It ain't all about lithium: 2 other ASX shares exposed to the EV trend

This expert says it's not just ASX lithium stocks that will benefit from the long-term EV megatrend.

| More on:
Female miner uses mobile phone at mine site

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

sdf

Key points

  • Lithium is the most well-known metal and mineral component of an electric vehicle (EV) battery
  • But other commodities like graphite are also required in EV batteries, and are also set to benefit from the long-term EV megatrend
  • One expert says graphite is almost as important as lithium in the chemistry of EV batteries, and names two ASX graphite shares that could benefit from rising demand 

It's been an exciting few days for ASX lithium shares, with news of the surprise takeover offer from global giant Albemarle for Liontown Resources Ltd (ASX: LTR) on Tuesday pushing every lithium share north.

None more so than Liontown, with its share price up by 67% in just four days.

But one expert is reminding investors that it takes more than just lithium to make an electric car battery.

He says another way to leverage the "mega-trend of vehicle electrification" is through ASX graphite shares.

Graphite almost as important as lithium, says expert

Westpac Banking Corp (ASX: WBC) hosted a webinar this week on the future of lithium investment.

Among the speakers was Matthew Frydman, a senior research analyst specialising in metals and mining at MST Financial.

Frydman said there was a "j curve of adoption for electric vehicles", and this would be a long-term trend benefitting several commodities.

MST Financial presented a chart sourced from Mineral Resources Ltd (ASX: MIN) showing that global sales of EVs are expected to rise from 11 million as of 2021 to more than 60 million by 2030.

Australia aims to have 3.8 million EVs on the roads by 2030.

Frydman said even though lithium commodity prices were falling, the medium-term outlook for Australia's established producers was 'still very favourable'.

But he also said lithium wasn't the only commodity that would benefit from the EV megatrend.

While lithium is a well-known key component of EV batteries, with 40kg to 50kg of the carbonate variety used per car, Frydman said graphite was "almost as critically important to the chemistry of the battery".

He explains:

Lithium is really important to the cathode side of the battery, graphite is absolutely critical to the anode component — the other half of the battery.

Graphite, like lithium, will be a rapidly growing market … and really, globally, there's probably not too many widely-known graphite projects that are out there in the common knowledge.

2 ASX graphite shares that could be worth a look

Frydman said there were two ASX graphite stocks worth mentioning for Australian investors interested in leveraging the EV trend.

Firstly Syrah Resources Ltd (ASX: SYR). They have the biggest natural graphite deposit in the world in Balama in Mozambique. That was a mine which was developed a number of years ago and is currently producing [and is] really a stand-out in terms of the size and scale and quality of that deposit.

Balama and Syrah will be absolutely critical to supplying the market's graphite needs in coming years.

The Syrah Resources share price closed on Friday at $1.84. It is up 8.9% over the past year.

The second ASX graphite stock Frydman highlighted was Black Rock Mining Ltd (ASX: BKT).

He said:

They have a very large and reasonably high grade deposit that they are developing in Tanzania and they're quite advanced relative to the peer group and potentially will form part of that supply solution for graphite in the coming years. 

The Black Rock share price closed on Friday at 14 cents. It is down 48% over the past year.

Graphite market at a turning point

At an industry event in November last year, Andy Miller, COO of Benchmark Mineral Intelligence, said the mined and synthetic graphite market was at a turning point (courtesy mining.com).

Benchmark predicts that graphite demand will grow at an annual compound rate of 10.5% over the next 10 years, but supply will only expand by 5.7% per annum.

Benchmark's Natural Flake Graphite Forecast tips the battery industry will consume two-thirds of the world's flake graphite by 2025, increasing to 79% in 2030.

Graphite has traditionally been used in steel-making.

Motley Fool contributor Bronwyn Allen has positions in Westpac Banking. 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 recommended Westpac Banking. 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 man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Is the Fortescue share price a buy for passive income?

Let’s dig into the potential of this mining giant.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Major miners fall as iron ore prices continue to sink

Waning Chinese demand and oversupply concerns push iron ore prices lower.   

Read more »

A mining worker clenches his fists celebrating success at sunset in the mine.
Resources Shares

Would I buy Pilbara Minerals shares?

Are investors missing an opportunity with this lithium stock?

Read more »

Three miners looking at a tablet.
Resources Shares

Here's the earnings forecast out to 2029 for BHP shares

Let’s dig into the predictions.

Read more »

A smiling miner wearing a high vis vest and yellow hardhat does the thumbs up in front of an open pit copper mine.
Broker Notes

Why Macquarie expects this ASX All Ords copper stock to soar 48% in a year

Macquarie forecasts another big year of gains ahead for this ASX All Ords copper stock. But why?

Read more »

Female miner standing smiling in a mine.
Broker Notes

Why Macquarie predicts Pilbara Minerals shares could surge 71%

Macquarie forecasts a big rebound ahead for Pilbara Minerals shares. Let’s find out why.

Read more »

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

ASX All Ords mining stock sinks on US silver acquisitions

Investors are bidding down the ASX All Ords miner on US acquisition news. But why?

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

How these 2 tailwinds could boost the BHP share price into 2026

A leading expert forecasts that BHP shares are set to recover. But why?

Read more »