Charging up on lithium – the metal or the miner?

Until the recent introduction of lithium futures, there was no direct way to invest in the lithium commodity itself. We construct an equally weighted index of lithium mining firms to represent a tradable proxy for lithium exposure. The index broadly captures lithium price movements but exhibits higher average returns and volatility than the underlying commodity, reflecting the industry-specific risks of lithium mining. In addition, miner index returns lead lithium price returns implying that lithium prices only reflect information with a delay.