Flick through Five ASX Lithium Stocks as 2023 continues to see EV popularity

 Highlights:

• Lithium, a critical component in rechargeable batteries, has witnessed huge demand growth in recent years and the trend continues in 2023.

• 2022 has been a remarkable year for lithium amid supply chain issues and COVID-related restrictions.

• Australia is the biggest exporter of lithium in the world, as per the Australian Bureau of Statistics (ABS).

• According to ABS, Lithium exports are expected to be around AU$9.4 billion by 2023-24.

Lithium demand has seen a huge growth in recent years. Lithium, a critical component in rechargeable batteries, witnessed a rise in demand with the global push for electric vehicles and the metal's use in the batteries for today's essential items such as cell phones, laptops, and other energy storage devices.  Given this backdrop, many market participants are closely tracking the developments and keeping an eye on ASX listed lithium shares.

Australia is the biggest exporter of lithium in the world, as per the Australian Bureau of Statistics (ABS). In 2020, around 46% of lithium globally came from Australia. As per ABS, Lithium exports are expected to be around AU$9.4 billion by 2023-24.

Australian mines mainly extract spodumene concentrate from which lithium hydroxide and lithium carbonate are produced. Lithium hydroxide is preferred for batteries, whereas lithium carbonate is sometimes used for batteries but mainly for medication, glass production etc. 

Australia's export is mainly in the form of spodumene concentrate, but the mining companies are now focused on producing lithium hydroxide considering the rising demand for batteries. 

2022 has been a remarkable year for lithium while the world was grappling with supply chain issues and COVID-related restrictions. The fast-growing EV industry is the main factor behind lithium demand which, as per many market participants, could see a rise in the coming years.

Lithium is used to manufacture lithium-ion batteries for EVs, which is getting the government's push and is seen as a solution to climate change. 

Lithium prices grew in the first half of 2022 but started falling towards the second half. As news of China reopening the economy after prolonged COVID-related restrictions came, overall sentiments for the commodity became optimistic, but lithium prices are still at lower levels than June 2022.  

Besides Australia, China, Chile, and Argentina are the top lithium producers, and China, the US, Japan, and South Korea are the top lithium importers worldwide. 

Let us have a look at five lithium stocks.

Rio Tinto Limited (ASX: RIO) is not a pure-play lithium company. It is a mining and metals company.

The company's consolidated sales declined around 10% to AU$29.8 billion for the half year ended 30 June 2022, while its net earnings fell 28% to AU$8.9 million in H1FY22 compared to AU$12.3 billion in H1FY21.

The company announced in December to have completed the acquisition of NYSE-listed Turquoise Hill Resources Ltd for approximately AU$3.1 billion to strengthen its copper portfolio. It further increased its copper guidance too. 

The unaudited results released in January 2023 reported 324.1 million tonnes (Mt) of iron ore production for the full-year 2022 from the Pilbara operation, which is 1% more than FY21. Except for Aluminium, its production increased for all other materials in FY22; bauxite increased by 1% to 54.6Mt, mined copper grew 6% YoY to 521kt, titanium dioxide slag increased by 18% to 1,200kt, and IOC iron ore pallets and concentrate, up by 6% YoY to 10.3Mt in FY22. 

On lithium front, the company is optimistic about the Jadar lithium-borate project in Serbia as a potential asset for producing critical energy transition materials. It is also investing and making progress in the Rincon lithium project in Argentina and working and progressing in the Simandou project in Guinea.

At its Rincon lithium project, the company announced that the development of the three thousand tonnes per annum lithium carbonate plant is progressing. It plans to produce battery-grade lithium carbonate from the pilot plant. It informed about commencing studies for full-scale operations and exploration campaigns to understand the Rincon's basin and brine reservoir.  

As the EV market is getting support from the governments, lithium prices, the company says, are expected to remain high. However, the outlook may be uncertain in the short term because of an interest rate rise and a slower global economy, the company stated. 

Rio is scheduled to announce the full-year 2022 results on 22 February 2023. 

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as of 10/02/2023, 04:46:20 PM AEDT

Mineral Resources Ltd (ASX: MIN) owns mining operations across commodities such as lithium and iron ore. Its principal activities include the integrated supply of goods and services to clients in WA and northern territory in Australia. 

The company submitted its revised offer for an off-market bid to acquire all the fully paid ordinary shares of Norwest Energy NL (ASX: NWE). Under this offer, the Norwest shareholders will receive one share of MinRes (fully paid) for every 1,300 Norwest shares. This offer was at a 65% premium on the closing price of 15 December 2022. The offer's closing date was extended to 20 February. Those who take the offer before the said date are entitled to MinRes's H1FY23 dividend. 

The company reported mining services production volumes within expectations at 70Mt in December in its quarterly activities report. 

Its iron ore shipments fell 9% QoQ but remained in line with the FY23 guidance, whilst the realised prices improved by 33% on a quarterly basis.  

The company reported an 18% growth in the spodumene concentrate shipped during Q2 to 97 thousand dmt. Further, it converted a total of 7,418 tonnes (attributable) of lithium hydroxide and lithium carbonate with 6,612 tonnes (attributable), showing 75% growth quarterly. It had an average realised lithium hydroxide and lithium carbonate revenue (exclusive of China VAT) of US$65,996/t.

If we see its FY22 results, the company achieved a historical second-best year in financial performance despite an 8% decline YoY in revenue to AU$3.4 billion and a 46% drop in EBITDA to AU$1 billion in FY22. 

According to the company, the demand for the 'battery mineral and lithium-ion batteries' pose an opportunity over the medium term. In the next five years, it expects to produce lithium hydroxide from its Wodgina mine in Australia, with a processing facility in Pilbara.  

The company aims to leverage the global demand with its current position to capture the battery supply chain starting from hard rock mining, processing, constructing facilities, and manufacturing battery cells. 

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as of 10/02/2023, 04:46:20 PM AEDT

Pilbara Minerals Limited (ASX: PLS) is a pure-play lithium company engaged in exploration, development, and mineral mining. 

In the December quarter, Pilbara Minerals reported a 10% QoQ increase in the spodumene concentrate production to 162,151 dry metric tonnes (dmt) and a 33% increase in the average realised sales price to US$5,668 per dmt compared to the September quarter. It also reported an 8% growth QoQ in shipments.  

The company's total mined material across Pilgangoora Project was 7,456,690 wet metric tonnes (wmt) versus 7,982,879 wmt in the September quarter, and the total mined ore for the quarter was 1,095,739 wmt.

The company entered into a joint venture (JV) agreement with Calix during the quarter to develop a demonstration plant at the Pilgangoora project. The plant may lead the JV to license the technology if it becomes commercially successful. The demonstration plant aims to produce superior lithium salts product for the market with lower cost, lower carbon energy intensity and lower waste products. 

The company reported a huge jump in revenue from customers' contracts in FY22 to AU$973.7 million compared to AU$175.8 million in FY21. Its net profit for the period also improved to AU$561.8 million from the net loss of AU$51.4 million in the previous financial year. 

Pilbara Minerals is expected to provide half-yearly results and guidance for the full year FY23 in late February.

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as of 10/02/2023, 04:46:20 PM AEDT

The speciality chemicals company Allkem Limited (ASX: AKE) is engaged in mineral extraction, production and chemical processing. It has lithium operations in Australia and Argentina and a conversion facility in Japan. 

In its second quarter ended 31 December 2022, the company earned a revenue of US$32 million from low-grade 53,517 dmt spodumene sales from existing stockpiles and approximately US$83 million spodumene sales from Mt Cattlin production. 

The Mt Cattlin facility produced 16,404 dmt of spodumene, and its Olaroz Lithium facility produced 4,253 tonnes of lithium carbonate during the quarter. Allken's revenue for the December quarter (Q2FY23) was US$552 million, up US$105 million from the September quarter. 

Separately, the company closed the 100% strategic lithium tenement acquisition of María Victoria for Borax Argentina S.A in December. 

In another development, the government of Argentina conveyed its intention to withdraw export benefits on lithium chemical production, which would cause a dent of around 1.5% to 4% of Allkem's revenue.  

As per the company report, the demand for spodumene concentrate and lithium chemicals remained strong in the December quarter, along with record-high lithium prices. Demand for EVs remained high, with record Chinese EV sales of 2.3 million units, an 82% annual increase, and 0.7-million-unit sales in EU countries showing 38% YoY growth in sales. 

The company expects global sales to be approximately 3.5 million units in the December quarter and annual sales of roughly 10.5 million units with 57% YoY growth. According to the company, this is because of the strong order book, pent-up demand, and conducive government policies.

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as of 10/02/2023, 04:46:20 PM AEDT

Liontown Resources Limited (ASX: LTR) is an emerging battery mineral producer engaged in battery mineral exploration and development. Aiming to transition from a mineral explorer to a producer, it seeks to expand its portfolio and downstream participation to add value and have a competitive advantage. The company was included in the ASX 200 index during the December quarter. 

On 03 February, the company announced commencing an open pit mining operation at Kathreen Valley Lithium Project in WA. 

The board approved the Kathleen Valley for full development in June 2022. The Definitive Feasibility Study (DFS) confirmed the potential of long-life and standalone mining and processing operations there.

In the December quarter, it completed offtake agreements for its 90% startup production. Its clients for offtake include LG Energy Solution, Tesla and Ford Motor Company (Ford). 

During the said quarter, no exploration work was conducted at Kathreen Valley. The company said the project is on schedule for its first production in mid-2024. 

At its Buldania Project, the company has been exploring since 2018 with 100% rights to lithium and other related metals.

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as of 10/02/2023, 04:46:20 PM AEDT