Is this ASX sector gearing up for a year of M&A activity?

Plenty of eyes will be watching ASX lithium producers in 2022. Here's why.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX lithium shares might be in for a roaring 2022, with experts predicting the sector could be a major merger and acquisition target.

Reports of the lithium market's outlook might have buoyed sentiment in the resource's producers today.

The Pilbara Minerals Ltd (ASX: PLS) share price is currently surging 5%. Meanwhile, that of Rio Tinto Limited (ASX: RIO) and Mineral Resources Limited (ASX: MIN) are up 0.2% and 1.6% respectively.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 0.99% at the time of writing.

Let's take a look at what the experts are expecting from the ASX lithium sector and the shares that call it home, in 2022.

A mine worker looks closely at a rock formation in a darkened cave with water on the ground, wearing a full protective suit and hard hat.

Image source: Getty Images

What might be in store for ASX lithium shares in 2022?

According to recent reporting by The Australian, 2022 could bring movement for the lithium space. Particularly, as Chinese companies are predicted to be vying for control over mines.

Companies based in China are reportedly turning their attention to international lithium resources to continue supplying the nation's battery industry.

Additionally, the publication claims Canaccord Genuity analyst Timothy Hoff told clients that large miners are "finally taking notice of what is happening in the lithium market".

The statement follows last week's news that ASX giant Rio Tinto is undergoing the $1.15 billion acquisition of an Argentinian lithium project. The purchase is expected to go ahead in the first half of 2022.

Meanwhile, the company is continuing to face challenges at its $3.3 billion Jadar project.

The Australian also quoted Barrenjoey mining analyst Glynn Lawcock. Lawcock reportedly believes Rio Tinto might be on the lookout for more lithium assets in the near future.

It comes only weeks after S&P Global Platts quoted a spokesperson from China-based, Tianqi Lithium Corp as saying:

Due to its strategic significance, lithium resources will [become] more difficult to obtain and control. Therefore, lithium resources will become a key factor restricting the development of the industry in the medium- and long-term.

It also reported that many lithium producers are pushing to expand their production to keep up with burgeoning demand. Interestingly, Mineral Resources and Pilbara Minerals are doing just that.

The former is planning to restart its 40%-owned MARBL joint venture in 2022. At the same time, the latter is aiming to restart its Ngungaju plant.

Last week, my Foolish colleague James Mickleboro reported that Macquarie Group Ltd (ASX: MQG) analysts are predicting lithium prices will continue to strengthen in 2022. Additionally, they predict prices will stay high over the coming 4 years.

It likely goes without saying that all eyes will be on the ASX lithium sector in the new year. Particularly, as many of its participants already enjoyed a generally fruitful 2021.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

Two CEOs shaking hands on a deal.
Resources Shares

European Lithium updates merger terms with Critical Metals Corp

European Lithium has updated its merger terms with Critical Metals, introducing a floating share ratio and targeting completion in October…

Read more »

Woman pointing to a hologram of a world map with finance graphs and related themes.
Resources Shares

Would I invest $5,000 into Rio Tinto shares this week?

The shares have already run hard, but I still see plenty to like in the years ahead.

Read more »

A business person directs a pointed finger upwards on a rising arrow on a bar graph.
Broker Notes

Up 118%! Are PLS shares now a buy, hold or sell?

A leading expert provides his outlook for PLS' surging shares.

Read more »

Miner and company person analysing results of a mining company.
Earnings Results

Iluka Resources shares: 2026 half-year earnings results unravelled

Let's see what the mineral sands producer reported for the half.

Read more »

A group of five engineers wearing hard hats and some in high visibility vests raise their arms in happy celebration atop a building site with construction and equipment in the background.
Broker Notes

Why this $1.4 billion ASX All Ords mining stock is tipped to jump 30%

A top wealth manager forecasts more than 30% returns from this ASX mining stock.

Read more »

Flying Australian dollars, symbolising dividends.
Resources Shares

Everything you need to know about the BHP dividend

This is how much BHP shareholders are going to be paid.

Read more »

Two miners at a mine site on their tablets, with mining machinery behind them.
Resources Shares

Lycopodium lands $37 million contract for Bolivian silver project

Lycopodium share price in spotlight after winning a $37 million EPCM contract for Bolivia’s San Cristóbal mine expansion.

Read more »

Miner puts thumbs up in front of gold mine quarry.
Resources Shares

Westgold Resources: Maiden Fletcher Ore Reserve announcement

Westgold Resources unveiled a maiden Fletcher Ore Reserve and a major resource upgrade, strengthening long‑term prospects.

Read more »