Top 10 ASX Lithium Stocks to Watch in 2021
We examine ten ASX-listed companies with exposure to lithium assets.
Investing in lithium in Australia: what you need to know
The 2018 battery boom coincided with the stratospheric run up in the share prices of a number of ASX-listed lithium stocks.
That boom – as with many others in the history of financial markets, was met with a bust in 2019 – as oversupply issues saw lithium prices collapse, instilling doubts in a market that rested its hopes on an electric vehicle revolution that has yet to truly arrive.
To further demonstrate the impact of those price falls, as reported by Bloomberg:
‘Lithium-ion battery pack prices, which were above $1,100 per kilowatt-hour in 2010, have fallen 89% in real terms to $137/kWh in 2020.’
Things aren’t expected to improve any time soon either, with forecasts from BloombergNEF suggesting that prices will fall to an average of $100/kWh by 2023.
Despite that, investors have turned bullish on many ASX-listed lithium stocks in the last six months, with the likes of Pilbara Minerals gaining over 250%, Galaxy Resources has surged 191%, and Mineral Resources has added some 55%.
Looking further into the fundamentals of this market, recent research from BloombergNEF forecast that electric vehicle (EV) sales are set to hit to 8.5 million by 2025, while EV sales, represented as a percentage of all new car sales, is set to hit 10% by 2025.
Importantly, although lithium-ion has many uses outside the production of EVs – including the production of batteries for smartphones, laptops and other digital devices, armour plating and glasses as well as certain pharmaceuticals – the consensus is that its long-term viability will be ‘directionally proportional’ to the adoption of electric vehicles, according to S&P Global Platts.
Other things to consider
Lithium is mined from three types of deposits: brine deposits and Pegmatite lithium and sedimentary (hard rock) deposits, with Australia accounting for the majority of lithium hard rock mines on a global scale.
This, according to S&P Global Platts, puts Australian lithium miners and producers in an interesting position, with it being noted that ‘This has seen wider argument that Australian hard rock mining could find itself in the role of swing production, with projects coming on and offline as the price dictates.’
Top 10 lithium stocks on the ASX
Having examined some of the key issues surrounding the lithium market, below we look at ten high profile lithium stocks, or companies with exposure to lithium assets – listed on the Australian Stock Exchange.
Mineral Resources (MIN)
Mineral Resources is a leading Perth-based mining services provider, with assets spread across iron ore and lithium.
Owing to a run-up in iron ore prices, the miner posted stellar FY21 results, revealing revenue of $3.7 billion (+76%) and underlying profits (NPAT) of $1.1 billion (+230%). Indeed, Mineral’s spodumene operations continued to drag on performance in fiscal 2021, delivering an EBITDA loss of $5 million. In FY21, the company exported 17,274,000 wet metric tonnes of iron ore; and 485,000 dry metric tonnes of spodumene.
With a market capitalisation of $9.86 billion, Mineral Resources is one of the largest companies on this list. Year-to-date the stock has traded up 35%, last sitting around the $52.28 per share mark.
Pilbara Minerals (PLS)
Pilbara Minerals is a lithium-tantalum producer, with the ambitious aim of becoming 'one of the biggest and lower cost lithium producers' in the world. The company’s main project, which it owns outright, is the Pilgangoor Lithium-Tantulum Project based out of Western Australia. The company describes this project as 'the largest independent hard-rock lithium operation in the world.'
In September 2021, the company upgraded the size of the Pilgangoor Mineral Resource, raising the indicated and inferred resource to 309 million tonnes, implying a significant 39% increase in total resource tonnage.
Investors are already optimistic about Pilbara’s potential – with the company standing as one of the largest lithium companies in Australia, touting a market capitalisation of $6.46 billion. The stock last traded at $2.20 per share and has gained 152% since January.
An industrial chemicals and minerals company, Orocobre holds a diversified portfolio of lithium, potash and boron assets across northern Argentina.
In August 2021, the previously announced merger between Orocobre and Galaxy Resources was completed, creating the world's fifth largest lithium chemicals company in the process. The company intends to rename the merged group to Allkem, pending shareholder approval.
Commenting on that merger, Orocobre’s Managing Director and Chief Executive Officer, Perez de Solay:
‘With the merger we will go further in our commitment to delivering the lithium chemicals that the world increasingly needs to mitigate climate change and carbon emissions.’
In 2021, Orocobre produced 12,611 tonnes of lithium carbonate, representing a 6% increase year-on-year; while posting a loss of US$89.5 million.
Iconic Australian conglomerate Wesfarmers – through its $776 million, 2019 acquisition of Kidman Resources – has significant exposure to lithium assets, primarily through Kidman's 50% stake in the Mt Holland lithium project.
The Mt Holland project – comprised of an open pit lithium mine and processing plant – in late 2018 was estimated to have a projected annual average production of 45,254 tonnes of LiOH. The Earl Grey deposit at the Holland site was estimated to have a maiden ore reserve of 94.2 million tonnes.
At the time the acquisition, Wesfarmers’ Chief Executive Officer, Rob Scott, said:
'The acquisition and our planned future investment is an attractive opportunity to participate in the development of a large-scale, long-life and high grade lithium hydroxide project in Western Australia in partnership with a global leader in the lithium industry.'
Piedmont Lithium (PLL)
With operations focused in the US, ASX-listed Piedmont Lithium is currently in the process of developing its North Carolina lithium project, with the ultimate goal of producing low cost lithium hydroxide for the fast-growing electric vehicle market.
According to management, this North Carolina location, described as the 'cradle of the lithium industry', bears strategic significance, as it is ideally located to ‘serve the fast-growing US electric vehicle supply chain.’
Investors have taken notice of Piedmont over the last nine months, with the stock up 103% in that period, last trading at $0.75 per share and giving the company an implied market capitalisation of $1.17 billion.
Vulcan Energy Resources (VUL)
ASX-listed Vulcan Energy Resources has an ambitious aim: become the world's first zero carbon lithium producer. Like Piedmont, Vulcan is focused on the electric vehicle market. The key difference? Vulcan’s lithium project is based in Europe, a region which, the company proudly notes, currently ‘sells more electric vehicles than China.’
Vulcan also touts a similar supply chain advantage to Piedmont: proximity to key players in the electric vehicle industry, such as VW and Tesla. This proximity, says management is a key advantage, both in terms of ‘cost advantage as well as carbon advantage'.
Year-to-date the Vulcan Energy share price has skyrocketed, at the time of writing it was up 475%, with the stock last trading at $15.93 per share.
Liontown Resources (LTR)
Liontown Resources boasts what it describes as a world-class mineral deposit. Recent studies suggest the company's key lithium project, based in Western Australia, has a mineral resource estimate of 156Mt at a grade of 1.4% Li2O and 130ppm Ta2O5.
The resources company had two other core projects: including a gold nickle project, and another Western Australian lithium project.
Like many others on this list, Liontown Resources has seen its share price run hard in 2021, gaining 209% since January, to last trade at $1.30 per share. At those levels, the company has a market capitalisation of $2.48 billion.
Founded in 2001, Ioneer is in the process of developing its Nevada-based lithium project. This project, says management, represents a ‘substantial foundation for [the company] to become a responsible and profitable producer of the materials necessary for a sustainable future.’
Looking at the specifics of the company's Rhyolite Ridge project, as part of a recent investor presentation, the company said its ore reserve stood at 60 million tonnes, with around half of that reserve defined as 'Proved'. It was also noted that 'Boron grades increased by 26% in the total Ore Reserve, significantly lifting boric acid production.’
Year-to-date the Ioneer share price has risen 150%, with the stock last trading at $0.70 per share.
AVZ Minerals (AVZ)
AVZ Minerals, trading under the ticker AVZ, the company recently provided an update on its core, DRC-situated lithium project – the Manono Project.
As part of that update, the company revealed that it had bumped up its shareholding in Manono to 75% as well as received 'DPEM approval' from the local government.
'The company is executing its strategy on all fronts to maximise shareholder value, increasing its equity share in the Manono Project,' according to the company's Managing Direction, Nigel Ferguson.
Year-to-date the AVZ Minerals share price has gained 47%, last trading at $0.25 per share.
Core Lithium (CXO)
Core Lithium - trading under the ticker CXO - is currently in the process of developing the Finniss Lithium Project, based in the Northern Territory, Australia. The company’s management team has described this project as 'one of Australia’s most capital-efficient and lowest-cost' lithium projects.
Recent studies conducted on the cornerstone project and framed against an initial mine life of 10 years, showed that the site could support ‘production of an average 173,000tpa of high-quality lithium concentrate at a C1 Opex of US$364/t and A$89m.’ Construction is expected to commence at the Finniss site before the close of CY21.
The Core Lithium share price has risen 104% year-to-date, last trading at $0.34 per share, implying a market capitalisation of $537 million.
How to buy or invest in lithium stocks on the ASX
You can gain exposure to ASX-listed lithium stocks or companies with exposure to lithium-ion in two ways: either through share trading or derivatives trading. Share trading means that you take direct ownership of the stock, meaning you could potentially profit if the share price increases in value or if the company decides to pay a dividend.
By comparison to owning shares outright, derivatives trading – such as CFD trading – allows you to speculate on the price movement of a company’s shares without actually taking ownership of them. CFD trading may prove attractive to some investors for a number of reasons, including the flexibility to trade stocks long and short, the ease of which it allows to hedge, as well as the ability to gain larger exposure to an asset through leverage.
Follow the simple steps below to start investing or trading lithium stocks:
Investing in lithium stocks
- Create or log in to your share trading account and go to our trading platform
- Search for the company you wish to invest in
- Select ‘buy’ in the deal ticket to open your investment position
- Choose the number of shares you want to buy
- Confirm your purchase and monitor your investment
Trading lithium shares
- Create or log in to your trading account and go to our trading platform
- Decide whether CFD trading is right for you
- Search for the company you wish to trade
- Choose your position size and select ‘buy’
- Confirm your trade and monitor your position
Best ASX lithium stocks summed up
Traders and investors looking to gain exposure to this unique market should keep in mind that:
- Australia accounts for the majority of hard rock lithium deposits in the world
- Electric vehicle sales are forecast to hit 8.5 million by 2025, and make up 10% of all new car sales
- The consensus is that the long-term viability of will be influenced by the adoption of electric vehicles
- ASX-listed lithium stocks, though trading off the highs recorded in 2018, have traded with incredibly bullish momentum in CY21
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