What’s the difference between lithium hydroxide and spodumene and which ASX shares are involved with each one?

Most ASX investors would know by now that ASX lithium stocks have been all the rage on the Australian share market for a while now. Fuelled by hopes of lithium being a key ingredient in a green, clean future, investors have been very excited to try and get themselves a piece of any profits. 

And we’ve certainly seen a response in the share prices of some of the ASX’s most prominent lithium stocks. For example, the Pilbara Minerals Ltd (ASX: PLS) share price remains up an incredible 198% or so over the past 12 months. That’s even after the company’s 20% or so fall so far in 2022. 

But most investors would be familiar with the term ‘lithium stocks’. Or perhaps the names of prominent ASX lithium shares like Pilbara. It’s far less likely though that mentioning phrases like ‘lithium spodumene’ or ‘lithium hydroxide’ elicit too much more than glazed eyes for many investors.

And yet these terms are very important in understanding the value of any lithium producer. So let’s dive in and examine what these terms mean.

Like most metals, lithium cannot be dug out of the ground and put in a battery. Instead, producers extract lithium-infused compounds and ores. They then refine them to produce industry-ready, high-grade lithium.

Spodumene and hydroxide: What does it mean for ASX lithium stocks?

According to a report in the Australian Financial Review (AFR), there are two types of lithium concentrates that can be used for batteries. They are spodumene and hydroxide. Of these two, hydroxide is reportedly harder to produce. But it “commands much higher prices as battery manufacturers prefer it”. In contrast, spodumene concentrate usually only contains around 6% lithium. Thus, it needs to be heavily refined before the lithium inside it can be used.

The ASX’s largest lithium player, Pilbara, already has one of the world’s largest spodumene concentrate processing plants. As well as some of the largest hard-rock lithium deposits. But it also has a joint venture with a South Korean company Posco to refine 43,000 tonnes of lithium hydroxide annually. 

Minerals Resources Ltd (ASX: MIN) is also a player in the lithium space. It is no doubt looking forward to the completion of its lithium hydroxide refinery next year, which it owns a 40% share of. 

Liontown Resources Ltd (ASX: LTR) caused a stir earlier this year after signing a spodumene supply deal with the US electric vehicle and battery company Tesla Inc (NASDAQ: TSLA). 

Even Wesfarmers Ltd (ASX: WES) owns the Mt Holland mine in Western Australia. It is aiming to produce and refine lithium hydroxide by 2024. 

So there is certainly a lot going on in the ASX lithium space. No doubt this emerging industry will continue to hold the spotlight in the years ahead.    

The post What’s the difference between lithium hydroxide and spodumene and which ASX shares are involved with each one? appeared first on The Motley Fool Australia.

More reading

• Broker names 3 of the best ASX 200 shares to buy in March
• Could Wesfarmers (ASX:WES) be gearing up for an electrifying investment?
• Why the Pilbara (ASX:PLS) share price is a buy right now: expert
• Here are the 3 most heavily traded ASX 200 shares this Thursday
• How did ASX lithium shares perform in February?

Motley Fool contributor Sebastian Bowen owns Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Tesla. The Motley Fool Australia owns and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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