Lithium’s had a roller coaster of a decade, from boom to bust to boom and now bruised, and it’s been a reality check for the market and investors alike.
It’s still the metal that makes batteries work, and the world’s building more of them than ever – cars, grid storage, data centres, defence. But oversupply and slower EV sales have dragged prices down from their peaks. Demand’s still climbing long term as more factories, storage systems, and EV models roll out.
Australia produces more lithium than anywhere else, it’s mined hard-rock spodumene. It comes in the form of pegmatites, hard rock often buried beneath the ground that is then drilled out. Once drilled, testing is done to understand the grade of the contained lithium, impurities and if it’ll be economic to mine.
The other form of lithium is brine. Lithium brine is pumped from underground salars and spread into large evaporation ponds, where sunlight and wind gradually evaporate the water. This process concentrates the lithium salts over several months, after which the brine is processed further to produce lithium carbonate or hydroxide.
The next phase in the lithium journey will be about who can produce the cheapest lithium, who can process efficiently, and those that can quickly take advantage of fluctuating prices. A boom or bust commodity, ASX lithium companies have often had a volatile past.
The long game’s still there, just not as easy as it looked in 2022.
The Latest Lithium ASX News
Investing in Lithium on the ASX
Why Lithium Matters
Lithium is the backbone of modern batteries. It stores energy efficiently, recharges fast, and lasts long. EV battery packs, house storage batteries, and every Tesla to heavy truck battery, runs on lithium. Beyond transport, lithium’s key for renewable energy storage, this is a segment of the market that is growing extremely quickly as it keeps solar and wind power usable when the sun’s down or the wind’s dead.
Where the Lithium Market Sits Now
After years of celebrations during soaring prices, lithium is now waking up to a hangover. New supply came online faster than demand could keep up, and EV adoption hit speed bumps. Most analysts still see strong long-term demand through the 2030s, but the easy money phase is gone.
As weaker players fold and new projects stall, the supply demand balance should reset. It’s now tough times for lithium producers and explorers, capital preservation and understanding a changing market is paramount.
How Lithium’s Priced
Lithium trades mainly through contracts, not public exchanges. Prices depend on product type, spodumene concentrate, the raw mineral mined from the ground. Then there is the refined lithium carbonate and hydroxide, the chemical forms used to make the cathodes in lithium-ion batteries.
Purity also plays an important part, like with any metal, the higher the purity the greater price it can fetch. China’s spot market is still in its infancy and sets the mood globally, and it can swing hard, hence the roller coaster price we’ve seen over the years. Subsidies, inventory builds, and tech shifts all feed volatility, as the long term market for lithium develops, so will a more stable price.
What to Watch in the Lithium Market
Watch the chemistry race as battery tech keeps evolving. Most EVs use either nickel-manganese-cobalt (NMC) or lithium-iron-phosphate (LFP) batteries, but solid-state technology (100% lithium) is getting closer to commercial reality.
Processing is where the real competition sits now, turning raw spodumene into battery-grade chemicals is where the advantage lies. Australia’s finally building conversion plants instead of just shipping rocks to China. The issues Australia is having is doing this competitively, we’ve seen conversion plants close due to high costs.
This is an area to watch, as lithium companies on the ASX are doing their best to secure downstream processing capacity, those who have the expertise, or bring in the right partners will benefit the most.
How to Research Lithium Stocks on the ASX
Start with the basics: resource size, grade, and production costs. Hard-rock operations (spodumene) get to production faster than brine projects but typically cost more to operate. The key question now – who still makes money at current prices versus who’s burning cash waiting for a recovery.
The money is now in the conversion, having a vertically integrated set up, mine through to processing, means one company taking advantage of the supply chain. The less parties involved in the supply chain the better.
Check companies funding runway, who their partners are, and whether they’ve locked in offtake agreements. Tier-one partners who have expertise, and long term contracts are crucial to survival in a weak market.
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