Image source: Getty Images
It’s shaping up to be a relatively solid day for ASX lithium shares on Thursday. At the time of writing, most ASX companies associated with the major battery commodity are in the green.
However, as Tesla Inc (NASDAQ: TSLA ) tech kingpin Elon Musk explained during the electric vehicle (EV) maker’s earnings call this morning, not all lithium companies are created equal. Indeed, there is one specific part of the lithium value chain in which Musk sees an immense financial reward.
Let’s take a closer look at what Musk said and the ASX lithium shares it could imply.
Money printing machine inside lithium?
Shareholders listened intently to Tesla’s Q2 earnings call this morning. But for some investors, Elon Musk’s comments about lithium took center stage. Answering a question about how inflation will affect electric vehicle prices, Musk shared his thoughts on the lithium industry.
For most commodities, we are seeing a downward trend towards the end of this year or next year. Some commodities…lithium processing is crazy. I would like to again urge entrepreneurs to enter the lithium refining business.
On initial inspection, Musk’s expectation that commodity prices will trend downward may not seem too bullish for ASX lithium shares. However, the serial entrepreneur is quick to draw a line in the sand, putting “lithium refining” in a separate category.
Elon Musk reiterated the attractive economics on offer in lithium refining at the moment, stating:
this [lithium refining] it’s basically like minting money right now. Right now there are software margins in lithium processing. So, I really like to encourage, once again, entrepreneurs to get into the lithium refining business. You can’t lose, it’s a license to print money.
ASX lithium shares rise in response
Following this morning’s comments, many ASX lithium stocks have moved higher. For example, here are some of today’s best-performing lithium companies:
However, according to Musk’s comments, it is lithium refiners of particular interest. Novonix could be getting the higher yield as its synthetic anode production could be more used to refining than mining.
Likewise, IGO Ltd (ASX: IGO ) is another ASX lithium stock that could soon be classified as a refiner. On 20 May 2022, the mining company announced that its first battery-grade lithium hydroxide had been produced at the Kwinana refinery.