Tesla may get into the lithium-mining business, and these stocks are cratering

And rounding out the main U.S. publicly traded lithium producers, Piedmont Lithium PLL, -1.36% fell more than 2% after a 12% drop on Friday.

According to a Bloomberg report late Friday, Tesla is considering a potential bid for Canadian miner Sigma Lithium Corp. SGML, +16.11%.

Sigma Lithium is one of “multiple mining options” being explored, the report said.

Tesla has long wanted to mine its own metal, a key component in electric-vehicle batteries.

In September, the EV maker filed paperwork connected with a proposed lithium refinery in Texas, which would add to Tesla’s presence in the state. It also would be following the advice of the company’s chief executive, Elon Musk, who has compared lithium mining to “printing money.”

The Financial Times reported in October that Tesla held talks to buy a stake in commodities giant Glencore PLC GLEN, -3.16%, but those talks fizzled.

Lithium prices peaked about a year ago and have since come off those highs. Benchmark Mineral Intelligence’s lithium price index is down 1.7% this year but up 34% year over year.

The index is tied to the weighted average price for lithium carbonate and hydroxide, the two primary lithium chemicals.

Tesla’s proposed lithium facility, located close to the port city of Corpus Christi, would be the first of its kind in North America, Tesla has said.

Construction could reach “commercial operations” by the end of 2024, Tesla said in an application for tax breaks filed with the Texas Comptroller’s Office.

Last month, General Motors Co. GM, -4.73% announced a $650 million investment in Canadian miner Lithium Americas Corp. LAC, -4.20%.

Also weighing on shares of lithium-mining companies is news that Chinese battery maker Contemporary Amperex Technology Co. 300750, -1.30%, or CATL, is reported to be offering discounts mostly to local EV makers on its batteries “to win more orders as lithium prices slowly unwind,” Emmanuel Rosner at Deutsche Bank said in a note.

Despite the recent losses, shares of the three lithium miners have outperformed the broader market index both over the past year and in the year to date.

In the past 12 months, Albemarle and Piedmont are up 30%, while Livent has gained slightly over 3%. That contrasts with losses of around 8% for the S&P 500 SPX, -2.00% in the same period.

The overperformance is holding for the year so far, with Albemarle up 14%, Livent advancing 18% and Piedmont gaining 43%. That compares with gains of about 5% for the S&P.