Why is lithium space heating up?

Highlights

  • Lithium seems to be the new gold for the Australian metals and mining industry.
  • Australian metal explorers are striking new supply agreements with companies globally.
  • Explorers like RIO, VUL, MNS and others are gaining investor traction based on their Lithium capabilities. 

Every day the ASX is buzzing with new Lithium deals. Lithium is boasting great fundamentals on the back of the electric vehicle (EV). EV sales in Europe, China and North America are growing. On the back of this, Australian metal explorers are striking new supply agreements with companies globally. Australia currently supplies about 55% of the world's Lithium. Furthermore, binding supply contracts are giving producers the needed push to become a leader in this space.

Here are five Lithium deals that buzzed on ASX recently 

  • Australia's Magnis Energy (ASX:MNS) reported a battery sales deal. The Lithium-ion battery maker's shares gained about 12.5% in response. Magnis's New York-based energy storage systems unit has bagged an additional binding contract worth AU$74 million from a U.S. government supplier. The contract period is four years. It takes the total binding sales deals at MNS to AU$729 million. MNS is also holding discussions with other similar consumers, investors, and agencies for future growth. 

Why is Lithium Space Heating Up?
  • Another ASX listed explorer Anson Resources Limited (ASX:ASN) entered into a non-binding Memorandum of Understanding (MOU) with TETRA Technologies, Inc. (NYSE: TTI). The agreement is to jointly develop Anson's Paradox Brine Project located in Utah, USA. ASN will manage the Bromine production at site while using TETRA's patented process technology for operation. ASN's Paradox Brine Project consists of claims & leases from the USA government and SITLA Special Use Surface Agreements (SULA). The SITLA mineral leases include rights for Lithium, bromine, boron, and iodine extraction. ASN is currently finalizing a pre-feasibility study initially for bromine and next for Lithium.

Related Article: 5 Hot Lithium (Li) stocks on ASX

Image Source: © Radius06 | Megapixl.com 

  • Iron ore explorer Eastern Iron Limited (ASX:EFE) struck binding heads of agreement with Amery Holdings Pty Ltd, for an option to acquire a 100% interest in Trigg Hill Project. Trigg Hill contains several Lithium (LCT) pegmatites. It is located in Pilbara, West Australia and comprises one exploration licence application for five blocks. Eastern Iron seeks exposure to the booming lithium market with this project interest acquisition.
  • Perth based explorer Vulcan Energy Resources (ASX:VUL) signed a five-year lithium supply deal with French carmaker Renault SA. Under the five-year strategic partnership deal, VUL will supply 6,000 to 17,000 tonnes of Lithium annually to Renault. Supply will be from its geothermal brine deposits in Germany. The agreement aligns with Renault Group's strategy to offer competitive, sustainably - made in Europe, electric vehicles. It is initially a five-year agreement that can be extended. The start of commercial delivery will begin in 2026.   
  • Blue chip miner Rio Tinto (ASX: RIO) unveiled investment plans in the Jadar lithium-borates project in Serbia. RIO plans to invest AU$2.4 billion in the Jadar project in Serbia, one of the world's most significant greenfield lithium projects.

Bottomline

Although not magnetic, Lithium is attracting a lot of miner and investor traction in Australia. The battery minerals business currently has solid demand and limited supply. Even the pricing of Lithium seems too favourable for at least 3-5 years. ASX investors are therefore seeking chances to gain from the trend.

Related Article: What’s latest with these three ASX lithium penny stocks? 

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