Mineral Monday: What you need to know about lithium and which ASX shares are cashing in on it

The Australian government has listed lithium as a critical mineral for its importance in EV and grid storage batteries.

| More on:
Female miner uses mobile phone at mine site

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Lithium is listed as a critical mineral by the Australian government
  • Lithium is a core element in EV and home storage batteries
  • Only three ASX shares are currently in the production stage

There are several dozen ASX shares that are on the hunt for lithium. A handful of others are in the pre-production stages.

But only three ASX shares are currently actually producing the metal.

We take a look at those below.

But first…

What is lithium?

Lithium is a lightweight, malleable alkali metal, silvery in colour.

Historically it's been used to increase the heat resistance of glass and ceramics. Lithium salts are also used as antidepressants.

But it's lithium's high level of heat and electricity conductivity that has seen demand boom alongside the fast-growing lithium-ion battery market. Batteries that power most every electric vehicle (EV) on the road.

Lithium's crucial role in the transition to renewables has seen the Australian government list the metal as a critical mineral.

The metal is primarily mined from ore and brines, with Australia, Chile, China and Argentina holding the largest deposits.

The government reports that Australia has high geological potential for lithium, with a 2020 Economic Demonstrated Resource of 6.17 million tonnes. In 2020, Australia produced 40,000 tonnes of lithium out of total global production of 82,000 tonnes.

So, which three ASX shares are producing lithium?

Three ASX shares cashing in on lithium

Taking them in alphabetical order, we start with Allkem Ltd (ASX: AKE), former known as Orocobre.

Allkem has a market cap of just under $6.6 billion. Based in Brisbane, its projects are primarily located in Argentina. The company supplies lithium carbonate to a variety of industrial and technical sectors, supplying roughly 10% of the global lithium market.

Allkem claims to be among the lowest-cost lithium producers in the world. The company intends to ramp up production by three times its current levels by 2026.

The Allkem share price is up 72% over the past 12 months.

The second ASX share already producing lithium is Mineral Resources Limited (ASX: MIN), with a market cap of $10.1 billion.

Though you may think of Mineral Resources as a mining services company, which it is, the company also has a large footprint in the lithium space. Its operations in Western Australia are Mt Marion, located in the Goldfields; and Wodgina, in the Pilbara region.

The company mines and produces both direct shipping ore lithium and spodumene concentrate.

The Mineral Resources share price is up 8% since this time last year.

Moving on to our third ASX share in the production stage for lithium, we have Pilbara Minerals Ltd (ASX: PLS), which has a market cap of $6.3 billion.

Pilbara's flagship Pilgangoora Lithium-Tantalum Project is also located in the Pilbara region of WA.

Pilgangoora project counts amongst the largest hard-rock lithium-tantalum deposits in the world. Pilbara Minerals has big expansion plans for the project. It forecasts spodumene concentrate capacity at Pilgangoora to increase to 560,000 to 580,000 dry metric tonnes (dmt) this year.

The Pilbara share price is up 57% over the past 12 months.

You can find also find out which ASX shares are cashing in on cobalt and vanadium in more of our 'Mineral Monday' series.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

a tired and sad looking bulldog sits at an office desk with a pen an paper on it and a cup of coffee with his head resting on the desk as he gives a mournful look to the camera.
Resources Shares

After crashing 50%, could this ASX All Ords stock rebound?

Such low starting valuations could help.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Why did the Fortescue share price fall 7% in October?

Let's review what happened with the ASX 200 mining giant in October.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Resources Shares

Why did the BHP share price get hammered in October?

ASX 200 investors sent BHP shares sharply lower in October. But why?

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Resources Shares

Gina Rinehart's empire raked in another $5.6 billion. Here's how

Resources and mining continue to dominate the Australian market.

Read more »

two men in business suits sit across from each other at a table with a chess board on it. Both hold their hands to their chins and look down in serious contemplation of their next move.
Resources Shares

'Not ruled out': Could BHP still buy Anglo-American?

This mega-deal might not be as dead as it looks.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Mineral Resources share price rockets 16% on $1.1 billion news!

ASX 200 investors appear thrilled with Mineral Resources' latest news.

Read more »

Miner looking at a tablet.
Resources Shares

Here are the latest share price forecasts for Fortescue

Let’s unearth what analysts think could happen with this iron ore miner.

Read more »

A businesswoman ponders why her boat is sinking in the ocean.
Resources Shares

Lake Resources share price sinks on quarterly cash flow news

Let's take a look at the highlights of the company's Q3 update.

Read more »