Down 68 percent from its 12-month high, is this ASX 200 lithium favourite an irresistible bargain to me now?

Lithium shares have suffered more than most ASX stocks over the past year. It is time to buy?

| More on:
Female miner smiling in front of a mining vehicle as the Pilbara Minerals share price rises

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

I'm keen to get exposure to the lithium sector.

And now looks like a great time to buy.

The price of lithium has tanked over the past few years.

In late 2022, spodumene was trading at above US$6000 per tonne.

The price of spodumene is currently sitting at around US$1000 per tonne, having dropped more than 80% over the last few years.

Meanwhile, lithium hydroxide, another key material used for producing lithium-ion batteries, has fallen just as much.

It's dropped from around US$72,000 a tonne in 2022 to its current value of around US$12,000 per tonne.

And Australia's ASX lithium companies have certainly felt the impact of plummeting lithium prices.

The Pilbara Minerals Ltd (ASX: PLS) share price has gone from $5.42 back in October 2022 to its current price of $1.33.

Is it time to buy?

Pilbara Minerals is a leading producer of lithium materials.

It owns the world's largest independent hard-rock lithium operation, the Pilgangoora Operation in Australia.

It also owns the Colina Lithium Project in Brazil.

In its latest half-year results, the company reported that its production increased by more than 50%.

Additionally, the latest Resources and Energy Quarterly report states that global lithium demand is forecast to grow by almost 13% a year to 2030.

According to the report, this will be largely driven by the increased uptake of electric vehicles and battery energy storage systems.

And, if all goes well, Pilbara Minerals should be well placed to capitalise on the rising demand for lithium.

Still, we all know things don't always go to plan and forecasts change.

I'm very keen on getting in on the lithium space while prices are down.

But with so much uncertainty, I want to be sure if I'm investing in the lithium space, I'm backing the strongest ASX lithium company.

While Pilbara Minerals increased production over the last half, falling lithium prices hit the company's bottom line.

The lithium producer went from posting a profit of $220 million for H1 FY24 to recording a loss of $69 million for H1 FY25.

Meanwhile, the company's cash balance dropped from $2.1 billion to $1.2 billion over the same period.

I don't have any serious concerns about Pilbara Minerals' balance sheet at this stage.

But I am asking myself: Why would I invest in a company that's burning cash when there are so many other great options out there?

Motley Fool contributor Steve Holland 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

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Australia's export earnings to slide as iron ore and LNG forecasts lowered

The price of iron ore is expected to continue to decline.

Read more »

A man in a high visibility vest and hard hat at the wheel of a heavy mining machinery looks backwards.
Resources Shares

What this unexpected supply surge means for ASX 200 mining shares like BHP

Why is everyone talking about the big Aussie miners like BHP, Rio Tinto, and Fortescue today?

Read more »

Pile of copper pipes.
Resources Shares

If Goldman is right, these 3 ASX 200 copper stocks could surge into August

Today could be an opportune time to buy these three ASX 200 copper stocks.

Read more »

Miner looking at a tablet.
Gold

Greatland Resources shares commence trading on the ASX; Macquarie initiates coverage with outperform rating

Greatland Resources shares closed at $7.30 on their first day of trading.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain.
Resources Shares

Is the Pilbara Minerals share price set for a rebound?

The Pilbara Minerals share price hasn’t been this low since 2021. Is it time to buy?

Read more »

Miner and company person analysing results of a mining company.
Resources Shares

The Rio Tinto share price hit a 52-week low last week, is it a buy?

Is this mining giant worth digging into?

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain.
Resources Shares

Is the Fortescue share price a buy for passive income?

Let’s dig into the potential of this mining giant.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Major miners fall as iron ore prices continue to sink

Waning Chinese demand and oversupply concerns push iron ore prices lower.   

Read more »