Lithium, as a primary ingredient in high-powered batteries, is crucial for the world's transition to a reduced-carbon future.
The element is valuable because it's not easy to substitute it with something else.
"The reason for the hype is [that] lithium has unique characteristics that are difficult to replicate," said Shaw and Partners portfolio manager James Gerrish back in June.
"It is a light metal but is able to store large amounts of energy and is an excellent conductor of electricity."
And many experts predict that for the next few years, the increasing demand will far outstrip what mining companies can dig out of the ground.
"Demand for lithium has grown at [approximately] 20% compound annual growth rates through 2017 to 2022 and we think that will continue, while lithium deposits that are technically and economically viable to exploit are rare."
This is why any ASX shares that have anything to do with lithium production have been in hot demand the past couple of years.
Image source: Getty Images
The biggest lithium producers on the ASX
But this also means there are many companies out there that are exploring for lithium and not actually producing any yet.
It takes many years to find mineral deposits then process all the paperwork and get the infrastructure set up to actually dig the stuff out of the ground.
Hence, many experts have warned investors to stay away from ASX shares that represent explorers because of the highly speculative risks involved.
The larger companies that are already producing lithium from established deposits will be more stable and reliable for shareholders.
So which ones are they?
Helpfully, Visual Capitalist this month published a top 10 league table of global lithium producers, and three S&P/ASX 200 Index (ASX: XJO) were featured.
This means that these are the biggest lithium producers you can get your hands on on the ASX at the moment.
With a market capitalisation of $13 billion, Mineral Resources Limited (ASX: MIN) came in at number five.
The Motley Fool reported last week that analysts at Citi rate Mineral Resources as a buy.
"Citi recently attended a presentation relating to Mineral Resources' Mt Marion and Wodgina lithium operations," wrote The Motley Fool's James Mickleboro.
"Following the presentation, the broker remains very bullish and is expecting these lithium operations to generate over three-quarters of its earnings in FY 2023."
Not far behind is Pilbara Minerals Ltd (ASX: PLS), coming in at sixth, and Allkem Ltd (ASX: AKE), sitting in seventh position.
According to Macquarie analysts, Allkem has the higher upside of the two.
Although they rate both as a buy, The Motley Fool reported that Allkem has a price target of $21 and Pilbara's $5.60. This makes the former a better proposition in relation to their current stock prices.
It seems the ASX is the place to be when seeking lithium investments.
According to Visual Capitalist, Australia has the largest annual production, extracting 55,000 metric tons each year.
"Four mineral operations in Australia, two brine operations each in Argentina and Chile, and two brine and one mineral operation in China accounted for the majority of global lithium production in 2021."
