General Mining Corporation Ltd (ASX: GMM) has seen its share price soar 5,800% since early January 2015, adding another 7.3% today to trade around 29.5 cents.

That makes the resources company by and far the best performer on the ASX in 2015, well ahead of gold miner St Barbara Ltd (ASX: SBM) with a gain of 988%, Bellamy’s Australia Ltd (ASX: BAL) with a gain of nearly 700%, Adacel Technologies Limited (ASX: ADA) 680% and Netcomm Wireless Ltd (ASX: NTC) with a share price rise of 584%.

General Mining looks set to become Australia’s next lithium producer, with mining at the Mt Cattlin spodumene and tantalum operations expected to commence in April 2016 (spodumene is a mineral containing lithium).

General Mining has an agreement with Galaxy Resources Limited (ASX: GXY) to be the sole operator of Mt Cattlin for 3 years with both companies set to benefit from the restart of mining.

Demand for lithium is soaring, with iron ore giant Rio Tinto Limited (ASX: RIO) reportedly wanting to join the party. Lithium prices have soared from around US$4,900 a tonne in early 2015 to around US$10,000 a tonne recently. According to analysts, the northern hemisphere winter has crimped production of lithium in China, creating a shortage, and prices could continue rising.

So far, none of the major miners sell lithium, but Rio has a lithium-borate project in Serbia.

Thanks to the rise of electric cars and the rocketing demand for lithium batteries, lithium is in high demand and is only expected to grow as households and car manufacturers increasing switch to lithium-ion batteries for energy storage.

Demand for lithium and the rising commodity price has spurred a number of Australian resources companies to pursue spodumene mines in Western Australia, including General Mining, Pilbara Minerals Ltd (ASX: PLS) and Neometals Ltd (ASX: NMT). Pilbara Minerals rates its Pilgangoora project the second-largest spodumene-tantalum resources in the world.

Neometals is planning on producing spodumene concentrate from its 45% owned Mt Marion project from mid-2016, with partners Mineral Resources Ltd (ASX: MIN) and Jiangxi Ganfeng Lithium (China’s second-largest lithium producer). Construction of the mine began in November 2015.

Foolish takeaway

Just because a commodity price is soaring, doesn’t necessarily mean shareholders in the lithium companies mentioned above will see huge returns from here. Investors might want to learn the lessons in the iron ore, coal and oil markets, where overwhelming demand eventually led to oversupply – coupled with falling demand – which led to lower prices, and high-cost producers dropping out of the market. A key factor to watch will be General Mining’s all-in sustaining costs.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.