How did ASX lithium shares perform in the FY22 first quarter?

Here's a recap of how ASX-listed lithium companies performed during the last quarter…

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published October 8, 2021 1:31 pm AEDT

The price of lithium continued to rage higher during the first quarter of FY22, sending ASX lithium shares skyward. This generally meant if you owned shares in a lithium producer/explorer, you enjoyed a rewarding quarter.

In fact, lithium shares bucked the trend across the broader materials sector in Q1. Looking at the S&P/ASX 200 Materials Index (ASX: XMJ), the sector was pulled down 10.5% over the 3-month duration. This was mostly from heavy losses in iron ore producers including BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO).

To grasp an understanding of which ASX lithium shares delivered the goods we need to take a closer look.

Young boy with glasses in a suit sits at a chair and reads a newspaper. — Image source: Getty Images

Outsized returns from these ASX lithium shares

While the S&P/ASX 200 Index (ASX: XJO) barely budged in the first quarter (increasing 0.26%), lithium companies went for a run. A large chunk of the euphoria stems from the unrelenting surge in the price of the battery-making chemical element.

According to Trading Economics, the price per tonne of lithium carbonate skyrocketed from approximately 88,800 Chinese yuan to 165,000 yuan during the quarter. This is on top of the strengthening in lithium prices that had been playing out since late 2020.

As a result, investors flocked to Aussie companies set to benefit the most from this continuing trend. In response, the majority of lithium shares on the ASX experienced upwards movement. The company undergoing the strongest share price appreciation during the quarter was AVZ Minerals Ltd (ASX: AVZ). Over the 3-month period, AVZ surged around 110% in value.

Adding to the optimism, in September AVZ announced a transaction implementation agreement with Suzhou CATH Energy Technologies, which would see CATH pay US$240 million in a joint venture to kickstart the Manono Lithium and Tin Project.

Following closely behind, these 5 other ASX lithium shares delivered outsized returns to their shareholders in Q1 FY22:

Ioneer Ltd (ASX: INR) up 90.9%
Liontown Resources Limited (ASX: LTR) up 77.8%
Vulcan Energy Resources Ltd (ASX: VUL) up 66.6%
Pilbara Minerals Ltd (ASX: PLS) up 40.9%
Orocobre Limited (ASX: ORE) up 34.9%

Interestingly, Elon Musk, CEO of Tesla Inc (NASDAQ: TSLA), shared his thoughts on lithium in the company's annual general meeting this morning.

Musk and his company don't foresee any lithium supply shortages, stating: "There's lithium everywhere, so that's not an issue. Also, lithium is maybe only 1 or 2 per cent of the [battery] cell."

Lagging the pack

Although the far majority of ASX lithium shares experienced strong price appreciation, there was an exception. Specifically, Piedmont Lithium Inc (ASX: PLL) took a 30.1% tumble during the quarter.

This disappointing move coincided with difficulty winning over residents near its proposed open-pit lithium mine in Gaston Country, North Carolina. During a presentation in July, residents expressed discontent towards the mine proposal set out by Piedmont.

Additionally, the ASX lithium share took another hit following a class-action lawsuit being filed against it. As a result, Piedmont shareholders have missed out on the same gains that other lithium producers enjoyed.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.