The Mineral Resources Limited (ASX: MIN) share price is up 3.7% today to $86.09 at the time of writing.
Shares in the $15 billion diversified miner are up 45% this year and a big driver of this investor confidence is its lithium business.
ASX lithium shares have been all the rage this year. Global demand is rising as the electric vehicle (EV) manufacturing industry ramps up.
Let's take a look at what's happening.
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Will lithium keep driving the Mineral Resources share price up?
Mineral Resources has four business branches — iron ore, energy (gas), mining services, and lithium.
It holds a stake in two of Australia's largest hard-rock lithium mines — Mt Marion and Wodgina in Western Australia.
Mt Marion is owned 50:50 with one of the world's largest lithium producers, Ganfeng Lithium Group Co Ltd (SHE: 002460).
Wodgina is owned 40:60 with US lithium giant Albemarle Corporation (NYSE: ALB).
Mineral Resources is already a global top-five lithium producer. That means it has a headstart on all the other lithium miners that have popped up in recent years and are still in the exploration stage.
Mineral Resources is producing lithium at scale at a time when lithium prices are sky-high due to EV demand.
The company has been able to take great advantage of this huge new channel of demand quickly, placing it "in the sun" for the next several years, according to managing director Chris Ellison.
According to The Age, Ellison reckons it will take some time for supply to catch up with demand.
Ellison said:
From finding dirt to having a (lithium) hydroxide plant running, it's about six or seven years.
If we've got seven years in the sun, we're gonna have a lot of fun.
Mineral Resources already provides 29% of the world's hard rock lithium supply.
That's a nice position to be in, given demand for lithium is forecast to outstrip supply until at least CY30.
According to research from Macquarie, the supply/demand imbalance is expected to be at its worst over CY24, CY25, and CY26.
What's next for Mineral Resources' lithium business?
Mineral Resources says it has big plans for its lithium division.
As per an investor presentation delivered at the company's annual general meeting last week, Mineral Resources expects to double production at Mt Marion from 450,000 tonnes of lithium spodumene concentrate per annum to 900,000 tonnes by early 2023.
The company says 80% of the mine remains unexplored to date.
It also wants to "toll and convert" spodumene into lithium hydroxide. This is a refining process required for EV batteries.
To this end, Mineral Resources and Albemarle have just finished building one of the world's largest lithium production facilities, the Kemerton lithium hydroxide processing plant.
The plant is fundamental to the companies' joint venture to develop the Wodinga project.
They plan to ramp up the production of lithium hydroxide over the next two years.
Back in July, EV pioneer Elon Musk said lithium refining is where the real money is in the lithium arena today. He described refining as "like minting money" with "software margins" available.
Mineral Resources share price snapshot
The ASX mining share hit a new 52-week peak of $86.35 on 14 November. The Mineral Resources share price is up 103% over the past year and 15% in the past month.
