Day: September 20, 2022

Are ASX hydrogen shares worth buying right now?

Hydrogen symbol with a globe.Hydrogen symbol with a globe.

Renewable energy is undoubtedly a key thematic on the world stage right now. The shift to so-called ‘green’ sources of power generation has sparked some fairly interesting trends as well.

We’ve all heard about lithium-ion (li-io) batteries – it’s been hard not to – and the (emission-free) glamour that surrounds the electric vehicle space.

It’s no coincidence some of the best-performing ASX shares in 2022 are tied to lithium.

Then there are the other ‘traditional’ sources of renewable energy: solar, wind, geothermal, nuclear, etc.

It really is a new marketplace. Yet, the geopolitical fallback still involves hydrocarbons: oil and gas.

However, one form of clean energy you mightn’t be so familiar with is hydrogen.

Hydrogen is also doing the rounds and making a name for itself as a hot (or cold?) contender for top spot in the green energy stakes.

Let’s take a deep dive into the sector to strip out the fluff and put some flesh on the skeleton of the ASX hydrogen space. Read on.

Hydrogen for fuel?

Hydrogen is a chemical element with the easy-to-remember symbol ‘H’. It is, in fact, the lightest element on the periodic table.

In practical terms, it is a highly combustible and flammable gas that – like natural gas – can also be condensed into a liquid, albeit at roughly minus 253 degrees Celsius.

Hydrogen is found just about everywhere in nature. In particular, water (the classic H2O) and hydrocarbons, like methane, are very common sources.

The gas can also be produced from a variety of sources, such as natural gas, nuclear power, and even renewable energy like solar.

This gives rise to hydrogen’s ‘green’ credentials as hydrogen produced by electrolysis is a more energy-intensive process.

According to the United States Energy Department (USED), “Hydrogen is an energy carrier that can be used to store, move, and deliver energy produced from other sources”.

Hydrogen is also faring as a contender to power fuel cells of non-combustion engines. It can, as USED says, “power fuel cells in zero-emission vehicles”.

But just how efficient and effective is hydrogen at powering vehicles? And how does it stack up compared to ‘traditional’ fuel sources like oil?

Actually, quite well. According to USED:

A fuel cell coupled with an electric motor is 2–3 times more efficient than an internal combustion engine running on gasoline.

The energy in 2.2 pounds (1 kilogram) of hydrogen gas is about the same as the energy in 1 gallon (2.8 kilograms) of gasoline.

So then, does it have any advantage over lithium-ion electric vehicle batteries?

It seems to boil down to two factors: distance and refuelling time.

According to sustainability publisher youmatter: “While most fully electric vehicles can travel between [160–320 kilometres] on a single charge, hydrogen ones can get to [482 kilometres].”

However, there is far less of a gap when comparing premium lithium-ion EV batteries to the best hydrogen fuel cells. Indeed, most prominent EV manufacturers have opted to proceed down the battery-powered technology path.

Interesting debate

The push to discover and develop new forms of fuel for transport has sparked an interesting debate. While hydrogen is abundant on earth, it must undergo a process to separate it into its pure form, and then compress it into fuel cells.

Meanwhile, developing lithium-ion battery technology has led to a wave of new mining ventures on a global scale. Indeed, the International Energy Agency (IEA) says the auto industry will require 30 times the current amount of minerals to meet demand.

We are already seeing the effect this imbalance in supply and demand is causing. The price of lithium hit all-time highs again this week. There are also questions on the ongoing availability of these critical minerals.

And so the debate turns to what’s going to be the best at powering vehicles looking ahead, from a cost and feasibility perspective.

Australian mining figure Andrew Forrest, founder of Fortescue Metals Group Ltd (ASX: FMG), has been leading the hydrogen charge both on our shores and abroad via his investment vehicle Fortescue Future Industries (FFI).

Forrest is aiming to produce 15 million tonnes of green hydrogen by the year 2030, in line with targets set by the European Commission.

When quizzed on how he intends to finance the ambitious goal, he told The Financial Times Hydrogen Summit: “Look, I built $50 billion worth of iron ore infrastructure in the Pilbara…I am very used to executing large capital projects at a cost that is a fraction of what our competitors do,” The Financial Times reported.

He also took a shot at prominent lithium-ion battery proponents, adding: “[Tesla CEO] Elon Musk knows that almost every time a Tesla is plugged into almost every grid in the world, it is just burning coal and oil and gas…[and] it is doing nothing for the environment.”

What’s all this mean for ASX hydrogen shares?

Whilst there’s plenty to like about the future of hydrogen, it hasn’t yet made its mark on the ASX. In fact, the sub-sector continues to face heavy selling pressure.

Shares of Hazer Group Ltd (ASX: HZR), a company that conducts research and development into hydrogen-producing technology, are down 45% this year to date.

In July, the Hazer share price was crushed when the company reported a part for its commercial demonstration project had failed during fabrication.

Meanwhile, shares of Pure Hydrogen Corporation (ASX: PH2) have also headed south and are down 52% since January.

In contrast to the speculative mania setting the lithium/electric vehicle space alight over the past two years, the hydrogen fuel camp hasn’t secured anywhere near the hype.

The returns for both of these ASX hydrogen shares are plotted on the chart below against the S&P/ASX 200 Energy Index (ASX: XEJ), in red, over the past 12 months.

The diversion in performance is abundantly clear, perhaps as abundant as hydrogen is in the environment.

TradingView Chart

The post Are ASX hydrogen shares worth buying right now? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

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Motley Fool contributor Zach Bristow 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.

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Is this prediction great news for ASX lithium shares?

A man wearing a suit holds his arms aloft with a smile on his face is attached to a large lithium battery with green charging symbols on it.

A man wearing a suit holds his arms aloft with a smile on his face is attached to a large lithium battery with green charging symbols on it.The Australian share market has been flooded with lithium shares in recent years and it isn’t hard to see why.

With lithium found in abundance across the country and the white metal commanding mouth-watering prices, there’s a big incentive to dig it out of the ground.

The good news for many of these ASX lithium shares is that one leading analyst is tipping electric vehicle (EV) sales to grow exponentially in the coming years.

And given how the majority of lithium ends up being used in the EV market, this can only be good news for shares such as Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS).

What is being said about the EV market?

According to a note out of Cathie Wood’s ARK Invest, its analysts expect the electric vehicle market to grow quicker than expected.

Director of Research, Autonomous Technology & Robotics, Sam Korus, commented:

Delving into our EV forecast for the next five years, once again we can see the difference between the linear growth rates powering most forecasts and the exponential growth derived from Wright’s Law.

According to Wright’s Law, every cumulative doubling in the number of units produced results in a consistent percentage decline in costs that increases the affordability and uptake of new products like EVs. Driven from Wright’s Law increasing EV affordability, […] we are projecting that, in the absence of autonomous taxi platforms, EV sales will increase more than six-fold to 45 million units, or more than double the 20 million consensus expectation.

If this prediction is accurate, there sure will need to be a lot of lithium produced to build 25 million more EV batteries that consensus expectations.

This bodes well for Allkem and Pilbara Minerals, but also for lithium developers that are nearing the commencement of production such as Core Lithium Ltd (ASX: CXO) and Liontown Resources Limited (ASX: LTR).

The post Is this prediction great news for ASX lithium shares? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

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*Returns as of September 1 2022

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Motley Fool contributor James Mickleboro has positions in Allkem Limited. 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.

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Is the Santos share price ‘starting to resume its uptrend’?

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plantA male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant

The Santos Ltd (ASX: STO) share price lifted today, but could it be on a trend to go higher in the future?

Santos shares rose 1.56% today to close at $7.83. For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) jumped 1.99% today.

Let’s take a look at the outlook for Santos.

Is Santos a buy?

The Santos share price has soared 24% in the year to date. Santos shares hit a high of $8.76 in June before pulling back to the current share price.

Fairmont Equities managing director Michael Gable recommends the Santos share price as a “buy”.

In comments published on The Bull, Gable said he believes Santos will continue to benefit from higher energy prices “for some time”.

He added:

The share price is down from its June peak in response to a short-term retreat in the crude oil price.

However, this presents a buying opportunity, as the share price has recently firmed and is starting to resume its uptrend.

Santos is a major oil and gas producer. The company reported a 230% boost in statutory net profit after tax in FY22 to $1.167 billion.

Santos CEO Kevin Gallagher said: “Demand for our products has remained strong in both Australia and internationally, due to increased demand and shortages of supply from producing nations due to global underinvestment in new supply”.

Santos share price snapshot

Santos shares have soared 28% in the past year. In the last month, Santos shares have risen 4%, while they have lifted 1.56% in the past week.

Santos has a market capitalisation of more than $26 billion based on the current share price.

The post Is the Santos share price ‘starting to resume its uptrend’? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Santos Limited right now?

Before you consider Santos Limited, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Santos Limited wasn’t one of them.

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Motley Fool contributor Monica O’Shea 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.

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Is this the new frontier for ASX lithium shares?

giant battery represented by battery next to world globegiant battery represented by battery next to world globe

It’s expected recycling of components used in batteries and electric vehicles will help keep EV production sustainable, according to the plans of overseas manufacturers.

Recycling is expected to ramp up once the production of new battery technologies reaches a critical mass, allowing enough components to be reused.

This could mean ASX lithium shares like Pilbara Minerals Ltd (ASX: PLS) and Argosy Minerals Limited (ASX: AGY) — and others with significant production volumes — may enjoy additional tailwinds as recycled materials keep production lines churning.

Some lithium shares, such as the world’s largest lithium producer Albermarle Corporation (NYSE: ALB), based in the US, are already planning to recycle components on Australian soil.

Recycling boom for lithium shares

Albemarle is planning a purpose-built 25,000-tonne production train exclusively for recycling materials from used batteries at its Kemerton lithium plant in Western Australia, as reported by the Australian Financial Review.

Recycling will also allow lithium shares like Albemarle to keep up with soaring demand. Albemarle CEO Kent Masters said the company cannot deliver products fast enough to keep up with its order book:

Every conversation I have with either battery or OEM [original equipment manufacturer] customers, they’re always asking, ‘when can I have more, and where can I get it? And they’re pounding the table around that, and we’re trying to respond to that.

Glencore PLC, a multinational commodities behemoth, has also invested heavily in the future recycling of lithium-ion batteries. The company has invested $US 200 million in Li-Cycle Holdings, a lithium-ion recycler. It’s made a joint venture agreement with Britishvolt to build a battery recycling plant in England, BusinessDay reported.

Recycling might not only fit with the green ethos of reducing emissions but could also become a necessity. Albermarle believes we’re just starting to see the wave of demand for lithium and EVs slowly build before the crest hits the market later this decade, as reported by The Australian.

Zero-carbon lithium creates further scarcity

Albermarle believes that lithium carbonate prices are expected to remain high with companies competing for limited supply. Adding to the scarcity is that governments may be likely to favour, or even impose, zero-carbon lithium extraction processes in a bid to reach emissions targets.

This, in turn, may increase the valuations of some ASX lithium shares such as Vulcan Energy Resources Ltd (ASX: VUL). The company is aiming to use environmentally-friendly geothermal extraction methods to produce lithium. It could see Vulcan’s product trading at a ‘green premium’ in the future.

The post Is this the new frontier for ASX lithium shares? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of September 1 2022

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Motley Fool contributor Matthew Farley 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.

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