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ASX lithium shares facing ‘insatiable’ demand amid global funding gap

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ASX lithium shares are charging higher today.

Leading lithium stocks Liontown Resources Ltd (ASX: LTR) is up 4.96% in early afternoon trade and Pilbara Minerals Ltd (ASX: PLS) shares are up 3.61%.

Both ASX lithium companies presented at the Diggers & Dealers Mining Forum in Kalgoorlie, Western Australia, this week.

As attendees heard, the long-term demand outlook for lithium – a lightweight, conductive metal critical in electric vehicle (EV) and home storage batteries – remains very strong amid rapid global growth in EV markets.

This, as the battery metals industry is looking at a US$42 billion funding shortfall to meet that soaring demand, according to Benchmark Mineral Intelligence.

Growing future deficits in lithium supply forecast

According to Pilbara’s presentation at Diggers & Dealers, the expected deficit in lithium by 2040 is the equivalent to some 18 Pilgangooras. The ASX lithium share was referring to its Pilgangoora project, one of the largest hard rock lithium-tantalum deposits on Earth.

It said the forecast deficit comes “with likely pricing implications”.

Lithium prices have already leapt almost 500% since this time last year.

According to Pilbara Minerals CEO Dale Henderson (quoted by Bloomberg), “The appetite is insatiable. Any producer in lithium is very popular at the moment.”

In its presentation, Liontown Resources pointed to research from global consulting firm Boston Consulting Group (BCG). BCG expects overall lithium demand growth of approximately 20% per year from 2020 through to 2035. This will be mostly driven by increased demand for EV and energy storage system (ESS) batteries.

Liontown CEO Tony Ottaviano said (courtesy of Bloomberg):

I don’t want us to come across as self-indulgent because we have immense respect for our customers, but the simple fact is it takes five to eight years to bring greenfield supply online in tier-one jurisdictions.

Ottaviano said that “interest was low” when the ASX lithium share approached car makers and other manufacturers for its first offtake.

“Roll the clock forward and we are seeing a completely different commercial posture,” he added.

How have these two ASX lithium shares been performing?

Over the past 12 months, the Pilbara share price is up 42% while the Liontown share price has gained 74%. That compares to a full-year loss of 7% posted by the All Ordinaries Index (ASX: XAO).

Roll the clock back five years, and these ASX lithium shares have really shot the lights out.

If you’d invested in Pilbara five years ago, you’d be sitting on gains of 689%. As for Liontown, its shares have surged an eye-popping 14,550% in five years.

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