ASX lithium shares facing ‘insatiable’ demand amid global funding gap

Lithium prices are up almost 500% over the past 12 months.

| More on:

Image source: Getty Images

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

Key points

  • ASX lithium shares are well into the green today
  • A long-term deficit in lithium supply is forecast amid rapid growth in global EV markets
  • Lithium prices have rocketed almost 500% since this time last year

ASX lithium shares are charging higher today.

Leading lithium stocks Liontown Resources Ltd (ASX: LTR) is up 4.96% in early afternoon trade and Pilbara Minerals Ltd (ASX: PLS) shares are up 3.61%.

This week, both ASX lithium companies presented at the Diggers & Dealers Mining Forum in Kalgoorlie, Western Australia.

As attendees heard, the long-term demand outlook for lithium – a lightweight, conductive metal critical in electric vehicle (EV) and home storage batteries – remains very strong amid rapid global growth in EV markets.

This, as the battery metals industry is looking at a US$42 billion funding shortfall to meet that soaring demand, according to Benchmark Mineral Intelligence.

Growing future deficits in lithium supply forecast

According to Pilbara’s presentation at Diggers & Dealers, the expected deficit in lithium by 2040 is the equivalent to some 18 Pilgangooras. The ASX lithium share was referring to its Pilgangoora project, one of the largest hard rock lithium-tantalum deposits on Earth.

It said the forecast deficit comes “with likely pricing implications”.

Lithium prices have already leapt almost 500% since this time last year.

According to Pilbara Minerals CEO Dale Henderson (quoted by Bloomberg), “The appetite is insatiable. Any producer in lithium is very popular at the moment.”

In its presentation, Liontown Resources pointed to research from global consulting firm Boston Consulting Group (BCG). BCG expects overall lithium demand growth of approximately 20% per year from 2020 through to 2035. This will be mostly driven by increased demand for EV and energy storage system (ESS) batteries.

Liontown CEO Tony Ottaviano said (courtesy of Bloomberg):

I don’t want us to come across as self-indulgent because we have immense respect for our customers, but the simple fact is it takes five to eight years to bring greenfield supply online in tier-one jurisdictions.

Ottaviano said that “interest was low” when the ASX lithium share approached car makers and other manufacturers for its first offtake.

“Roll the clock forward and we are seeing a completely different commercial posture,” he added.

How have these two ASX lithium shares been performing?

Over the past 12 months, the Pilbara share price is up 42% while the Liontown share price has gained 74%. That compares to a full-year loss of 7% posted by the All Ordinaries Index (ASX: XAO).

Roll the clock back five years, and these ASX lithium shares have really shot the lights out.

If you’d invested in Pilbara five years ago, you’d be sitting on gains of 689%. As for Liontown, its shares have surged an eye-popping 14,550% in five years.

Motley Fool contributor Bernd Struben 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

A smiling woman holds an arm in the air in triumph while also holding a graphic of a fully-charged battery in her other hand representing the Pilbara Minerals share price
Resources Shares

The Pilbara Minerals share price has powered 28% higher in a month. What’s been happening?

Lithium has been on a wild ride recently.

Read more »

A white EV car and an electric vehicle pump with green highlighted swirls representing ASX lithium shares
Resources Shares

Could this new development boost Allkem shares heading into 2023?

ASX lithium shares have been among the strongest performers over the past 12 months.

Read more »

A worker stands over a large copper coil in a factory
Resources Shares

What’s so good about copper anyway?

Why are investors going mad for copper?

Read more »

Two mining workers in orange high vis vests walk and talk at a mining site
Resources Shares

Why Lynas shares and one other ASX 200 rare earths miner are in this expert’s ‘core basket’

Rare earths stocks have been getting attention as demand continues to soar for the group of metals.

Read more »

Miner with thumbs up at mine
Resources Shares

‘Phenomenal start’: Here’s why ASX gold share Tempus Resources just rocketed 53%

Tempus Resources shares are on fire today.

Read more »

A girl runs along with her kite flying high in the sky.
Share Gainers

3 ASX mining shares rocketing by more than 20% today

Up we go in another day of double-digit gains for the ASX metals and mining equity bucket.

Read more »

A man in trendy clothing sits on a bench in a shopping mall looking at his phone with interest and a surprised look on his face.
Resources Shares

Could this development further energise ASX lithium shares in FY23?

ASX lithium shares are soaring today with the Lake Resources share price up 27% this afternoon.

Read more »

share price ASX mining shares buy coal miner thumbs up
Earnings Results

Coronado share price jumps on 3,200% earnings surge

The company's half-year EBITDA eclipsed even its highest-ever full-year figure.

Read more »