If Lithium prices make a comeback, which stocks will be the first to benefit?

The lithium market has been one of the most fraught yet promising sectors in the recent years. The element Lithium is a very critical component that is used in the batteries of Electric vehicle manufacturing, some advanced technologies such as energy storage for renewable energy. With the nominal supply and demand surge prevailing, the demand for lithium has seen substantially increasing. However, this volatile market is prone to highs and unavoidable lows. If the price of lithium makes a comeback, certain companies listed under the Australian Stock Exchange (ASX) are well-positioned to capitalize on this opportunity.

The resurgence of lithium after a series of predictable highs and lows will serve as a leveraging point for companies to come out ahead in the competition. As lithium is a prevalent element found almost everywhere ranging from industrial grade batteries for electric vehicles and grid storage to non-rechargeable batteries for household devices such as clocks.

 

Why is lithium essential for the future of energy?

Considering the recent efforts to reduce carbon emissions, the demand for electric vehicles and the production of renewable energy storage has been increasing rapidly. This force drives the demand for lithium. Another reason contributing to the demand also comes from the ubiquitous nature of the element. Lithium powers small toys in the domestic space to high grade battery storage solutions for grids in the industrial landscape. Such drastic applications provided through lithium is highly advantageous.

There are certain factors that cause the overstimulation of the prices of lithium and thereby leading its value towards a downfall. Such factors include oversupply, unnecessary market speculation and unpreventable geopolitical conflicts.

 

How geopolitical factors are shaping the lithium market?

The concentration of this critical element has led to some world-wide constraints in acquiring lithium. Some of the major facets for this cause are:

• China’s control: The country of China now dominates the lithium processing activities. It produces about 60% of the world’s lithium mineral products and around 73% of lithium-ion batteries.
• Nationalization of Lithium: Due to the growing demand for the need of lithium based products and its undersupply in the global markets, the country of Chile has nationalized its lithium reserve.
• Alliances of countries: To manage this imbalance in supply and demand for this critical element, nations are now forming partnerships to create mineral trade chains. A precise example for this could be Canada’s GEMM (Global Energy Minerals and Markets) is currently coordinating with the United States, Europe Australia and South Korea.
• Deposits of Lithium and hovering interests on them: The Sonora Lithium Project in Mexico has the potential to be one of the world’s largest lithium deposits center. Now, both China and the United States have scheming interests in its success.

 

What is driving the demand for lithium in the EV revolution?

True that the need to accelerate the renewable growth factors such as developing electric vehicles to produce a more sustainable environment, it also ultimately means that the raw materials used while coming up with such solutions require lithium. And a sudden demand skyrocketing like this has led to the undersupply of lithium beyond its gradual production.

The good news however is that many experts and insights derived from current trends state that the lithium prices will bounce back due to long-term demand from the EV revolution. This will be stimulated by another crucial reason that is as major automakers plan to go all-electric in the upcoming decades.

Counting all these factors and weighing the pros and cons, as the prices of lithium rebound, its producers and explorers, specifically on the ASX are primed to benefit.

 

Which ASX-listed lithium stocks are positioned for growth?

 

Pilbara Minerals (ASX: PLS)

Pilbara Minerals is one of the largest independent lithium producers in the world. They also thrive as a dominant force on the ASX. Its flagship project, the Pilgangoora Project in the region of Western Australia, is one of the colossal hard-rock lithium-tantalum deposits globally. The company has been looking for opportunities to expand its production capacity in order to meet the rising demand for lithium minerals.

Pilbara is also one of the crucial players with strategic partnerships with global customer base in China, Japan and South Korea. Pilbara Minerals has an 18% stake in a South Korean refinery, which allows it to produce higher-value battery materials. The company also follows a vital vertical integration strategy which will strengthen its value proposition in a high-lithium price environment.

 

Liontown Resources (ASX: LTR)

Thriving as one of the rising stars in the lithium mining market, it has attracted a significant amount of attention due to its crown jewel, the Kathleen Valley Lithium Project n Western Australia. This project is expected to start production soon and when it does, the Liontown resources will become a key supplier of lithium when the prices recover.

 

Jindalee Resources (ASX: JRL)

Not the synonymous name in the industry of lithium markets yet but due to its McDermitt Lithium Project located in the United States, this company stands to gain a significant amount of revenue from the global lithium market. Since its strategic placement in the US, Jindalee’s project can become a key player in the US electric vehicle and battery manufacturers.

 

Vulcan Energy Resources (ASX: VUL)

This company is a unique ASX-listed company that focuses on the production of zero carbon lithium. from Europe. Their Zero Carbon Lithium project in Germany is designed to supply the European battery and EV markets with lithium while minimizing its environmental impact.

Their innovative approach to lithium production has attracted significant amount of attention from both investors and major automakers who are seeking sustainable lithium sources. With Europe being one of the largest EV markets in the world, Vulcan Energy is well-positioned to benefit from rising lithium prices.

 

What’s next for the lithium market?

As there exists a global push for the demand for sustainable options towards electrification and renewable energy accelerates, the demand for lithium is expected to continue rising. There are a lot of lithium mining companies that stand to gain from the resurgence of the lithium prices and the reviving of the global lithium market.

As there exists a global push for the demand for sustainable options towards electrification and renewable energy accelerates, the demand for lithium is expected to continue rising. There are a lot of lithium mining companies that stand to gain from the resurgence of the lithium prices and the reviving of the global lithium market.

 

What are the Best lithium stocks to invest in right now?

Check our buy/sell stock tips