Lithium is an important part of making batteries for electric vehicles (EVs), which will soon make up most of the world’s car market. The potential for buyers to make money in this growing business increases as the need for lithium does. Read on to learn why buying in ASX lithium stocks is a good idea and to find out which ASX lithium stocks you should keep an eye on in 2023.
Australia’s Leading Role in the Lithium Industry
Australia makes and sells more lithium than any other country in the world. In 2021, it made up more than half of the world’s lithium output. There are a lot of hard-rock lithium sources in Australia. This lithium is taken from rocks like spodumene and petalite. Hard-rock lithium is better than liquid lithium, which comes from salt lakes and ponds. It is more pure, has less of an effect on the environment, and can be made faster.
It’s also smart for Australia to sell lithium to the rapidly rising Asian market, especially China, which buys more lithium and electric vehicles than any other country. A lot of big Chinese lithium companies, like Ganfeng Lithium and Tianqi Lithium, have teamed up with Australia and invested in Australian lithium mines and processing plants.
Australia also wants to become a star in the lithium value chain by improving its ability to refine, make, and recycle lithium goods. It is important for Australia to have its own battery business, so the government has backed a number of programs that encourage new ideas and teamwork in this area. The Future Battery Industries Cooperative Research Centre (FBI CRC) is an example of a $135 million project that brings together business, university, and the government to work on the problems and chances in Australia’s battery industry.
Why You Should Invest in ASX Lithium Shares?
Investing is a field that is always changing. In the past few years, there has been a huge shift around the world toward more environmentally friendly ways to power and move around. This change has made more people want lithium, which is an important part of batteries for electric cars and systems that store energy from green sources. In light of this, lithium stocks have become popular as a good place to trade. Some strong reasons to think about buying lithium shares on the Australian Securities Exchange (ASX) are discussed below.
Market Trends Support Lithium Demand
First, you should think about how the market is changing. More and more people are buying electric cars (EVs), and experts predict that this number will continue to grow significantly in the next few years. Recently released data suggests that the market for electric vehicles will grow at a rate of over 20% per year from 2021 to 2028.
An important part of this burgeoning market is lithium-ion batteries, which constitute a significant portion of the cost of an EV. This trend has a direct impact on ASX Lithium Stocks, as the demand for lithium is expected to surge. Additionally, the broader ASX Mining Stock sector could also see gains, given that lithium mining is a key component of the industry.
Sun and wind power are examples of green energy sources that are increasing the need for lithium. This is because energy storage systems often need lithium-ion batteries. There are more and more systems of renewable energy, and countries around the world are making big goals to switch to clean energy sources.
Diverse Options on the ASX
It is a good idea to look at the Australian Securities Exchange (ASX), which has many lithium stocks for people who want to trade. Since many mining companies and lithium makers are listed on the ASX, it is a great way to spread your risk in this market. You can spread out your risks and increase your chances of making a lot of money by buying in a number of lithium companies.
Regulatory Support
Australia has some of the world’s biggest lithium sources, and the government is very interested in growing them. You can be sure that your investments are safe and well-regulated in Australia because the country is stable and has strong laws. Because the government backs the ASX, it is a great place to invest in lithium.
Economic Factors: Supply and Demand
Stock prices are affected by the basic economic rule of “law of supply and demand.” Australia has a lot of lithium sources and is close to places like China that need a lot of lithium. This makes it easier for ASX-listed lithium companies to take advantage of the growing demand around the world, which can have a good effect on share prices.
Potential for High Returns
People often call lithium stocks “growth stocks,” which means they have the ability to gain a lot of value. There are risks with every investment, but the rising need for sustainable technologies and the high demand for lithium make lithium stocks a good choice for investors who are willing to take on some risk.
The Top 5 ASX Lithium Stocks to Watch in 2023
A lot of businesses on the ASX are interested in finding lithium, mining it, treating it, or making lithium goods. Here are the 5 best lithium stocks on the ASX to keep an eye on in 2023:
- Pilbara Minerals (ASX: PLS): The Pilgangoora Lithium-Tantalum Project in Western Australia is one of the biggest hard-rock lithium projects in the world. It is owned and run by Pilbara Minerals. To sell in China and other places, the company makes spodumene concentrate and tantalite concentrate. Also, Pilbara Minerals wants to build an integrated downstream processing plant at Pilgangoora so that battery makers can get high-purity lithium hydroxide. Ganfeng Lithium and General Lithium, two of China’s biggest lithium companies, work with the company.
- Core Lithium (ASX: CXO): The Finniss Lithium Project is being built by Core Lithium. It is located near Darwin in the Northern Territory. Mineral resources for the project are thought to be 30.6 million tonnes at 1.32% LCE. Keep going, assistant
- Core Lithium (ASX: CXO): Core Lithium is developing the Finniss Lithium Project near Darwin in the Northern Territory. The project has a mineral resource estimate of 30.6 million tonnes at 1.32% LCE and a proven and probable ore reserve of 9.63 million tonnes at 1.4% LCE. The project is expected to produce 175,000 tonnes per annum of spodumene concentrate for export to China. Core Lithium has secured an off-take agreement with Yahua Group, one of China’s largest lithium producers. The company also has exploration projects in the Bynoe Pegmatite Field and the Anningie and Barrow Creek Pegmatite Fields.
- Orocobre (ASX: ORE):There is a big factory in Argentina called Olaroz Lithium Facility that makes a lot of lithium carbonate. It is owned by Orocobre, Toyota Tsusho Corporation, and Jujuy Energia y Mineria Sociedad del Estado. Also, the business owns 75% of the Cauchari-Olaroz Lithium Project, which is still being built and will begin producing lithium in 2023. Advantage Lithium owns the Cauchari Joint Venture and other lithium mining projects in Argentina. Orocobre owns 34.7% of Advantage Lithium. One more thing that Orocobre owns is 66.5% of Borax Argentina, a company that makes boron goods.
- Galaxy Resources (ASX: GXY): Galaxy Resources has lithium properties in Australia, Canada, and Argentina, so it is a diverse company. The company runs the spodumene mine at Mt. Cattlin in Western Australia. It makes spodumene powder that is sent to China. There are also 6.3 million tonnes of measured and suggested resources of LCE at the Sal de Vida brine project in Argentina, which is owned by the same company. There are also 1.3 million tonnes of measured and likely reserves of LCE. The project should make lithium carbonate and potash that can be used in batteries. Galaxy Resources is also the owner of the James Bay spodumene project in Quebec, Canada. This project has a potential of 40.3 million tonnes at 1.4% LCE that has been measured and suggested.
How to Buy ASX Lithium Shares
If you are interested in buying ASX lithium shares, you will need to follow these steps:
- Sign up for an account with a broker that lets you trade on the ASX. There are many online sites to choose from, each with its own prices, features, customer service, and level of knowledge.
- Put enough money into your account to cover the price of the shares you want to buy plus any fees or commissions your broker charges.
- Look into the ASX lithium stocks you want to buy and think about how well they’ve done financially, how much they could grow, how they compare to other companies, and what risks they pose. There are many places to find information, such as online forums, business websites, yearly reports, ASX releases, expert reports, and news stories.
- Use your broker’s site to put in your order to buy the shares. Orders like market orders, limit orders, stop orders, and conditional orders are some of the types you can choose from. You can also say how many shares you want to buy and how much you want to pay for them.
- After you confirm your order, wait for your broker to carry it out. When your order is finished, you will get a confirmation email or message.
- Check your account often and keep an eye on how your ASX lithium shares are doing. There are many tools and signs you can use, like alerts, charts, graphs, ratios, and trends. You can also change your portfolio based on your risk tolerance and financial goals.
Conclusion
Lithium plays a major role in the production of batteries for electric vehicles (EVs). Australia is a significant player in the lithium market, boasting abundant hard-rock lithium reserves and a strategic position in the Asian market. For those looking to capitalize on this burgeoning industry, investing in ASX Lithium Stocks offers a promising avenue. These stocks are part of the broader category of ASX Mining Stocks, which include various resources but have a particular emphasis on lithium due to its rising demand. By investing in these specialized stocks, you can potentially reap substantial financial benefits as the market for lithium continues to grow.
Even so, people who want to buy lithium stocks should know that there are risks and problems that come with them, such as price changes, operating problems, market competition, and environmental issues. So, people who want to buy ASX lithium shares should do their research first and then spread their money around a number of different companies, stages of growth, and types of lithium goods.
FAQs
Are lithium shares a good investment?
Yes, lithium shares are usually thought to be a good investment, especially for people who want their money to grow over the long run. An increase in the number of electric vehicles and green energy sources will cause a big rise in the need for lithium. But lithium shares have risks, just like any other investment. It’s important to do a lot of study and maybe even talk to a financial expert before buying.
What are the best ASX lithium stocks to buy?
Even though I can’t give you financial help, Orocobre, Pilbara Minerals, and Galaxy Resources are some well-known ASX-listed lithium companies that buyers often look at. In the past few years, these companies have done very well, and they are currently working on big lithium mining and production projects. But the best stocks for you will depend on how much risk you are willing to take and what your financial goals are.
Who is Australia’s biggest lithium producer?
Asx: PLS, which owns and runs the Pilgangoora Lithium-Tantalum Project in Western Australia, was Australia’s biggest lithium provider in 2021. Five hundred thousand tons of spodumene concentrate can be made every year at most by the project. Spodumene concentrate is a lithium-rich raw material that can be processed and used in batteries. The company Pilbara Minerals also wants to build a plant at Pilgangoora to make high-purity lithium hydroxide for companies that make batteries. Ganfeng Lithium and General Lithium1, two of the biggest lithium companies in China, work with Pilbara Minerals.
Which ASX lithium stocks come with dividends?
Mineral Resources (MIN) and Rio Tinto (RIO) are two ASX lithium stocks that have a history of giving dividends. Pilbara Minerals (PLS) told owners in 2022 that it would be paying them its first dividend, which was given out in March 2023.
