Here Are The 3 Best ASX Lithium Mining Stocks Set to Capitalise on the Growing Lithium Demand

ASX Lithium Mining Stocks are amongst the most peculiar companies on the ASX. There is a rapid expansion of electric vehicles (EVs), and renewable energy systems that drive the global surge for the production of lithium. We know that prices have not been the best in 18 months, but there are signs the worst is behind us, and the next 12-24 months may be better than the period preceding it. The Australian Stock Exchange is home to several lithium mining companies that are well-positioned to turn around in conjunction with commodity prices

 

Why is Lithium in Demand?

Because it is a key material in various revolutionising products offered in industries.

• Electric Vehicles (EVs) – One of the primary drivers of lithium demand is the global shift towards Electric vehicles. Governments and car manufacturers worldwide are pushing for greener transportation to combat climate change. In that, lithium-ion batteries are the power source of choice for most EVs.
• Renewable energy sources – Solar, wind power, and water turbines are some of the most widely used renewable energy sources that have become more prevalent. Lithium-ion batteries provide a reliable way to store energy for later use. They have since become a critical component for grid energy solutions.
• Telecommunications – With the growing innovation in the technological sector, the demand for consumer electronics only seems to rise. This means that lithium, a primary component in smartphones and laptops will see its demand soaring. These devices all rely on lithium-ion batteries.

Given these trends for lithium, it’s no surprise that the demand for lithium is expected to continue growing rapidly in the coming years. Australia, being one of the largest producers of lithium, has several ASX-listed mining companies that are positioned to benefit from this demand for lithium.

 

Our Top 3 ASX Lithium Mining Stocks

Pilbara Minerals (ASX: PLS)

Pilbara Minerals continues to be a major lithium stock, with significant operations in Western Australia. It are well-positioned to benefit from the increasing demand for lithium-ion batteries, particularly those used in electric vehicles (EVs) and energy storage systems.

The company’s Pilgangoora Lithium-Tantalum Project is one of the largest lithium ore deposits in the world, and the company is actively expanding production to meet rising global demand. The most recent Mineral Resource statement (calculated in mid-2023) has 4.75Mt of lithium and 101.8m pounds of taltalum. The mine life is 34 years.

 

Liontown Resources (ASX: LTR)

Liontown Resources is another key lithium stock, being Australia’s newest producer. Its flagship project, Kathleen Valley, is one of the most promising lithium assets globally.

Kathleen Valley has a current Mineral Resource Estimate of 156Mt at 1.4% lithium and could produce over 500ktpa over a 23-year life of mine. Over 80% of this is Measured or Indicated. The project’s economics, outlined in the 2021 DFS include an NPV of A$4.2bn and a 57% IRR after tax. Its opex of US$314/dmt still provides for good margins at the current prices. Liontown has customers including Tesla, Ford and LG and total offtake commitments of up to 450,000 dmt (dry metric tonnes) per annum.

The first spodumene concentrate was produced in July 2024 and the company expects to ramp up to its nameplate capacity of 3Mtpa by the end of the March quarter of CY25.

 

Mineral Resources (ASX: MIN)

Mineral Resources is a diversified lithium mining company with a robust presence in the Australian lithium sector but with other divisions too. It has gold and iron ore assets too, not to mention a mining services division. On top of all this, it is an investor in a handful of micro-cap explorers with one example being lithium newcomer Kali Metals (ASX: KM1) and another Delta Lithium (ASX:DLI).

The company has not had the best 12 months, and it is not all because of lithium. Its debt has doubled in 12 months and iron ore prices weakened just as it ramped up its capacity by opening a new mine at Onslow. On top of this, the company has has learnt it may not be able to access US critical minerals subsidies as well as that will need to sell lithium on an auction platform rather than rely on individual contracts. At its FY24 results, the company decided not to pay a dividend for the first time in a decade. The company’s underlying net profit was only a fifth of FY23, at $158m, while its underlying earnings fell by 40% to just over $1bn.

But the company declared in August the market bottomed once news was spreading that. that China’s CATL suspended operations in Jiangxi. Obviously something has to give at some point if companies keep closing operations. And Jiangxi was not just any lithium mine but one of the few sources of lithium lepidolite, not to mention a big proportion of global supply.

 

Applications of Lithium

To understand the demand for lithium, and consequential appetite for ASX mining stocks, it is essential to see its profound applications that will in turn shed light on its requirement at a global level.

• Lithium is the primary power source for the electric vehicles, lithium-ion batteries. They provide high energy density and an acute ability to store and release energy efficiently.
• With increasing telecommunications development, the need for consumer electronics such as smartphones is also steadily increasing.
• Lithium as an energy metal, is also used in various medical instruments such as pacemakers. This is possible because lithium has long-lasting power and it is reliable.
• Even in the medical field lithium plays a crucial role with most of the equipment being powered by this versatile metal. Since it has high durability and long life, it is preferred.

 

Future Outlook for Lithium

There are varying estimates, but these all suggest that demand will explode over the next few years. Demand for lithium went up from 101 kilotonnes in 2021 to 165 kilotons in 2023 according to the International Energy Agency. By 2030, this is expected to be 531 kilotonnes.

The global transition to electric vehicles is considered to be a prime factor for this growth. Both the supply and demand for lithium look promising at a steady rate. The idea is to stabilise the usage of renewable energy in the industrial sector. Lithium entered that space to dominate the energy sources. Australia, being one of the largest producers of lithium globally, is well-positioned to meet the benefits of this demand.

 

Conclusion

Whatever lithium prices are doing, The global demand for lithium is increasing because car manufacturers and governments are looking to encourage the usage of renewable energy sources rather than heavily relying on fossil fuels. Apart from this, the demand is increasing consumer electronics is also growing rapidly.

Investors should look at this sector, the bargain basement prices may not last for very long…

 

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