One of the hottest commodities in the world right now is lithium carbonate.
The metal is a key ingredient in rechargeable batteries which are used to power smartphones, renewable energy, and electric vehicles.
Its usage in the latter is what has really got the market excited lately. In July both the United Kingdom and France advised that they would ban the sale of petrol and diesel engine vehicles by 2040.
This was closely followed by news out of China which revealed that regulators are expected to follow the lead of the UK and France and do the same in the not so distant future.
I believe that this is very likely to speed up the adoption of electric vehicles, leading to even greater demand for lithium carbonate.
All in all, with supply already struggling to cope with demand, I expect that this could have an increasingly positive effect on lithium prices over the next decade.
Which will be great news for Australian lithium-focused miners such as Galaxy Resources Limited (ASX: GXY), Kidman Resources Ltd (ASX: KDR), Mineral Resources Limited (ASX: MIN), Orocobre Limited (ASX: ORE), and Pilbara Minerals Ltd (ASX: PLS).
Should you invest in the industry?
Whilst the lithium miners are notoriously volatile and often see their shares swing wildly, I do believe that there is a lot of upside potential for them over the next few years. This could make them a great option for investors with a high risk tolerance.
My number one pick in the industry remains Galaxy Resources. I believe the company's three key assets put it in an outstanding position to generate significant free cash flow if the lithium prices does at least remain at these high levels in the long-term.
