What happened
Shares of lithium mining company Lithium Americas (LAC) closed 7.7% higher on Friday.
You can thank rival lithium company Albemarle (ALB 0.93%) for that.
Image source: Getty Images.
So what
In its 2021 Investor Day held Friday, Albemarle told investors that a surge in demand for lithium -- which is used to build batteries for electric cars -- is going to lift its profits in 2022.
Car buyers around the world bought 2.5 million electric cars in 2020, reports Reuters, and that number is only going to grow as governments continue to encourage efforts to go electric. In the U.S., for example, President Biden has set the goal of having half of all cars sold in 2030 be electric cars.
To meet the demand for all the lithium that will be required to build the batteries for those cars, Albemarle has promised to double its production of the metal, helping to drive its own profits up 25% to 35% in 2022 alone.
Now what
But 2022 is only the start of this story. Albemarle set a new target to roughly triple its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the next five years ($2.2 billion to $2.6 billion, versus $820 million earned over the last 12 months).
So far, Lithium Americas hasn't made a similar promise. But investors seem to be assuming (and logically so) that what's good for one lithium miner should be good for another as well. This, in a nutshell, is why Lithium Americas stock is rising on Albemarle's good news.
