Top 10 ASX lithium stocks to watch
A brief examination of ASX lithium stocks, their advantages and drawbacks, and a rundown of the 10 best lithium stocks to watch in Australia this year. These stocks are the largest lithium miners on the ASX.
ASX lithium stocks: what you need to know
Lithium is a silvery-white alkali metal, with special properties that make it extremely useful in the production of lithium-ion batteries that act as the power source for Electric Vehicles (EVs).
Because lithium is both the least dense metal and least dense solid element, it is highly unlikely to be replaced in modern EVs by alternatives such as nickel. While nickel has been used in the past, it has 40% lower energy density, meaning more of the metal is required to create an EV battery.
However, lithium’s chemical disadvantage is its inherent instability. Lithium is highly reactive and must be stored in an inert atmosphere or vacuum such as oil. This makes it expensive to produce, transport, and store.
As the Electric Vehicle revolution gathers pace, by dint of the increasingly scarce and costly oil, or because of environmental concerns, lithium mining is likely to become ever more profitable in the long term. Of course, the lithium price fell sharply in 2023 due to several complex factors — including Chinese overstocking and oversupplied markets.
ASX lithium stocks: further important information
The best current alternative to lithium is nickel-based batteries. But lithium batteries charge quicker, and have no memory issues, meaning their maximum charging capacity isn’t affected by each charging cycle. Nickel batteries also run hotter quicker, so usually require a cooling system.
On the other hand, lithium’s instability makes it around 50% more expensive to manufacture lithium batteries, which impacts the cost of an EV. Lithium batteries also typically have a shorter shelf life than nickel batteries before needing replacing. And because nickel is more widely used, the metal can already be recycled profitably.
But fundamentally, lithium is likely to be the metal that will power the EV revolution, unless there is a giant technological leap forward.
To understand the potential the EV revolution has, market leader Tesla’s market cap, while volatile, currently hovers around $900 billion, comparable to the sum of every other auto manufacturer in the world combined. The company produced less than one million vehicles in 2021, while the OICA estimates 57 million passenger cars were produced in total.
Indeed, in the past CEO Elon Musk has likened lithium mining to ‘minting money,’ and has hinted plans to start his own lithium company to gain some control of the supply chain.
The global shortage pushed lithium prices beyond record levels in 2022, threatening to arrest its so far rapid growth. However, prices fell sharply back in 2023 as supply caught up, Chinese demand faltered, and the world teetered on the brink of global recession.
According to The International Energy Agency (IEA), the number of EVs produced more than doubled in 2021 to 6.6 million. Analysts expect lithium demand to increase tenfold by 2030, as legislation prohibiting the manufacture or sale of internal combustion engine (ICE) cars in the future is being passed across vast swathes of the world, including in the EU, UK, USA, and even China.
Currently, China controls 80% of battery cell production and maintains a market-leading position in lithium refining. The war in Ukraine, combined with the Shanghai pandemic lockdown has forced companies worldwide to examine the strength of supply chains and perhaps pay more for higher security of supply.
In March 2023, ex-US President Joe Biden invoked emergency Presidential powers under the Cold War era 1950 Defense Production Act. The aim was to increase production of key metals including lithium, ‘to reduce our reliance on China and other countries for the minerals and materials that will power our clean energy future.’
Further demand is likely to be awoken by the recently passed Inflation Reduction Act, which offers $370 billion of investment into clean energy including extending the $7,500 consumer income tax credit for the purchase of a new EV, and eliminating the per-manufacturer limit on these tax credits.
One lithium concern is that it is relatively abundant worldwide. However, supply is restricted for two reasons. The first is that lithium needs to be concentrated enough to be worth mining and exploratory projects are often expensive with a high failure rate.
The second is that lithium is difficult and time-consuming to mine, with new mines taking up to ten years to begin extraction. While corporations worldwide are trying to set up their own mining and processing operations, the demand for lithium is likely to eclipse the supply ramp-up. The IEA estimates that demand for lithium will rise by 900% by 2030, and by 4,000% by 2040.
Of course, lithium prices are as volatile as the metal itself. For example, a recent influencing factor is China’s ‘zero-covid’ strategy which saw lithium processing halt in some areas of the country, leading EV manufacturers like Tesla to be forced to suspend factory production at times. Indeed, China has promised a crackdown on illegal mining which could see prices shoot up again, with analysts predicting that 10% of global production could be affected.
Finally, there are multiple ways to invest in ASX lithium stocks. It’s worth noting that lithium is mined from three types of deposits: brine, pegmatite lithium and sedimentary, with Australia accounting for the majority of the sedimentary lithium worldwide. Many lithium investors prefer to invest across all three types.
More widely, many investors choose to buy shares in a diversified miner like Rio Tinto to gain exposure to lithium while limiting overall risk. Of course, this cuts both ways, with diversified miners unlikely to feel the full benefit of any future price rise. While most of the stocks on this ‘top 10’ list are large-cap miners, with the potential for share price hikes in the long term with rights to exclusive projects, small-cap lithium stocks can be more lucrative, despite carrying more risk.
Overall, pure-play ASX lithium stocks are exciting long-term prospects for the adventurous investor.
Best 10 ASX lithium stocks to watch
The following ten shares represent some of the largest lithium miners on the ASX. The stocks are listed by market cap, from largest to smallest. Although the final stock has a considerably lower market cap than the others, it’s worth keeping an eye on, as it has attracted significant investor interest.
Remember, past performance is not indicative of future returns.
Rio Tinto Ltd (ASX: RIO)
Rio Tinto Ltd stands as one of the world’s largest and most diversified mining companies, with operations spanning iron ore, aluminium, copper, and other industrial minerals. Its flagship iron ore projects in Western Australia continue to be a major revenue driver, supplying key materials for global infrastructure and manufacturing.
Recently, Rio Tinto has focused on decarbonisation initiatives, including investments in greener technologies and sustainable mining practices. Its joint ventures in lithium and copper exploration highlight a strategic pivot towards minerals essential for the energy transition.
For investors, Rio Tinto offers the allure of strong cash flows, robust dividends, and a commitment to capital discipline. The company’s exposure to commodities like iron ore and aluminium positions it well to benefit from global infrastructure growth and industrial demand, particularly from China.
Furthermore, its efforts to expand in critical minerals, such as lithium, align with rising demand for battery materials and green energy solutions—making RIO a compelling long-term investment prospect.
Market capitalisation: $166.07 billion.
South32 (ASX: S32)
South32 Ltd is a globally diversified mining and metals company, with operations in aluminium, manganese, nickel, silver, lead, and zinc. Born from a demerger with BHP in 2015, South32 has built a reputation for focusing on high-quality assets in stable jurisdictions, including Australia, South Africa, and South America.
Recent developments include its acquisition of an additional stake in Mozal Aluminium in Mozambique, boosting its exposure to aluminium at a time when demand for the lightweight metal is growing due to the push for energy efficiency.
Investors may find South32 appealing due to its strong balance sheet, diversified commodity exposure, and focus on shareholder returns through dividends and buybacks. As the green energy transition accelerates, South32’s presence in aluminium and nickel (critical inputs for electric vehicles and renewable energy systems) positions the company to benefit from structural shifts in commodity markets. Its clear commitment to sustainability and decarbonisation further strengthens its investment case.
Market capitalisation: $16.16 billion.
Pilbara Minerals Ltd (ASX: PLS)
Pilbara Minerals Ltd is one of Australia’s leading lithium producers, with its flagship Pilgangoora Project in Western Australia supplying high-grade spodumene concentrate to global battery manufacturers.
As demand for lithium-ion batteries surges, particularly in the electric vehicle and energy storage sectors, Pilbara Minerals has ramped up production and expanded its offtake agreements with key global partners.
In recent news, the company has advanced plans to develop a mid-stream lithium refinery, which could allow it to capture more value from its raw materials.
PLS is often on the radar of investors looking to capitalise on the lithium boom. With governments worldwide pushing for a transition to cleaner energy and electric transportation, Pilbara Minerals’ strategic positioning within the lithium supply chain presents significant growth opportunities.
Its established infrastructure, coupled with ongoing expansion projects, makes it a compelling option for those seeking exposure to one of the most in-demand commodities of the next decade.
Market capitalisation: $5.82 billion.
Mineral Resources Ltd (ASX: MIN)
Mineral Resources Ltd operates as a diversified resources and mining services company, with significant interests in iron ore and lithium. Its Wodgina and Mt Marion lithium projects, alongside its iron ore operations in Western Australia, offer a unique combination of traditional bulk commodities and future-facing battery metals.
Recently, Mineral Resources has expanded its downstream lithium processing capabilities through joint ventures with major partners, aiming to deliver higher-value products directly to end markets.
For investors, MIN presents a compelling dual play on both traditional infrastructure-driven commodities and the fast-growing lithium sector. The company’s integrated approach, combining mining, processing, and logistics, enhances operational efficiency and profitability.
Mineral Resources’ robust cash flow, underpinned by iron ore, and its strategic moves in lithium make it an attractive option for those looking to benefit from both cyclical and structural trends in the commodities space.
Market capitalisation: $4.12 billion.
IGO Ltd (ASX: IGO)
IGO Ltd is an Australian mining company focused on clean energy metals, with operations in nickel, lithium, and copper.
Its interest in the Greenbushes Lithium Mine, one of the world’s largest and highest-grade lithium deposits, alongside its Nova Nickel-Copper-Cobalt Operation, positions IGO at the forefront of the battery metals revolution.
Recently, IGO completed the acquisition of Western Areas, further solidifying its position as a major player in nickel production.
IGO is highly attractive to investors seeking exposure to the electrification and decarbonisation megatrends. Its strategic focus on battery and energy storage metals aligns with the accelerating shift towards renewable energy and electric vehicles.
The company’s strong ESG credentials, underpinned by sustainable mining practices and a commitment to lowering carbon emissions, enhance its appeal to socially responsible investors and those anticipating long-term growth in green technology demand.
Market capitalisation: $2.97 billion.
Iluka Resources (ASX: ILU)
Iluka Resources is a leading global producer of zircon and high-grade titanium dioxide products, materials critical for ceramics, pigments, and industrial applications.
In addition to its mineral sands operations, Iluka has made significant strides in rare earths development through its Eneabba Project in Western Australia. The project, focused on processing rare earths monazite concentrate, represents a strategic move into critical minerals essential for the production of electric vehicles and wind turbines.
For investors, Iluka offers diversified exposure to both traditional industrial commodities and future-facing rare earth elements. Its established operations generate steady cash flow, while the rare earth's business presents compelling growth opportunities in high-tech and renewable energy markets.
Iluka’s vertically integrated strategy, spanning from extraction to processing, could enable it to play a critical role in global supply chains for critical minerals, making it a stock to watch closely.
Market capitalisation: $1.75 billion.
Liontown Resources Ltd (ASX: LTR)
Liontown Resources Ltd is an emerging leader in the lithium sector, with its Kathleen Valley Lithium Project in Western Australia poised to become one of the most significant new lithium developments globally.
The project is expected to deliver high-grade spodumene concentrate to meet the surging demand for lithium-ion batteries. Recently, Liontown secured key financing deals and offtake agreements with major players such as Tesla and Ford, underscoring the strategic value of its resources.
LTR is considered a high-potential growth stock for investors looking to capitalise on the accelerating shift to electric vehicles and renewable energy storage. Its advanced-stage development and strong partnerships with major OEMs reduce some of the typical risks associated with junior miners.
As construction progresses towards first production, Liontown is positioning itself as a key player in the global lithium supply chain.
Market capitalisation: $1.54 billion.
Vulcan Energy (ASX: VUL)
Vulcan Energy Resources is pioneering a zero-carbon lithium extraction process in Germany’s Upper Rhine Valley.
Its integrated geothermal and lithium brine project is designed to produce battery-grade lithium with net-zero carbon emissions – a compelling value proposition in an industry under increasing ESG scrutiny.
Vulcan has signed binding offtake agreements with several leading European carmakers, including Volkswagen and Stellantis, reflecting strong market confidence in its innovative approach.
For investors, VUL represents a unique opportunity to gain exposure to both lithium and renewable energy production. Its dual revenue streams from geothermal energy and lithium extraction create a diversified and sustainable business model.
With Europe’s push towards localised and ethical battery supply chains, Vulcan Energy is strategically positioned to benefit from both regulatory tailwinds and growing consumer demand for sustainable EV materials.
Market capitalisation: $865.95 million.
Patriot Battery Metals (ASX: PMT)
Patriot Battery Metals is a North American-focused exploration company, with its flagship Corvette Lithium Project in Quebec garnering significant attention.
Recent drilling results have confirmed high-grade spodumene deposits, positioning Corvette as one of the most promising new lithium discoveries globally. Patriot is advancing exploration aggressively, with further resource updates and feasibility studies expected to unlock additional value.
PMT appeals to speculative investors looking for early-stage exposure to the booming lithium sector. Its strategic location in a mining-friendly jurisdiction, coupled with rising global demand for battery-grade lithium, makes it a stock to watch closely.
As the company de-risks the project through ongoing exploration and development milestones, Patriot Battery Metals could emerge as a key player in North America’s growing battery materials supply chain.
Market capitalisation: $459.16 million.
Talga Group (ASX: TLG)
Talga Group Ltd is an advanced materials company developing sustainable graphite and battery anode products from its projects in northern Sweden.
Its Vittangi Anode Project is set to produce ultra-high-grade graphite and anode materials for use in lithium-ion batteries. Recently, Talga secured supply agreements with major battery manufacturers and advanced funding discussions with potential partners and government bodies to fast-track project development.
For investors, TLG offers unique exposure to the battery supply chain, focusing on sustainably sourced graphite – an essential component in EV batteries. With growing concern about the environmental impact of battery materials, Talga’s vertically integrated and green-focused operations present a compelling case.
As global demand for EVs and energy storage systems grows, Talga’s strategic position in Europe and its ESG credentials could translate into significant long-term upside.
Market capitalisation: $191.11 million.
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