What you need to know about lithium and which ASX stocks are profiting from it

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Several dozen ASX stocks are looking for lithium. A handful more are in the pre-production phase.

But only three ASX stocks are currently producing the metal.

We take a look at those below.

But first…

What is lithium?

Lithium is a light and malleable alkali metal, silver in color.

Historically, it has 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 thermal and electrical conductivity that has seen demand soar alongside the rapidly growing market for lithium-ion batteries. Batteries that power most electric vehicles (EVs) on the road.

Lithium’s crucial role in the transition to renewable energy has seen the Australian government classify the metal as a critical mineral.

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

The government reports that Australia has high geological potential for lithium, with a demonstrated economic resource in 2020 of 6.17 million tonnes. In 2020, Australia produced 40,000 tons of lithium out of a total world production of 82,000 tons.

So what are the three ASX stocks that produce lithium?

Three ASX stocks cash in on lithium

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

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

Allkem claims to be one of the cheapest lithium producers in the world. The company intends to increase production to three times its current levels by 2026.

Allkem’s share price has risen 72% over the past 12 months.

The second ASX stock already producing lithium is Limited mineral resources (ASX: MIN), with a market capitalization of $10.1 billion.

While you might 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 drop-ship lithium ore and spodumene concentrate.

Mineral Resources’ share price is up 8% since the same period last year.

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

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

The Pilgangoora project is one of the largest hard rock lithium-tantalum deposits in the world. Pilbara Minerals has big expansion plans for the project. It expects spodumene concentrate capacity at Pilgangoora to increase to 560,000 to 580,000 dry metric tons (dmt) this year.

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

About Kristina McManus

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