3 Best Lithium Stocks To Buy In 2025

Lithium prices have plummeted more than 80% from their 2022 highs, leading to a selloff in lithium mining stocks. Analysts appear skeptical about any near-term revival in lithium demand amid the persistent buildup of lithium inventories that are expected to last at least until the end of 2027. China’s oversupply, paired with a slowdown in electric vehicle (EV) adoption is hurting demand for lithium, which is the lifeblood of EVs. Adding another layer of uncertainty to the mix, President-elect Trump has vowed to rollback incentives to promote production and adoption of EVs.

• What could be the spillover effect of such a move on lithium demand and prices?
• Is there any compelling reason for investors to even consider buying lithium stocks now?
• If so, what are the top picks?

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Why Should Investors Even Consider Lithium Stocks Now?

The main reason investors should consider these types of stocks is because lithium stocks are down, not dead. Here’s why lithium stocks may be worth a closer look.

1. Supply Tightening through mine capacity curtailments

Strategic initiatives are underway to tighten lithium supply through mine closures and the deferral of new projects. These moves aim to address the excess supply that has contributed to the prolonged downturn in the lithium market.

Australian mining company Mineral Resources closed its Bald Hill lithium mine due to the crash in lithium prices. After reporting a net loss of $1.1 billion for the third quarter of 2024, Albemarle is cutting 2025 capex by about 50% compared to 2024, adjusting its budget to between $800 million and $900 million. The company is also implementing workforce reductions of 6% to 7% globally. Australian firm Liontown Resources, the Lithium rockstar of 2023, has decided to scale back production at its Kathleen Valley mine, while Pilbara Minerals has confirmed the suspension of a lithium processing plant in Western Australia.

Industry-wide lithium mine capacity reductions since the end of 2023 are estimated to lower lithium supplies by about 14% in 2025. If lithium prices approach the marginal cost of production, more miners may be compelled to slow down or halt production, triggering the possibility of further supply curtailment.

2. Energy majors investing in lithium production: A vote of confidence from Berkshire Hathaway Energy Renewables

A growing number of oil and gas giants are foraying into lithium production as efforts to curb emissions gain momentum, amid the global transition from fossil fuels to cleaner energy. An endorsement from Warren Buffett’s energy camp lends more credibility to the lithium push.

Berkshire Hathaway Energy Renewables & Occidental Petroleum explore sustainable lithium extraction:

In June, Buffett’s Berkshire Hathaway Energy Renewables and Occidental Petroleum (OXY)–in which Berkshire Hathaway owns a 28% stake–announced a joint venture to extract lithium from geothermal brine, which is used to produce electricity. The companies are testing to see if lithium can be produced in an environmentally safe manner. If successful, Buffett’s BHE Renewables plans to build commercial lithium production facilities in California’s Imperial Valley, with potential for further expansion beyond the region.

ExxonMobil setting up for first lithium production in 2027:

In late 2023, ExxonMobil (XOM) unveiled plans for its first lithium production in 2027, with the objective of producing enough lithium by 2030 to support the manufacturing of more than 1 million EVs per year.

3. Recent M&A in the Lithium mining space should encourage further consolidation in the beleaguered sector and likely boost the perceived value of other lithium mining stocks, currently in doldrums.

At current low valuations, taking over already-available, established lithium assets could be compelling for companies broadening their horizons into lithium production. Expanding of brownfield sites with established lithium resources presents a clear value proposition over greenfield development that may involve numerous unknown variables.

Sayona Mining, Piedmont Lithium to merge:

Last month, Australia’s Sayona Mining and U.S.-based Piedmont Lithium (PLL) agreed to merge in an all-stock transaction to form a unified lithium business, with Sayona assuming the role of the parent entity. While the merged entity will be domiciled in Australia with an ASX primary listing, it will also maintain a Nasdaq secondary listing of American depositary shares (ADSs). Sayona is offering a 6% premium over Piedmont’s closing stock price on the day prior to the merger announcement.

Subsequent to separate capital raisings by each company, the combined entity will have an estimated pro-forma market capitalization of $623 million, with shareholders of the two companies holding roughly equal ownership.

A back-of-the-envelope calculation shows that half of the $623 million is roughly 14% above Piedmont Lithium’s current market value of $272.95 million (not to forget this is Piedmont Lithium’s current market cap much after the merger announcement).

The proposed merger should also iron out contractual complexities in their Quebec-based joint venture – North American Lithium (NAL) and create economic alignment to pursue NAL brownfield expansion. NAL has a target annual production capacity of up to 226,000 metric tons of spodumene concentrate. Spodumene is valued as the most important lithium ore mineral because of its high Lithium content.

Rio Tinto’s acquisition of Arcadium Lithium:

Early October, Rio Tinto agreed to buy Arcadium Lithium plc (ALTM) for $5.85 per share in cash, bringing the total value of the deal to $6.7 billion. The acquisition price represents a 90% premium to Arcadium’s closing price of $3.08 per share on October 4, 2024. Arcadium’s lithium business will complement Rio Tinto’s portfolio (comprising its iron, aluminium and copper operations) to supply materials needed for the energy transition. With spot lithium prices down more than 80% versus peak prices, Rio believes the timing is right for the acquisition of high-quality lithium assets that represent substantial upside in the long-term.

4. Why the Trump Administration’s impact on America’s lithium industry may not be as negative as it appears

Other demand drivers for lithium:

Lithium is pivotal in the production of rechargeable batteries for mobile phones, laptops, digital cameras, and electric vehicles. Regardless of President-Elect Trump’s stance on electric vehicles, lithium has other demand drivers, thanks to the ever-increasing reliance on consumer electronics.

Home-grown lithium sounds appealing vs. less attractive alternatives:

Given Trump’s history of contentious dealings with China, it’s increasingly unlikely that the U.S. will depend on its geopolitical rival for lithium or battery production. In fact, the new administration may very well provide a boost to domestic lithium production.

Approval of lithium mine at Nevada’s Thacker Pass:

In early 2021, the Trump administration approved plans for a $1 billion open-pit lithium mine at Nevada’s Thacker Pass, which houses the largest known lithium resource in the U.S. The project is spearheaded by Lithium Nevada LLC, a subsidiary of Lithium Americas Corp. The approval highlights the administration’s willingness to support domestic lithium production, further dispelling the notion of Trump’s antagonism toward the industry.

Elon Musk’s rapport with Trump:

While Trump’s outspoken stance against EVs might seem at odds with the industry’s future, it didn’t deter Elon Musk from offering his support to the presidential candidate. Musk, who holds a 13% stake in Tesla, worth more than $100 billion, is arguably one of the most invested in the future of North American EVs. His endorsement of Trump is quite diplomatic. The Biden-Harris administration would have continued to support EVs with or without Musk’s patronage. By backing Trump, Elon Musk likely secured political goodwill. Experts opine that Musk’s rapport with Trump could even influence future policies on EVs under the new administration.

5. IEA’s positive forecasts for long-term lithium demand

Last but not least, the International Energy Agency (IEA) projects that clean energy technologies will increase global demand for lithium by nearly 90% over the next two decades, in a scenario which meets the goals of the Paris climate agreement.

Having established the rationale for considering lithium stocks, it is now time to examine the top picks.

Methodology Used For Lithium Stock Picks

Lithium supply is estimated to rise 32% in 2025, surpassing the 23% demand growth. The surplus in supply is anticipated to peak in 2027, and a deficit is expected to emerge by the end of the decade, according to industry experts. Since no near-term recovery appears in sight, ruling out most lithium pure plays seems like a logical choice. Typically, pure-play companies are the most vulnerable to demand and price fluctuations, as they lack the cushion of diversification to offset challenges during market downturns. Although most lithium mining stocks are trading at discounted valuations, with no clear signals of lithium demand recovery, it’s uncertain whether these represent value opportunities or value traps.

Selection criteria

• Prioritized diversified companies engaged in both lithium production and other business operations.
• Include dividend-paying stocks to provide income while investors await capital appreciation.
• Include at least one small-cap lithium stock with significant growth potential.
• Include stocks with no “Sell” rating from analysts.

Top 3 Lithium Stocks to Buy In 2025

Source: Seeking Alpha, Yahoo Finance

1. ExxonMobil (XOM)

Business Overview

This oil major is bringing its expertise in drilling and well construction to extract lithium from the lithium-rich brines (salty water rendered unusable for drinking or agriculture) lying deep underground at approximately 10,000 feet. Exxon will pump up the lithium-rich brine to the surface and extract lithium from the brine through a process called direct lithium extraction (DLE) and reinject the leftover brine back into the reservoirs it came from. The technique aims to produce lithium with less environmental impact than current methods like hard-rock mining.

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Why XOM Stock Is A Top Choice

Exxon’s business model, which is diversified yet integrated, provides the much-needed financial stability for cushioning against price and demand volatilities, now faced by lithium pure play producers. Exxon’s long-term profitability growth trends in its legacy business, strategic investments leading to higher returns, differentiated products, disciplined cost management and impressive shareholder returns show a well-rounded approach to long-term value creation. There is every reason to believe that Exxon is likely to apply the same diligence and method to its lithium business going forward. Here’s a detailed rundown.

Deep Industry Partnerships to foster Lithium positioning:

ExxonMobil is targeting commencement of lithium production in 2027, positioning itself strategically for the recovery in lithium demand expected by the end of the decade. It is easier for Exxon to build its lithium business on its deep and long-term industry partnerships. In fact, Exxon already has non-binding lithium supply deals in place with battery parts maker LG Chem, and battery technology company SK On, a unit of SK Innovation.

Improved Earnings Power:

While waiting for lithium demand recovery and Exxon’s lithium business to come online and contribute, investors can benefit from Exxon’s improved structural earnings power, achieved by reducing costs, investing in high-return projects and selectively divesting non-strategic assets. These strategies aim to improve profitability even in the bottom-of-cycle conditions.

The resilience of Exxon’s Upstream business & the ability to thrive even at lower Brent prices:

Over the last five years, ExxonMobil has doubled its average profit per oil barrel (at constant prices) from $5 per oil-equivalent barrel in 2019 to $10 this year and expects to add another $3 of profit/barrel by 2027. This is thanks to a strong portfolio of advantaged assets Exxon has built into its Upstream business. ExxonMobil appears to be tracking well with its corporate plan outlined in December of last year, which projected that Exxon could generate returns exceeding 10% even at a Brent price of $35/bbl over the next five years–from 90% of its planned Upstream capital investments in new oil and flowing gas production.

For the most recently reported third quarter, XOM achieved its highest liquids production in more than 40 years, driven by advantaged growth from both the Permian and Guyana. The growth in advantaged volumes is translating into higher profitability for Exxon’s Upstream segment.

Profit doubling in Exxon’s Energy Products business:

Exxon’s energy products business has seen impressive growth with earnings for the first three quarters of 2024 roughly doubling from the same period in 2019, thanks to a significant high-grading of its refining portfolio by divesting less-advantaged sites. The count of refineries has reduced drastically from 45 at the time of the Exxon and Mobil merger to 22 in 2017 and should potentially decrease to 15 by the end of this year. Investing in strategic projects to improve the yield of products with higher market value has also contributed to the improvement in earnings.

Carbon capture and storage business to benefit from decarbonization goals:

The company is making huge strides in carbon capture and storage (CCS) efforts, and has deals with major Co2 emitters like Nucor Steel, chemicals company Linde and CF Industries. Including a recent agreement with natural gas gathering companyNG3, Exxon’s total planned CO2 storage for customers is 6.7 million metric tons per year.

New differentiated product with a $30 billion TAM:

Exxon also sees a huge TAM of $30 billion by 2030 for its new Proxxima thermoset resin in applications including but not limited to rebar, structural components for automobiles, and battery boxes for EVs where traditional thermoset resins struggle to compete. This is because Proxxima is stronger, lighter, and more corrosion-resistant than conventional materials.

Significant cost savings:

Disciplined in its cost strategy, ExxonMobil has achieved $11.3 billion in cumulative structural cost savings since 2019 and remains on track to realize $15 billion in cumulative cost savings through the end of 2027.

Strong dividend track record and shareholder returns:

Last month, Exxon announced a 4% increase in quarterly dividend payments to $0.99 per share. At current stock prices, the dividend yields 3.5% on a forward basis. Exxon has increased its annual dividend for 42 years in a row, ranking it among ‘Dividend Aristocrats’, or companies that have increased dividends every year for the last 25 consecutive years. For the first nine months of 2024, Exxon generated total shareholder returns of 20% (including dividends and buybacks).

Near-term catalyst:

A key event to watch will be ExxonMobil’s virtual webcast of its “Corporate Plan Update and Upstream Spotlight” on December 11 to gather insights on its future direction.

2. Rio Tinto Group (RIO)

Business Overview

Rio Tinto is a global miner, producing iron ore, copper, aluminum, and other critical minerals needed for global energy transition. The mining behemoth continues to invest significantly in lithium, with investments exceeding $1 billion in lithium projects–Jadar in Serbia and Rincon in Argentina. Rio Tinto also capitalized on the steep selloff in lithium prices to scoop up Arcadium Lithium at an attractive valuation. Despite the oversupply in lithium markets, Rio Tinto staunchly defends the long-term narrative for lithium and EV transition.

Why RIO Stock Is A Top Choice

Rio Tinto’s status as a top global player in the mining and materials space with a $107 billion market cap and its low stock price volatility with a beta of 0.62 renders it a stable investment profile. The stock trades at a 14% discount to its 52-week high, and offers a compelling relative valuation vs. peers. Rio’s initiatives to position itself strategically in commodities critical for future technologies and infrastructure development should drive growth forward. The tailwinds include:

Rio Tinto’s proposed Arcadium takeover:

Rio Tinto already supplies aluminum, copper, and iron that make up over 40% of the material content of the battery. Lithium added to the mix will round out its portfolio for supplying critical materials needed for the energy transition. The proposed acquisition, if approved, will elevate Rio Tinto from the sidelines to the top leagues in lithium production.

Arcadium brings to the table high-margin, Tier-1 lithium assets and a resource base that should support 130% capacity growth by 2028 within Rio Tinto’s existing geographies. Arcadium’s blue-chip customers include Tesla, Panasonic, BMW, General Motor and Ford.

Rio Tinto and Arcadium share complementary geographic footprints in Argentina and in Quebec, Canada, where Rio Tinto plans to establish lithium hubs.

For investors worried if Rio is overpaying for the acquisition, Arcadium was valued at over $10.6 billion in May 2023, when lithium companies Livent and Allkem announced their plans to merge to form Arcadium. So, Rio’s $6.7 billion offer for Arcadium’s current annual lithium production capacity of 75,000 tonnes, top assets, DLE expertise, blue-chip clientele and more – does not appear overvalued, even if the transaction price was at a 90% premium to Arcadium’s Oct 4th closing price.

Return of Trump’s presidency:

The return of the Trump administration signals a renewed focus on construction, infrastructure, manufacturing, and industrial sectors, from which Rio Tinto is well positioned to benefit.

Focus on high-quality production paves access to lucrative markets:

Rio Tinto is prioritizing high-quality production to secure access to lucrative markets. The company is on track to achieve first production from its Simandou high-grade iron ore project next year and to deliver its first lithium from the Rincon starter plant by the end of this year. Meanwhile, copper production continues to ramp up at the Oyu Tolgoi underground mine, which is expected to be free cash flow (FCF) positive next year and drive strong FCF expansion over the next few years. The miner targets annual copper production of 1 million metric tons by 2030.

Solid FCF generation, generous dividend payouts:

For the first half of 2024, Rio Tinto reported free cash flow of $2.8 billion and underlying earnings of $5.8 billion. Return on capital employed was a healthy 19%. Rio Tinto paid a normal dividend with a 50% payout for the interim period– which equates to $2.9 billion (50% of underlying earnings of $5.8 billion). The payout is consistent with its now 8-year old shareholder policy of returning 40-60% of underlying earnings. On a per share basis, the interim dividend was $1.77/share.

Compelling relative valuation:

Based on 2024 earnings per share (EPS) estimate of $6.87, RIO stock trades at a forward Price-to-Earnings multiple of 9.4x vs. sector’s 17x. If the multiple were to rerate conservatively to even 12x, the potential upside from current stock price levels is more than 25%.

3. Atlas Lithium (ATLX)

Business Overview

Atlas Lithium (ATLX) is an emerging player in Brazil’s Lithium Valley (LV ) positioning itself strategically in the global lithium supply chain. Focused on lithium and other battery metals, this mineral exploration company holds Brazil’s largest portfolio of lithium mineral rights among publicly listed companies. This is clearly a positive for Atlas Lithium as LV shapes up as a premier hard-rock lithium jurisdiction, with major lithium players vying for presence. Atlas Lithium’s flagship Neves Project in southern LV, is advancing towards production after recently receiving permits. Recent exploration activities in its other key projects Salinas (in Northern LV) and Clear (in Central LV) have shown potential spodumene deposits.

Why Is ATLX A Key Choice?

The ATLX stock is down 75% in the year-to-date period, offering an opportunity to buy into a business that is already backed by some of the world’s prominent names, and heading into first lithium production that is fully funded. Despite its small-cap status, here’s why ATLX deserves attention.

Operational permit for flagship project de-risks investment thesis:

In late October, Atlas Lithium announced that it had secured the operational permit for its Neves project from the government of Minas Gerais in Brazil – marking a critical milestone that significantly reduces risks associated with the mining project. Permitting is widely regarded as one of the most pivotal risks in any mining venture. According to Atlas Lithium, this permit authorizes it to assemble and operate its lithium processing plant, process mined ore from one of its deposits at the facility, and sell the lithium concentrate produced. Following an expansion in late 2025, annual lithium production is projected to reach 300,000 tonnes, sufficient to power around one million electric vehicles.

High potential for identifying lithium deposits:

Atlas Lithium is optimistic that deposits at its Neves project are distinguished by high-quality, large spodumene crystals that should deliver lithium concentrate with minimal impurities. An initial exploration at the Salinas Project identified spodumene-rich pegmatites, a source of lithium and other rare metals. Atlas Lithium’s Salinas Project enjoys proximity to Latin Resources’ Colina Project, which is a significant lithium deposit. This advantageous positioning and proximity to established projects improves prospects for the Salinas project. Yet another key catalyst is the acquisition of Latin Resources by major lithium producer Pilbara Minerals for $370 million, which should further catalyze development of the lithium district surrounding the Salinas municipality.

Fully funded for first production with equity investments from companies connected to Warren Buffett, BYD, Tesla:

Atlas Lithium has forged key partnerships with Chengxin Lithium Group, Yahua Industrial Group, and Mitsui & Co., Ltd., securing a combined $40 million in equity funding. On top of that, these collaborations include additional commitments of $40 million in non-dilutive prepayments for future lithium supply. Chengxin and Yahua are key suppliers of lithium chemicals to Tesla, BYD, and LG. Warren Buffett has a 9% stake in Japanese conglomerate Mitsui and less than 5% stake in BYD. It is interesting to note Buffett’s name popping up in lithium related developments. With these transactions, Atlas Lithium says it is fully funded for its estimated total capex of $49.5 million for first production.

Bottom line

It is reassuring to see Buffett’s name making its way into lithium news developments, albeit indirectly. The involvement of major energy and mining companies in the lithium production space lends further credibility to global energy transition efforts. The new Trump administration has more incentives to foster home-grown lithium production like avoiding reliance on China and nurturing its rapport with ally Elon Musk, who is a key proponent of the domestic EV industry.

Among the stocks highlighted here, Exxon Mobil and Rio Tinto benefit from diversified operations and financial resilience, which provides the wherewithal to weather potential setbacks in their lithium strategies. These stocks also offer dividends to keep investors interested through market cycles. Conversely, Atlas Lithium carries higher risk because of its small market cap, but has the backing of prominent investors, operates in lithium-rich zones and is on its way to fully-funded first production. While Atlas Lithium does offer any dividend currently, analysts expect significant capital appreciation from its shares.

All said, low stock valuations in the absence of near-term recovery signals in lithium demand may imply a value trap vs. value opportunity. So, until the emergence of more concrete signals of lithium demand recovery, it would be prudent for investors to keep their choices open across the broader U.S. stock market.

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