see profitable progress in the sector over the next few years.

And lithium is a vital component in EV car batteries. There are a number of stocks related to the metal that could be primed to benefit. One I am considering for my holdings is Atlantic Lithium (LSE:ALL).

West Africa-focused

Atlantic Lithium is an Australian-based mining business that concentrates on assets in West Africa. It has a flagship mine in Ghana that is set to become Africa’s first lithium producing asset.

So what’s happening with the Atlantic share price currently? Well, shares are trading for 37p as I write. At this time last year, they were trading for 23p, which is a 60% rise over a 12-month period.

Lithium stocks have risks

Many of Atlantic’s assets are currently exploratory only. This means there is no guarantee that they will successfully mine lithium to sell. If Atlantic’s mines don’t bear fruit, I could see its performance and investor sentiment dwindle.

Another risk is that competition in the lithium mining sector is intensifying. Competition is natural but the issue I have with Atlantic is the fact there are better equipped businesses with bigger budgets and better infrastructure vying to dominate the market. One name that springs to mind is Rio Tinto, one of the largest mining businesses in the world.

Why I like Atlantic and my verdict

The general market for lithium is a positive point, in my opinion. Demand for it should only increase in the coming years with lots of different applications available. The most lucrative application should be for EV batteries. Demand for EVs has increased and there is a consensus that EV vehicles will outsell conventional cars in the coming years. In fact, many governments and manufacturers will only sell EVs in the future.

So what about Atlantic Lithium itself? Well, recent updates have been positive. In past months, Atlantic has invested significantly to upgrade the infrastructure at its flagship Ewooya mine. Furthermore, it is also increasing drilling capacity, which I see as a sign of its confidence in the mine producing lithium.

At current levels, the shares look dirt-cheap to me. I could be entering the potentially lucrative lithium stocks market at a rock-bottom price. My investment strategy has always been to buy and hold for the long term. If I added a small number of shares and the stock did not perform, I would not have lost much of my hard-earned cash.

Overall, I would add a small number of shares of Atlantic Lithium to my holdings. I believe it is a great entry point to access lithium stocks for my holdings. If I’m buying shares for 37p per share, I’m not worried about losing lots of money on the shares. However, based on the current lithium market, rising demand, and Atlantic’s confidence in its projects, I expect it to perform in the longer term and provide me with returns.

Lithium is a critical component in the batteries that make EVs run. So increasingly colossal amounts of the element will be needed in the years ahead to meet soaring production of low-carbon vehicles.

Studies suggest that there is huge financial incentive for carmakers to speed up their switch to EVs too, as environmental legislation is steadily tightened. According to thinktank Transport & Environment, operating margins on such vehicles “are expected to reach and surpass those of conventional cars” in the next three-to-five years.

Why I’d buy lithium stocks today

I think buying lithium stocks could be another good option for me as battery production steadily increases. I’d certainly rather buy one of these shares rather than an EV stock like Tesla or NIO. Competition among the autobuilders is intense and is set to increase.

Production levels at EV stocks like these are also tipped to come under pressure if, as some predict, massive lithium shortages occur towards the end of the decade. Conversely, lithium-producing stocks would benefit from a boost to lithium prices if material shortages emerge.

3 top lithium stocks to buy

There are plenty of top lithium stocks for me to choose from today. Here are three UK-listed mining stocks that I’m considering investing in:

#1: Zinnwald Lithium

Zinnwald Lithium is named after a gigantic lithium asset in East Germany where output is due to begin next year. Pleasingly, the project is located on the doorstep of some of the world’s largest automakers like Volkswagen, BMW, and Porsche. This gives it a huge advantage over many other lithium-producing stocks. Remember though that any mine development issues could cause profit forecasts to sink and potentially lead the company to embark on additional fundraising.

#2: Rio Tinto

FTSE 100 stock Rio Tinto is one of the world’s biggest mining businesses. Lithium forms a small part of its operations but Rio is boosting its exposure. This year, it paid $825m for the large undeveloped Rincon project in Argentina. A severe economic downturn in 2022 could smack demand for its industrial commodities, including copper and iron ore, very hard. But I believe Rio could be a great way for me to capitalise on soaring raw materials demand over the longer term.

#3: Atlantic Lithium

I like Africa-focussed Atlantic Lithium following a stream of positive project update. The company’s flagship asset is the Ewooya lithium project in Ghana which has been subject to significant resource upgrades in recent months. In recent days, Atlantic has said it will double the size of its drilling plan there with a view to producing a pre-feasibility study in the third quarter. I’m confident of further excellent newsflow here. Although I’m also aware that any adverse developments could cause its share price to reverse sharply.