Pilbara Minerals Ltd (ASX: PLS) shares are bucking the wider selling action on the S&P/ASX 200 Index (ASX: XJO) today.
The ASX lithium stock is currently trading for $4.83 per share, up 1% during Friday's lunch hour.
That's today's price action.
Now, if you own Pilbara Minerals shares, or plan to, here's why the miner will likely be doing business with core Chinese customers for many years.
Image source: Getty Images
What's happening with China?
China leads the world in EV production.
In 2022, EV sales in the middle kingdom averaged more than 500,000 per month, totalling 6.9 million units over the full year. A figure that's not expected to slow down anytime soon.
That's important for lithium, and by extension, Pilbara Minerals shares, as roughly 75% of the world's lithium consumption goes into rechargeable batteries.
Now lithium has been labelled a critical mineral by Australia and its allies. Which has seen Western nations work to source supply chains outside of China.
But, according to Pilbara Minerals CEO Dale Henderson, China is set to be a major buyer of the miner's lithium – sold in the form of spodumene concentrate – for a long time.
"I think they will be a key customer for Pilbara for a long time yet just because of the structural landscape that has evolved," Henderson said (quoted by The Australian Financial Review).
Henderson noted that Great Wall Motor Company and Ganfeng are the biggest buyers of Pilbara Minerals' Western Australian lithium exports.
"The lithium-ion industry is essentially completely domiciled in China, bar some emerging shoots elsewhere," he said. "So we have had to make the choice to work with China and our customers have been fantastic partners in the main."
Henderson added that the Chinese lengthy experience with lithium-ion battery production gives the country a competitive edge.
"China is really good in this space, they have honed their skills, they have done it for a long time, they will be really competitive for a long time," he said.
How have Pilbara Minerals shares been tracking?
As you can see in the chart below, Pilbara Minerals shares have shot out of the blocks in 2023, up 29%. Investors who bought shares six months ago will be sitting on gains of 62%.
