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Best ASX Lithium Stocks to Watch in 2024
By
Will Ellis
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Last Updated on March 16, 2024
If you’re looking for Lithium stocks on the Australian market, you might be wondering which ones to buy. It’s worth learning more about what Lithium is and why it’s an important investment.
Table of Contents:
- What You Need to Know About ASX Lithium Stocks
- Top 10 ASX Lithium Stocks
- Important Things to Know About ASX Lithium Stocks
- Why the Use of Lithium is Expected to Rise
- How Does China Affect Lithium
- How Do I Invest in Lithium Stocks
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What You Need to Know About ASX Lithium Stocks
Lithium is a type of alkali metal that is silvery-white. It has important properties that make it useful for making lithium-ion batteries. It can also be a source for powering electric vehicles.
Lithium is also the least dense solid element and the least dense metal so it has a very small chance of being replaced by other metals since most other metals cannot do the same things as lithium. Some people think lithium can be replaced with nickel, but they have two very different properties that make this impossible.
Nickel has a 40% lower energy density which means more metal is needed to create an EV battery. Lithium still has some disadvantages though not as many. Lithium is one of the most highly reactive metals which makes it very expensive to transport, store, and produce.
One of the main reasons Lithium stocks are so important right now is because Electric vehicles are on the rise. Lithium mining has also become very profitable with more people wanting to invest in it.
With oil prices rising, Lithium is expected to be used more and more for electric cars. Lithium does have some environmental concerns though similar to the concerns over oil.
However, most people are more concerned with oil environmental concerns. Lithium may prove to be one of the most important stocks in the near future and long term.
Top 10 ASX Lithium Stocks
- Core Lithium (CXO)
- Pilbara Minerals (PLS)
- Sayona Minding (SYA)
- Piedmont Lithium (PLL)
- AVZ Minerals (AVZ)
- Lake Resources (LKE)
- Allkem (AKE)
- Liontown Resources (LTR)
- Ioneer (INR)
- Mineral Resources (MIN)
1. Core Lithium (CXO)
Core Lithium is the producer of the Finniss Project in the Northern Territory. This project covers one of the most efficient spodumene lithium projects in the world.
The director is expected to start production of the lithium concentrates from this project by the end of this year.
The production of the concentrates will be when lithium prices are at one of their highest so the share prices should soar at this time. There will also be a very high operating environment.
One of the reasons who can expect this company to be successful in the months to come is because they have some of the best logistics and supporting infrastructure in all of the Asian and Australian lithium markets.
It’s also only 88km from the closest port in Asia, Darwin Port. This makes it extremely easy to be interconnected and supported.
2. Pilbara Minerals (PLS)
Pilbara Minerals is expected to be one of the lowest-cost lithium producers in the world. They are also long-term sustainable.
According to the company, Pilbara Minerals is the leading independent hard rock lithium operator. They also describe themselves as the “pure play lithium company”.
They have several lithium-producing partners, including Ganfeng Lithium and General Lithium. They have a mine in the Pilbara region that produces a few different concentrates, including tantalite and spodumene.
They have a few different strategies that they are aiming for, but one of the main ones is that they want to be an integrated lithium raw materials supplier. They also have a few plans to supply lithium chemicals.
They also understand that clean energies are important so they are working on creating technologies to ensure their lithium is produced in a way that is good for the environment.
3. Sayona Minding (SYA)
Sayona Mining is one of the leading lithium producers in the world. They are currently undergoing a number of different projects in Quebec, Canada, and Western Australia.
They have a partnership with Piedmont Lithium in Quebec since they have been able to gain access to North American Lithium.
In the future, it plans to also incorporate plans for Authier and Tansim projects. It also currently has 60% ownership in the Moblan project. With all these different partnerships all over the world, it wants to create a global scale for Lithium production and mining.
It also has reserves of gold and lithium in Western Australia. Its main plans are to use all of its partnerships and reserves to supply the fast-growing North American market for EV cars.
4. Piedmont Lithium (PLL)
Piedmont Lithium wants to integrate its businesses all over the world to be the top lithium business in the United States.
It currently holds control over the Carolina Tin Spodumene Belt in North Carolina. This is known as the top part of the lithium industry in the US.
The main interest that Piedmont Lithium has is that they want to become a miner that can produce lithium hydroxide at a fraction of the cost that the market currently makes it for.
It will also become an integral part of the US electric vehicle supply chain once lithium hydroxide begins being produced.
It’s partnered with Sayona in some areas and also has some interests in Quebec.
5. AVZ Minerals (AVZ)
This company is entirely focused on the development of its Manono project. It’s based in the Democratic Republic of the Congo which is known to be one of the largest lithium-rich countries since it has huge pegmatite deposits.
The company plans to leverage its projects in DRC. Unfortunately, though, this company is currently facing legal battles though.
Chinese Zijin Mining is one of the largest gold miners and they are staking claim to 15% of the Manono project. The issue has already been going on for months and has no interest in sight.
However, AVZ says they will be sure there will be a positive outcome on the matter and that their project will go on without a hitch.
Knowing the outcome before you invest is a good idea.
6. Lake Resources (LKE)
Lake Resources uses proprietary clean extraction technology which is different from many of the other lithium mining companies around the world. They are aimed at creating batteries that are high purity and made of lithium carbonate.
They are partnered with Lilac Solutions. They have created a type of water treatment that uses chemistry and technology to return all water to the source.
This is more environmentally friendly than the traditional types of brine evaporation. It’s also very different from hard rock mining which is why this technique will see some great success.
Lilac is also funded by the Bill Gates Breakthrough Energy Fund. Lake Resources has another project they are leading which is the Kachi project. It combines three different brine projects together taking place in Argentina. They own a 2,200 square kilometer location in what’s known as the lithium triangle.
40% of the world’s lithium is produced here at a very low cost.
7. Allkem (AKE)
Allkem is one of the best investments because it was formed from two other companies that are well-known in the lithium world. It formed from Orocobre and Galaxy Resources.
With the combination of these two giant companies, Allkem has become a global company with high-quality chemicals made from lithium.
Its main headquarters are in Buenos Aires, Argentina. Although it operates all over the world including in Australia, Japan, and several places in Argentina. They are quickly growing since the market is growing and they want to keep up.
They have partnerships with many different companies including Toyota, Prime Planet Energy & Solutions, and Jujuy Provincial government.
By 2026, they say their company will have tripled and within the next decade, their company will own about 10% of the world’s lithium.
8. Liontown Resources (LTR)
Liontown has many main missions but they are mostly invested in developing and supplying battery minerals which are badly needed by the Electric Vehicle and Energy Storage Industries.
Their main lithium deposits are in Western Australia and they plan to expand their locations to other parts of Australia and various other places in the world. They are working on partnerships and acquisitions.
Their main focus right now is the Kathleen Valley project which is one of the world’s largest lithium deposits. Over the next few years, the project is expected to supply over 500,00 tonnes of 6% lithium oxide concentrate per year. Production is set to start in 2024 and the supply will slowly increase as demand and production increase. It has a mine life of 23 years.
They also have a second project which will start after. It’s called Buldania and is set to have over 15 million tonnes mostly consisting of 1% lithium oxide.
9. Ioneer (INR)
Ioneer is special because it’s the first new lithium chemical producer that has presented itself in the US for over 60 years.
The current owner has a 100% interest in a project that started in Nevada as a lithium boron deposit. It’s the only one in North America and there is only one other one in the world.
A study was done in 2020 that said the site is one of the only world-class projects that will develop into one of the major lithium suppliers for decades. With the promise of being one of the world’s largest lithium suppliers, this company is an easy investment choice for most people.
They also recently signed a deal with NexTech batteries. They also meet with the US Department of Energy to talk about their technologies and their key loan programme.
10. Mineral Resources (MIN)
Mineral Resources has many different operations all over the world but they are mostly located in Western Australia and the Northern Territory. They have operations in many different commodities including iron ore and lithium mining.
The major site is Wodgina Lithium. It’s the largest hard rock lithium deposit in the world. It’s my life is around 30 years.
Mineral Resources is partnered with Albemarle. They are also partnered with Ganfeng Lithium and own 50% of the Mount Marion lithium project that is conducted by Ganfeng.
What makes them one of the best investments is that they are extremely diverse since they own iron ore and they have several different partnerships. They are one of the less risky investments.
Important Things to Know About ASX Lithium Stocks
Lithium is important for a variety of different reasons including batteries. Lithium batteries charge quicker and do not have memory issues like nickel-based batteries. Their maximum charging capacity is not affected by each charging cycle so you do not always need to charge it completely before using it.
Nickel batteries usually need a cooling system which can make them extremely convenient. You also have to be careful to charge them completely or you might not be able to have them reach full battery level in the future.
The main con when it comes to lithium batteries is that they are expensive to produce. This is because the metal is very unstable and is expensive to produce and transport. Lithium batteries also have a shorter shelf life so they need to be replaced much more often than nickel batteries.
Nickel is also used much more often than Lithium so there are better practices in place for recycling nickel batteries.
Despite some obvious disadvantages and drawbacks, lithium will be able to power EV cars in the future and will be the battery of choice.
The revolution of Electric cars is going to be different than anyone has ever seen before. For example, right now the leading manufacturer of EV cars is Tesla. They have a current market cap of about $900 billion. This is about the same as every other car manufacturer in the world, but they only produced less than one million cars in 2021 which is much less than other car companies.
The CEO of Tesla, Elon Musk has even said he wants to own his own lithium company in the future and start a process for gaining control of the supply chain by starting his own lithium company and not needing to rely on other mines around the world.
However, there is a global shortage of lithium so the current prices are much higher than record levels which might cause it to stop growing as rapidly as it currently is. For example, lithium carbonate is currently at $7,315 a tonne in China which means it has more than tripled in one year.
Unlike other stocks, lithium is not dropping like many other stocks because of the pandemic. Electric cars are also becoming more and more popular because the number of EVs being produced has more than doubled in 2021 with a number of more than 6.6 million.
Many electric car analysts expect the EV car market to increase by more than 10 times by the year 2030. EV cars also have a market in almost every continent with buyers being in the EU, UK, USA, and China.
In the US, President Biden has made strides for the lithium market by using emergency presidential powers to make sure that there is an increase in the production of certain metals including lithium. This is because China currently controls lithium production and many western countries are trying to get away from their reliance on China.
China controls more than 80% of the battery cell production and leads the market for lithium refining. Part of this is because of the pandemic and the lockdown that many countries faced. The war in Ukraine has also made many leaders of countries examine how the supply chain affects their resources because they want to make sure they are never too dependent on one country or one country’s resources.
Why the Use of Lithium is Expected to Rise
There are a few other reasons you can consider when it comes to examining why lithium is on the rise and why it will continue to do so in the future. One main reason is because of the Inflation Reduction Act. This offers $370 billion of investment into the clean energy sector aimed at creating ways to get away from fuel and make it more possible to start using electric cars.
This also extends the $7,500 consumer income tax credit for purchases that include an electric car. It also stops the per-manufacturer limit on tax credits. This highly motivates people to purchase electric cars since they are able to deduct a large portion from their taxes.
Even though it’s often hard to mine and transport, lithium is available all over the world. However, lithium mining is restricted for a few reasons. One is that it needs to have just the right amount of concentration to be worth mining. So, if mined too early or too late, it goes to waste. Mining lithium has a high failure rate.
Lithium is also very time-consuming to mine and needs professional miners since it’s very difficult to mine. Some of the mines even take up to 10 years to be able to properly extract lithium.
This is part of the reason why companies are trying to make their own companies set up lithium mining. Although when a company wants to start its own lithium mining, they also need to make its own processing systems.
The supply of lithium is expected to be greater than the speed at which it can be produced which could cause some issues in the future.
If you look at the information from the International Energy Agency (IEA), they say that the demand for lithium will rise by 900% before 2030 and by 4,000% by 2040. Some analysts even believe that the current lithium production is only about 10% of what the world will need within the next two decades.
How Does China Affect Lithium?
As stated above, China is one of the main factors when it comes to lithium manufacturing. Lithium prices are volatile. One key example of this is that China has a zero covid strategy which has greatly affected lithium and its prices. This has caused lithium processing and production to completely stop in some parts of China.
This has caused some EV manufacturers including Tesla to not be able to produce for certain periods every time China goes into a lockdown.
How Do I Invest in Lithium Stocks?
There are many different ways to invest in ASX lithium stocks. You should also consider how lithium is mined since there are three different ways to mine it. The three main ways are brine, sedimentary, and pegmatite lithium.
In Australia, the main type of mining is sedimentary. Australia accounts for almost all the mining of sedimentary lithium in the world. When investing in stocks, you might want to consider investing in all three different types of mining so that if one fails, you still have shares and money invested in the other two types.
To limit your risk when it comes to investing in lithium, you want to buy shares in diversified mining. While this does limit risk, it also means you will see fewer benefits in the future if one stock happens to soar while the other ones you invested in only do average.
If it’s your first time investing in lithium, you can spread out your money. Once you have more experience and know where to put your investments, you can choose which one you prefer based on how analysts are seeing which ones are rising and which ones might fall in the future.
If you are ready to take more of a risk, you can invest in small-cap lithium. They do have more risk, but you will reap many benefits if the stock does well. If you are looking for long-term investing and are feeling confident, you can look into investing in pure-play ASX lithium stocks.
Final Thoughts
There are many great ASX lithium stocks to invest in. The smartest way to invest is to choose more than one. This allows your portfolio to be diverse and decreases the chance that you will lose money in the case that one of the companies is not able to perform well.
This allows you to have more than one investment and one interest as well, which can grow you as an investor.
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