- Electric vehicles could account for 84% of the lithium demand in 2030.
- Lithium hydroxide prices have surged by 156% since the beginning of 2022.
- The shares of CXO are up by 143% in the last 12 months.
- Burley Minerals Ltd’s share price has zoomed up by 163% in the past six months.
Lithium is an alkali metal with a silvery-white appearance. It is highly reactive and flammable and hence needs to be stored very carefully in an inert environment. It does not occur freely in nature and is generally found in the form of compounds or ores. Among all the alkali metals, lithium has the highest boiling point and the lowest density.
Lithium makes up 0.0002% of the earth’s crust. Granite rocks have the largest concentrations of lithium, and spodumene and petalite are commercially viable lithium sources.
Chile has the largest reserves of lithium in the world, followed by Australia, Argentina, and China. However, Australia is the leading producer of lithium in the world, followed by Chile, China, Argentina, the United States, Brazil, Zimbabwe, and Portugal.
Lithium demand and supply scenario
Their higher energy density and lower self-discharge rates have helped lithium-ion batteries (LIBs) gain in popularity compared with other batteries. As the world looks to switch to carbon-neutral sources of energy, EVs and LIBs have emerged as key technologies. On average, the LIB pack in an EV contains 9 kg of lithium.
EVs accounted for about 55% of the total lithium demand in 2021, and they could account for approximately 84% of the total lithium demand by 2030.
Sales of EVs were at a record high in 2022. In China alone, EV sales were averaging half a million per month in 2022. The major global auto manufacturers plan to support the transition to EVs by developing new production lines.
Lithium demand is expected to surge faster than its supply. New projects for lithium production are coming up but global EV sales is expected to still be higher than the market supply of lithium. Governments are also supporting lithium producers’ efforts to increase their capacity. The US government has awarded a grant of US$2.8 billion to battery manufacturers to boost the production.
The growing importance of lithium in the global economy is forecasted to continue. South America and Africa are expected to make significant contributions to the supply growth in the next decade. Argentina is expected to have a 15% share in the lithium market by 2030.
Recent trends in lithium price
Amid the soaring global demand for EVs, lithium price has seen a 108% year-to-date surge. The price of lithium carbonate in China was at a record high of CNY597,500 per tonne on 11 November 2022.
At the time of writing this article, the average price of spodumene concentrate is CNY39,329.41 per tonne. Lithium hydroxide’s price has surged 156% from the beginning of 2022.
Image Source: © Malpetr | Megapixl.com
ASX lithium stocks
There are many lithium stocks registered on the ASX, for example RIO Tinto Ltd (RIO), Mineral Resources Ltd (MIN), Pilbara Minerals Ltd (PLS), Allkem Ltd (AKE), De Grey Mining Ltd (DEG), and Core Lithium Ltd (CXO). Of these, MIN, PLS, and AKE are among the world’s top ten mining companies.
Considering the current trends in the lithium market, let’s look at the performance of a few of these ASX stocks.
Core Lithium Ltd (ASX: CXO)
Australian mining company Core Lithium is developing the Finniss Lithium Project. In October 2022, Core and Primero were awarded a five-year operations and maintenance contract at the Finniss Lithium Project. The scope of the contract includes a dense media separation plant and tailing storage facilities. The first production of high-grade lithium at this project is expected by the end of 2022.
The shares of CXO are up by 143% in the last 12 months.
Winsome Resources Ltd (ASX: WR1)
Perth-based Winsome Resources is focused on exploring and developing high-quality spodumene concentrate. The company has five project areas in Quebec, Canada.
In mid-November 2022, Winsome announced that it had raised AU$6.8 million for its flagship lithium projects at Cancet and Adina.
The share price of the company has surged by over 197% in the last six months.
Data Source: ASX as on 1 December 2022
Burley Minerals Ltd (ASX:BUR)
A well-funded minerals explorer, Burley Minerals signed an agreement in November 2022 to acquire 100% of the Chubb Lithium Project in Quebec and Mt James and Dragon lithium projects in Western Australia.
The company’s share price has rocketed by more than 163% in the past six months.
Vulcan Energy Resources Ltd (ASX:VUL)
Vulcan aims to reduce the carbon footprint of LIBs by utilising geothermal energy in the extraction process. Recently, the company announced that 3D seismic works had begun in its phase 2 lithium and geothermal energy areas of the Upper Rhine Valley brine field. Vulcan also confirmed the production of the highest-grade and lowest-impurity lithium hydroxide to date at its lithium pilot plant.