What are the best lithium stocks on the ASX?

Lithium stocks on the ASX have seen some serious volatility of late, as ‘white gold’ skyrocketed in price then receded. But what does the future for ASX lithium stocks look like – and which companies should you be watching?

• Lithium trading overview
• ASX lithium stocks in 2023
• The best lithium stocks ASX

Lithium trading: an overview

Lithium is an alkali metal and the least dense metallic element. It has a variety of uses, including in medicine, lubricants and ceramics. However, in recent years it has become synonymous with just one: batteries.

Lithium-ion batteries are seen as crucial to powering the tech that can help economies achieve their net-zero targets – chiefly as part of electric vehicles (EVs), although their use is widespread in most technologies we use today.

That has driven lithium demand to new highs and has analysts predicting a supply deficit as soon as 2024. Perhaps unsurprisingly then, lithium prices have skyrocketed in recent years too, from less than $10 per kilo in 2020 to over $80 by the end of 2022.

In 2023, though, the picture has flipped, with lithium prices nosediving – partly thanks to lower Chinese demand for EVs after a long-standing subsidy programme ended.

Supply has also increased rapidly, which has hurt spot lithium prices. However, most still predict that demand will vastly outstrip supply in the coming years.

ASX lithium stocks in 2023

As we’ll see in our list of the top ASX lithium stocks, lithium miners tend to roughly follow the metal’s price. Trading lithium spot and futures isn’t as popular as other metals, so many investors flocked to the industry as a way of taking a position on the rally in ‘white gold’.

That has seen lithium stocks among the ASX’s best performers in recent years, with some drop off in 2023 as the market correction takes hold. However, with a supply deficit on the horizon, many see further gains to come.

Due to lithium being a relatively new top global commodity, lots of lithium miners are still in their early phases – often producing no metal at all just yet. This can make them key growth opportunities, but also means they can be a risky play. Others are more diversified, with less exposure to lithium’s price.

Almost all lithium mining today takes place in Australia, Latin America and China, which makes ASX lithium stocks well placed if the metal rallies once again. However, new mines are springing up across Africa, Europe and elsewhere.

Best lithium stocks ASX

Code	Company	Market cap (AU$m)
ASX:RIO	Rio Tinto	163,190
ASX:PLS	Pilbara Minerals	15,170
ASX:MIN	Mineral Resources	14,160
ASX:AKE	Allkem	10,510
ASX:LTR	Liontown Resources	6,270
ASX:DEG	De Grey Mining	2,120
ASX:SYA	Sayona Mining	1,860
ASX:CXO	Core Lithium	1,760
ASX:LLL	Leo Lithium	1,100
ASX:LRS	Latin Resources	797

 

1. Rio Tinto (RIO)

Rio Tinto is one of the world’s largest miners and one of Australia’s biggest companies. It is a component of both the ASX 200 (Australia 200) via its ASX listing and the FTSE 100 (UK 100) via its London Stock Exchange listing.

As a mining giant, Rio Tinto is far from dependent on lithium mining for its bottom line, and is far more focused on its core products including iron ore, aluminium and copper. However, it has begun making some key plays in the lithium space.

• In 2022, it acquired the Rincon lithium project in Argentina for $825 million
• It has been attempting to construct a lithium mine in Western Serbia, which would make Serbia the biggest lithium producer in the world. However, the project has been met with mass protests and in 2022 the Serbian government revoked Rio Tinto’s licence
• It recovers lithium from waste material at its Boron operations in California

While RIO might not be a major lithium player just yet, it clearly has plans for the metal in its future – so could make for a long-term bet.

2. Pilbara Minerals (PLS)

The second company on our list is dwarfed by Rio Tinto in terms of market cap, but makes up for it with a much tighter focus on lithium mining. It chiefly operates the Pilgangoora project, a long-term lithium mine in Western Australia and one of the largest hard-rock lithium deposits in the world.

Pilbara Minerals has also been developing a new midstream project in conjunction with Calix, an environmental tech company.

PLS stock is trading close to its record high at over AU$5. It has seen some impressive growth in the last three years, up from just AU$0.25 in 2020 thanks to lithium’s rapid rise.

3. Mineral Resources (MIN)

Another more diversified Aussie mining firm, Mineral Resources’ primary products are iron ore and lithium. It is among the top-five AU iron ore producers and the top-five global lithium producers. It first started mining for lithium over ten years ago, making it an early AU entrant into the space.

In early July 2023, Mineral Resources (MinRes) announced positive early results from its lithium exploration project in Mt Marion, Western Australia. The site is joint-owned by MinRes and Ganfeng Lithium, a lithium producer. It has a current capacity of 900,000 tonnes per year.

MIN stock hit a record high of over AU$90 at the beginning of 2023, up over 100% from two years earlier. However, it struggled in the first half of the year as lithium tumbled, dropping to around AU$70 per share.

4. Allkem (AKE)

Allkem is a pure-play lithium chemicals stock, involved across the lithium supply chain. It has hard-rock operations in Australia and Canada, a lithium-brine operation in Argentina and a conversion facility in Japan.

Much like MinRes and Pibara, Alkem stock grew rapidly from 2020-2022 as investors flocked to lithium. Today, it trades at a record high of AU$16, up from just AU$3 three years ago.

Allkem is headquartered in Argentina, but has a dual listing on both the Australian Securities Exchange and Toronto Stock Exchange.

5. Liontown Resources (LTR)

Liontown Resources is an Australian miner with a focus on tier-1 battery minerals – primarily lithium.

It is still preoperational, meaning that it currently isn’t producing anything. But with two projects underway in Western Australia, the company predicts that it will be able to produce up to 500,000 tonnes of lithium by mid-2024.

Preoperational lithium stocks bring more risk than those already producing the metal. Lithium prices may have receded further by 2024 – although the company has stated that the deficit will only have grown by then – or the project may not be as successful as planned.

However, that hasn’t stopped LTR stock taking the ASX by storm in 2023 so far, up almost 100% YTD. Much of that growth was due to an attempted takeover from US-based lithium giant Albemarle. Its approach was rebuffed, but an improved offer may still be made.

6. De Grey Mining (DEG)

De Grey is an Australian gold miner that, like Liontown, is currently preoperational. It is developing the Mallina project in Pilbara, Western Australia, with a final investment decision planned for later in 2023.

However, De Grey has also confirmed that its reserves contain high-grade lithium, which could bring it into the sector once drilling commences. While investors remain focused mainly on the gold side of the company, it can make a compelling gold plus lithium play.

7. Sayona Mining (SYA)

Sayona Mining is another miner that produces both gold and lithium – but this time with more of a focus on the lithium side. It operates three sites in Canada and one in Western Australia.

In March 2023, Sayona announced that it had successfully restarted its flagship North American Lithium (NAL) project in Quebec. A definitive feasibility study (DFS) shortly after confirmed that the mine should produce around 226,000 tonnes of lithium per year.

8. Core Lithium (CXO)

Despite the name, Core Lithium is not a pureplay lithium stock – with some uranium production under its belt too. However, it is mainly a lithium miner, and is another company that saw its share price rocket as the metal’s price rose up until 2022.

CXO is the 100% owner of the Finniss Lithium Project in the Northern Territory. It made the first concentrate shipment from the site in spring 2023, and has received authorisation for a second mine to increase production.

9. Leo Lithium (LLL)

Founded in 2019 and listed in 2022, Leo Lithium is a relatively new entrant into the sector. It is headquartered in Australia, but its main project is the Goulamina mine in Mali. That site is currently still preoperational and expects to begin producing spodumene in 2024 – when it will become the first site in West Africa to do so.

LLL stock floated at AU$0.70, but traded at a discount for much of its first months on the market. However, it has rallied in 2023, up above AU$1 per share.

Leo Lithium holds a joint listing on the Australian Securities Exchange and Frankfurt Stock Exchange.

10. Latin Resources (LRS)

As the name suggests, Latin Resources has projects in Latin America as well as Australia – specifically in Brazil, where its flagship Salinas project is located, plus Argentina and Peru. It aims to produce the minerals that help progress towards net zero targets. For now, that chiefly means lithium, alongside copper and halloysite-kaolin.

While the company is once again pre-operational, in mid-July LRS shares jumped on news of fresh lithium discoveries at its sites.