ASX 200 lithium shares had an amazing day in the sun yesterday on the back of a takeover offer from global lithium giant Albemarle (NYSE: ALB) for Liontown Resources Ltd (ASX: LTR).
The Liontown share price roared an astonishing 68.5% higher to close at an all-time record of $2.57.
Fellow ASX 200 lithium shares benefitted from the market's excitement.
Other top-performing ASX 200 lithium shares yesterday included Core Lithium Ltd (ASX: CXO), which went 21% higher to hit its intraday peak of 94.5 cents per share.
The Allkem Ltd (ASX: AKE) share price peaked at $11.65, up 15%; while the Pilbara Minerals Ltd (ASX: PLS) share price went as high as $3.99, up 16%.
Liontown rejected Albemarle's $2.50 per share offer, which was the third offer within six months. Albemarle offered $2.20 in October 2022 and $2.35 per share earlier this month.
4 ASX 200 lithium shares with a 'very favourable' outlook
Yesterday, Westpac Banking Corp (ASX: WBC) hosted a webinar discussing the future of lithium investing.
Among the presenters was Matthew Frydman, a senior research analyst specialising in metals and mining at MST Financial.
Frydman noted that lithium prices have been volatile and falling of late, but said "the medium-term outlook is still very favourable for Australia's established producers".
Frydman singled out four "globally significant" lithium producers and shares listed on the ASX 200.
They are Mineral Resources Ltd (ASX: MIN), IGO Ltd (ASX: IGO), Pilbara Minerals, and Allkem.
Frydman said Australia has forged a "very strong position" on the global lithium stage at a time of rapidly rising demand and scarce supply.
He estimates the world needs between 50 and 70 new lithium mines to meet projected demand in 2030. The problem is, mines tend to take longer than that to get established.
This means incumbent producers like these four ASX 200 lithium shares have a significant advantage.
Mineral Resources boss Chris Ellison has made the same point. In 2022, Ellison said: "If we've got seven years in the sun, we're gonna have a lot of fun."
Frydman said all four lithium miners are at the bottom end of the global cost curve.
All have high-quality assets and "good growth optionality", and should enjoy very attractive margins.
He said all of them are investing in their downstream processing capabilities. This will enable them to have two bites of the lithium cherry — digging it up and processing it.
Why this expert backs these lithium producers
ASX 200 lithium shares Mineral Resources, IGO, and Pilbara Minerals are based in Australia. In contrast, most of Allkem's assets are in the lithium-rich South American continent, particularly Argentina.
This presents a degree of sovereign risk. However, Allkem has the advantage of being a brine producer. Frydman points out that brine operations are easier to expand than hard-rock lithium operations.
He said all four companies were expanding their production and increasing their higher-margin processing operations.
He added that these four ASX 200 lithium shares have management teams that have proven themselves.
This is an important advantage, as it can take years for newer companies to garner the same level of investor confidence as established companies.
