What you need to know about lithium and which ASX stocks will benefit


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There are several dozen ASX stocks chasing lithium. A handful of others are in the pre-production phase.

But only three ASX stocks actually produce the metal right now.

We take a look at these below.

But first…

What is Lithium?

Lithium is a light, malleable, silvery alkali metal.

In the past it was used to increase the heat resistance of glass and ceramics. Lithium salts are also used as antidepressants.

But it’s lithium’s high thermal and electrical conductivity that has fueled a boom in demand alongside the rapidly growing lithium-ion battery market. Batteries that power almost every electric vehicle (EV) on the road.

Lithium’s critical role in the transition to renewable energy has led the Australian government to designate the metal as a critical mineral.

The metal is mainly mined from ores and brines, with Australia, Chile, China and Argentina having the largest deposits.

The Government reports that Australia has a high geological potential for lithium with an economic proven resource of 6.17 million tonnes in 2020. In 2020, Australia produced 40,000 tonnes of lithium out of a total world production of 82,000 tonnes.

So Which Three ASX Stocks Produce Lithium?

Three ASX stocks cash lithium

If we take them in alphabetical order, we’ll start with Allkem Ltd (ASX: AKE), formerly known as Orocobre.

Allkem has a market cap of just under $6.6 billion. Based in Brisbane, its projects are primarily located in Argentina. The Company supplies lithium carbonate to a variety of industrial and technical sectors, serving approximately 10% of the global lithium market.

Allkem claims to be one of the lowest cost lithium producers in the world. The company aims to increase production by 3 times current levels by 2026.

Allkem’s stock price is up 72% over the last 12 months.

The second ASX stock is already producing lithium Mineral resources limited (ASX: MIN) with a market cap of $10.1 billion.

Although you might think of Mineral Resources as a mining services company, the company also has a large presence in the lithium space. Its operations in Western Australia are Mt Marion, located in the Goldfields; and Wodgina in the Pilbara region.

The Company mines and produces both ore lithium and spodumene concentrate for direct shipment.

Mineral Resources’ stock price is up 8% since this time last year.

Coming to our third production stage ASX stock for lithium, we have Pilbara Minerals Ltd (ASX: PLS), which has a market cap of $6.3 billion.

Pilbara’s flagship lithium-tantalum project, Pilgangoora, is also located in the Pilbara region of WA.

The Pilgangoora Project is one of the largest hard rock lithium tantalum deposits in the world. Pilbara Minerals has major expansion plans for the project. It forecasts that Pilgangoora’s spodumene concentrate capacity will increase to between 560,000 and 580,000 dry metric tons (dmt) this year.

Pilbara’s stock price is up 57% over the past 12 months.


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