Top Broker Predicts Lithium Price to Rise 86% in Next 2 Years


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It’s another positive day for some ASX lithium stocks. At the time of writing, the Pilbara Minerals Ltd (ASX:PLS) the stock price is up 1% as its counterpart Core Lithium Ltd (ASX:CXO) is trading slightly lower.

Investors expect lithium demand to continue to rise over the long term.

As the world seeks to decarbonise, lithium is seen as an important element in the production of electric vehicle batteries and other large-scale battery solutions.

One of the biggest miners in the world, Rio Tinto Limited (ASX: RIO), recently expanded into lithium with the acquisition of its Rincon lithium project for $825 million. At the time, the miner said:

Market fundamentals for battery-grade lithium carbonate are strong, with demand for lithium expected to grow 25% to 35% annually over the next decade, with a significant supply and demand shortfall expected from of the second half of this decade.

Lithium price rise expected

According to information in the Australian Financial Reviewbroker Barrenjoey is even more bullish on the outlook for lithium.

Barrenjoey thinks the price of lithium could increase by as much as 86% over the next two years, thanks to tight market conditions that could continue into 2023. This, in turn, will have a ripple effect, causing higher net profit after tax. (NPAT) numbers and cash flow for lithium miners.

The FRG reported that Barrenjoey’s head of mining and metals, Glyn Lawcock, pointed to limited lithium supplies as the biggest barrier to EV adoption.

Barrenjoey said Pilbara Minerals would be the only miner to benefit the most from rising commodity prices. The FRG reported that the broker increased its earnings per share (EPS) forecast for Pilbara to up to 44% for FY23 and up to 120% for FY24.

Pilbara Minerals is optimistic about the situation

The FY22 result for ASX lithium stock included positive comments on the future.

He said the price of lithium remains “strong”, putting Pilbara Minerals in “a prime position to take advantage of current market conditions, including the sale of spodumene concentrate.”

Pilbara Minerals owns 100% of the Pilgangoora project in Western Australia, which the company says hosts one of the largest hard rock lithium deposits in the world.

The company also expects the lithium deficit to worsen. By 2040, the expected lithium deficit could be the equivalent of around 18 Pilgangooras “with likely price implications,” he predicts.

Dale Henderson, Managing Director and CEO of Pilbara Minerals, said:

The company is in an enviable position, supplying products to a growing market with a clear path for further production growth from a successful operating base. Additionally, the chemical participation with our downstream JV with POSCO and our midstream project provides another extension of value creation for our shareholders. A very exciting future awaits our company and our shareholders.

Pilbara Minerals Share Price Overview

Over the past six months, shares of Pilbara Minerals are up about 64%.


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