Buy Hold Sell: Battery metals stocks to buy (and those to avoid)

In the latest episode of Livewire’s Buy Hold Sell, host James Marlay is joined by two battle-hardened commodity experts to run the ruler over one of the most volatile and recently unloved sectors of the market: lithium and battery metals.

After a meteoric rise in 2021 and 2022, lithium prices have taken a sharp turn, falling significantly over the past year. This pullback has left many investors questioning whether the sector's structural tailwinds—such as electrification and the global energy transition—are still intact.

Joining the conversation are Ben Richards of Seneca Financial Solutions and Daniel Sullivan from Janus Henderson Investors, who share their insights on where value is emerging and what to steer clear of.

They delve into the recent price weakness, explore how far valuations have reset, and debate which companies and commodities are best positioned for a rebound.

Whether you're already exposed or just lithium-curious, this episode is essential viewing for anyone trying to navigate the next phase of the commodity cycle.

Watch the video, listen to the podcast, or read the edited transcript below.

Please note this video was filmed on 9 April 2025.

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Edited transcript

James Marlay: Hi there, ladies and gentlemen, and welcome to Buy Hold Sell. My name is James Marlay, I'm your host, and today we're talking about what was one of the hottest commodities on the street. Now it cannot find a friend. I'm talking about lithium and, more broadly, battery metals. I'm joined by Ben Richards from Seneca and Dan Sullivan from Janus Henderson. They're going to be talking us through this commodity that was all the rage and is now down on the canvas.

Dan, let's start with you. Lithium, as I mentioned, it's back to where it was in 2021. Can't find a friend. What does it take for lithium to catch a bid?

Lithium

Daniel Sullivan: Yeah, it's super compressed. I think it can happen any moment in a way because it really is, particularly the shares are very, very unloved and across the board, juniors, seniors, everything. And so we must be very, very close.

Now, having said that, it's felt that way a number of times on the way down and they keep falling, and even one of the largest, Albemarle (NYSE: ALB), is way below its price at the start of the cycle and still falling.

So we are in a crisis selling period. It will pass quite quickly at this pace, and yeah, there should be relief. In terms of the actual supply-demand, the modelling probably still has that out, maybe two to three years, but the market will also… we're all trying to anticipate that. So within one year of getting it there, someone will get the timing right. So we must be getting pretty close now, I think.

James Marlay: Okay, so the longer-term thesis for lithium, you still believe stacks up?

Daniel Sullivan: Absolutely. Yep. So the Chinese industry is massive. They're building heaps of cars. It's taking market share and growing all the time. We're probably going to lose a lot of the US interest in electric vehicles in this next period, I would say, but that's a smaller part of the global market anyway.

I think China is already dominant, they'll get even more dominance and more and more cars will get around the world coming out of China. The price keeps going down. I think you can buy an okay car now for 10 grand and a good one for 40. So it's all happening there. The factories are super sophisticated, very automated, and the production from lithium through to batteries is also very integrated now in China.

So there's a lot happening there that a lot of people don't get to see, but it's super first world. It's not dirty. I know there's been stuff on television about these industries, but to see a factory with basically no workers producing these cars is fantastic.

James Marlay: Ben, they say buy when there's a bit of blood on the street. It's overflowing in the lithium market at the moment. Is it a part of the market that's caught your attention?

Ben Richards: Yeah, I mean, I was going to quote Buffett, so you stole my thunder there, but it's really interesting. It's been over the last 10 years, it's been the top performing commodity in two of those years and the bottom performing commodity in two of those years. So it really whipsaws around. It's quite an immature market still.

We believe the demand is actually quite strong, still growing 20-30% per annum, and particularly driven by electric vehicles and solid-state storage batteries. But it's just the supply. So we've seen a lot of supply come on over the last sort of two years, and yeah, that's kind of led to the depressed pricing environment, but it's just hard to know exactly when it's going to turn. I'm reading some broker analyst reports are kind of forecasting more of a balance in 2028, '29, but some of those analysts are the same ones that were saying $80,000 a tonne was the new normal, so don't subscribe too much to that.

We think there's definitely opportunities, particularly given how low the price is and what the incentive price needs to be if we do sustain that 20% per annum growth. So yeah, it's probably a question of lithium brine players or lithium hard rock players. Australia has probably more of a role to play in the hard rock, but we've seen Rio Tinto (ASX: RIO) get into those South American lithium brine assets and try and get down the bottom end of the cost curve there.

So I think there's opportunities in both. We have a small position and, yeah, potentially good leverage if the lithium price does move higher.

Battery Metals

James Marlay: Now, lithium has been the dominant commodity for people wanting exposure to the EV, the battery, that sort of the electrification style theme, but there's some other commodities, graphite, cobalt, nickel, all is tied up and associated with it. They've all been smashed. What's your view on a couple of those second tier commodities in the role that they might play there?

Ben Richards: Yeah, it's hard to get too excited about some of those ones. We've seen graphite, just the synthetic graphite supply come out of China, nickel, kind of Indonesian-Chinese backed supply there, the laterite stuff. And the other one was cobalt, which is also a murky supply picture, particularly out of some African countries with questionable mining conditions.

So yeah, all three don't really have a clear supply-demand picture to get comfortable investing and have torched a lot of ASX investors in the past as well. So we're quite cautious on those.

I would throw one other commodity in there, which is silver, which isn't really a battery metal, but is a electrification metal just through its use in solar panels, as well as a bit of precious metal demand tied to gold. That's one which we think has probably a better risk-reward proposition at this time.

James Marlay: Okay. Same question for you Dan. Outside of lithium, are there some other commodities that you think give you good exposure to that EV and battery metal space?

Daniel Sullivan: Yeah, I agree. They're hard to find vehicles, but I think Nickel Mines (ASX: NIC) does stand out as a company that's done a very good job and participated in that Indonesian-Chinese joint venture build out of massive nickel supply. It was only probably two or three years ago that nickel had an enormous spike on the upside as the world thought they didn't have enough and were scrambling for it and then suddenly Indonesia, again, it's a massive industrial complex or a number of them just cookie-cutter approach, just keep churning it out.

This is what happened in the industrialization of China's steel from 1990 onwards. They get a template and just go for it and make sure it works. So they've done that and I think Nickel Mines, nickel price's low, that stock's probably in the sin bin with everyone else, but it's probably an attractive stock in the sense that there's very, very few nickel players in the world and they have good access to a partnership there, good resources and expansion plans. So I think the price will normalise and blow over.

I mean, nickel's a critical metal. Everyone in the world keeps putting out critical metals saying they believe these things are important and they need to find out how to secure them and get access to them. So for us investors, we've got an opportunity here to take advantage of that one given that it's listed here.

James Marlay: Okay, step back. Talking more broadly about the battery metal space, all the commodities in it, you've got the ability to look in Australia, but also globally.

Daniel Sullivan: Yes.

James Marlay: How do you prefer to play? Do you see better opportunities offshore or have we got a good suite here in Australia?

Daniel Sullivan: For battery metals, we've been lucky because Australia's done so well in finding lithium deposits and bringing mines to the market. And of course we had Orocobre early on doing the Argentinian brines, which has ended up going to Rio Tinto. So we've looked at both. We've looked at Canadians, north Americans, but, yeah, in that sense, Australia's done a great job at identifying the resources and bringing them through to mining in really short timeframes, which I think that's contributed to the two lithium collapses now. The response time to deliver more material has been super impressive.

James Marlay: Been our own worst enemy.

Daniel Sullivan: Incredible. But it means we've got these massive resources identified now, which they will get mined out over 15 to 25 years periods and they'll make a lot of money for the country, and that's fantastic.

I think in a way we've missed that opportunity or we've missed that win. We should have found more copper mines in the last 20 years of significance and we really haven't. That's been done somewhere else. So as a country, I think lithium, massive big tick. Other things we should have done better. But yeah, it gives us heaps of opportunities.

James Marlay: With depressed prices, M&A has been a feature in other parts of the commodity space. Do you think M&A comes to some of these lithium mines?

Daniel Sullivan: Absolutely.

James Marlay: Pilbara, those types?

Daniel Sullivan: Most of them. I think we'll lose nearly all of them.

James Marlay: Is that right?

Daniel Sullivan: If we, the public, and the fundies keep valuing this low because the price went up 10 times, then it went down 90%, so guess what? It's going to be a high price. It might be double or triple this price, but it's not going to stay here. As demand grows, I mean we're in the J curves where we're maybe only in the first 3-10% of global take up for EVs and lithium demand. So there's still like 10 times volume demand coming, and these identified and built resources will get mined out and they'll be valuable. So I think it's telling.

Now Rio's conservative in their acquisition strategy and they've gone and paid 100%. A lot of mature M&A like US large cap oil M&A is happening at zero premium. So it gives you an idea that there's still tension out there to get the right lithium thing. So something that's depressed and large like Pilbara or Liontown, et cetera, even IGO, someone who's happy to look through the cycle and say, "I'm in this business for 25 to 50 years and someone wants to sell this down for three months or three years, that's fine, I'll take it."

What are you buying?

James Marlay: Okay. Have you got a preferred name in the space?

Daniel Sullivan: We're in Pilbara (ASX: PLS). It's been somewhat painful because it keeps falling like everything else, but we've maintaining a position which includes topping up and seeing that money go away. But I feel that's important to have some exposure.

We want companies that have a very large resource base that's going to last a long, long time and make money. So they satisfy those criteria. They don't have debt. They'll get there.

And I guess the next one that I've already mentioned that's sort of on the radar is Albemarle just because it's in the brine, is again massive producer, good dominant position, and now it's sort of around $6 billion market cap. And you look at where it goes up to say, Tesla, it's $700 billion. It's like, why is the car maker a hundred times bigger than the battery supply that's sort of third or half the cost of the car? So it'll go, it'll go to someone. Yeah.

James Marlay: Okay. Ben, what's your preferred way of playing the battery metal space at the moment? You got a couple of names for us.

Ben Richards: Yeah. We prefer kind of tier one jurisdictions, so just to avoid the AVZ, Leo Lithium kind of risk and also ensure you've got regulatory framework where it's supportive, fair working conditions, all those kinds of things. So yeah, kind of prefer Australia particularly when it comes to hard rock. I think probably Pilbara is interesting at these prices as well.

We have a bit of a theory around the consolidation of that Pilbara hard rock space because you've got Pilgangoora there, which is Pilbara Minerals. You've got Wodgina, MinRes (ASX: MIN). You've also got Wildcat (ASX: WC8), up there at $200 or so million market cap with a large resource, thick tabular ore body. We think that's amenable to low cost mining, particularly if you blended it with something like a Pilgangoora thin stack pegmatite ore. Went up on site there last year and just saw just how much money they put into that ore sorting capacity. So yeah, we think there's a logical consolidation there. And Wildcat's our probably preferred way to play it just with the leverage to the upside.

We also, like the brine space, did own shares in Arcadium until that was taken over by Rio. We also own shares in a company called Vulcan Energy Resources (ASX: VUL), which is probably the last standalone brine player of significant scale, and that's got a brine project up in Europe as well. So yeah, definitely opportunities in this space.

What are you avoiding?

James Marlay: And what are you steering clear of? What don't you like in this space? Talk us through what you do like. What are you avoiding?

Ben Richards: I think, as I said, the second-tier jurisdiction stuff, we're pretty wary of. Closer to home we're avoiding the marginal players like Core Lithium (ASX: CXO). So they had an operating mine that was super high cost up in Northern Territory, and it's just gone to care and maintenance, and I see they've pivoted to gold. So I don't think that one was a sustainable way to play it. I think you'd rather in a Wildcat or even a Pilbara Minerals, which has a strong balance sheet, low-cost producer and can ride out the cycle.

James Marlay: Okay. Just on that theme, riding out the cycle.

Daniel Sullivan: Yep.

James Marlay: What are you avoiding that's not going to get you through the cycle?

Daniel Sullivan: Well, I think they will get through the cycle, and I don't want to pick on them, but Independence (ASX: IGO), a great company, did an excellent transition, got into lithium side, good joint venture partner. All of these things are working for them up as the cycle's running. But now, the thing that is somewhat disturbing is once you start choking down and shutting plant, because you can't either make money or the market's not there for your product, the last thing a commodity producer can't take is not being able to sell what you make. So whether it's because it's not profitable or the market's just not there for you.

So I think they'll get through it because I think the price will come back and sort of get things rolling again for them. But right at the moment, I think that's more complicated than just owning a mine where if you have to lay a mine off at the bottom of the cycle for a short period, it's much less capital that you're parking up and much less labour and things to sort of turn down to get through. Once you've got a big industrial complex and factory processing plant, downstream processing plant, it's much more complicated.

So yeah, not to say, not wanting to bag them out, but they've got to a tougher position than some of the others.

James Marlay: What was all the rage just a few years ago, the battery metal space is on its knees. But that's where my guests today are seeing some opportunity, particularly in the high quality assets. I hope you enjoyed that commodities special of Buy Hold Sell. Remember, we've got more of this on our YouTube channel. Check it out.