The impressive rise in lithium stocks of late has certainly been something to watch. Indeed, investors looking for sectors with strong catalysts have looked to lithium companies for such growth. Among the top players in this sector is Albermarle (NYSE:ALB). Indeed, as the world’s largest lithium producer, ALB stock has been on a very nice trajectory this year. This run has been due to a number of key factors.
First, investors are pricing in what is expected to be a lithium shortage in the years to come. Demand for batteries and new battery technologies has meant surging prices in the lithium space. For Albermarle, this has been a great environment. This demand surge has come at a time when new mine development has become a bit more tricky.
As with any other sector, bringing new mines online doesn’t happen overnight. Accordingly, a massive spike in demand can cause dislocations in commodity prices over the short-term.
That said, ALB stock has had a big down day today and is trending. Currently, shares of Albermarle are down more than 6% on a relatively flat day in the markets. Let’s take a look at what’s driving this top lithium stock lower today.
ALB Stock Lower on Ongoing Union Battle
Today, it was announced that a Chilean union had rejected Albermarle’s most recent labor contract offer. This has led to mounting pressure for Albermarle, as the company continues to battle ongoing union issues for its Chilean mine.
Reportedly, the 135-member union walked off the job more than a month ago. This mine is key for Albermarle and has become a point of contention for investors. Three other unions struck labor deals earlier in 2021, leading many investors to believe this work stoppage would be short-lived.
Indeed, many were hoping that this latest offer would resolve the ongoing dispute. However, news that this labor dispute may continue for longer than expected has hurt shareholder confidence.
How quickly this mine gets up and running to full capacity remains to be seen. Accordingly, investors bullish on Albermarle’s long-term prospects are stuck in an interesting position right now. This stock is likely to be more volatile than usual in the coming weeks and is one that investors should keep on their watch list now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
