Buy this ASX stock for 'the best lithium mine in the world'

The experts at Blackwattle reckon the battery material will come back into vogue soon, and these are the shares to grab now.

| More on:
A miner in a hardhat makes a sale on his tablet in the field.

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

ASX lithium shares are a problem child for many investors at the moment.

Lithium prices have plunged horribly and that's meant that pretty much any stock related to the battery ingredient has copped moderate to severe losses.

Back in November 2022, which was only 15 months ago, each tonne of lithium carbonate was going for near enough to 600,000 CNY. Now it can't even sell for six digits.

And 2024 is off to a poor start.

"New estimates showed that new electric vehicle sales in China plunged by nearly 40% from the previous month in January, stretching the pessimism following the slowdown from the previous year," stated TradingEconomics.

"The slowdown in electric vehicle sales in China limited lithium demand for battery manufacturers, driving factories to skip their typical restocking season."

For some miners, extracting lithium has become uneconomic, so they have responsibly shut down their projects. 

But, of course, this exacerbates the downward pressure on their stock price as investors don't want to have their money parked in a non-productive asset.

This lithium mine is still producing at a profit

Incredibly, amid this bleak situation, experts are still insisting that those willing to invest long-term should pounce on the current low prices.

The fact remains the world will need a lot of lithium to produce all the batteries required for transition to net zero. The electrification of fossil fuel technologies is an irresistible long-term movement.

Recent conflicts in places like Ukraine and the Middle East have only served to remind nations that reducing their dependence on traditional energy sources could be smart politically, as well as environmentally.

The team at Blackwattle Investment Partners is in no doubt as to which lithium stock it is backing from here onwards.

Shares for IGO Ltd (ASX: IGO) have now lost a painful 56.7% since July.

"IGO has been a poor performer due to falling lithium prices," Blackwattle analysts said in a memo to clients.

"We believe IGO provides investors with exposure to the best lithium mine in the world, Greenbushes, which is producing at a cost still well below current weak spodumene prices."

The team has done its research to deduce that the current malaise will ease sooner or later.

"Recently we spent some time meeting with downstream lithium converters and cathode manufacturers, and the conclusion was that destocking is gradually easing, and inventories are back down to three months' supply.

"High-cost Chinese lepidolite supply has also started to reduce given current spot prices."

According to CMC Invest, nine out of 17 analysts currently rate IGO Ltd as a buy.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. 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

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

How could this iron ore forecast impact BHP shares?

Here’s what could happen next for the iron ore miners.

Read more »

A boy stands firm on a rocky cliff holding a rocket in each hand and looking up toward the sky, anticipating flying into space.
Resources Shares

Up 864% in a year, how this ASX mining stock is primed to keep rocketing in 2025

The ASX mining stock looks to be in a sweet spot amid export bans from China and Russia.

Read more »

Miner looking at a tablet.
Resources Shares

2 small-cap ASX mining shares exploding 40%+ on China tariff news

Investors are sending the small-cap ASX mining shares flying higher on Wednesday.

Read more »

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.
Resources Shares

Why are ASX mining shares falling this week?

The tumultuous start to the week for mining shares could be a sign of things to come. 

Read more »

Three miners looking at a tablet.
Resources Shares

Did you catch what happened with the BHP share price in January?

BHP shares saw plenty of trading action in January.

Read more »

Man standing in a mine with mining vehicles.
Resources Shares

Sayona Mining share price charging higher on 33% revenue boost

ASX investors are reacting very positively to Sayona Mining’s December results.

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Resources Shares

How does the Fortescue dividend yield compare to other ASX mining shares?

Fortescue typically pays excellent dividend yields, but can it do so again in 2025?

Read more »

Miner looking at a tablet.
Resources Shares

Forget gold! Why this soaring ASX silver share is still trading at 'good value' today

A leading expert has a bullish outlook on this rocketing ASX silver miner.

Read more »