As the world steers towards a more sustainable future, the surge in electric vehicle (EV) sales is turning industries upside down, and mining is no exception writes Wealth Within chief analyst Dale Gillham.
Australia, famous for its treasure trove of minerals, finds itself right in the middle of the EV shift, which raises two questions. Firstly, are we about to see a new mining boom thanks to the growing demand for minerals essential for making EVs? Secondly, which stocks are best positioned to cash in on this opportunity?
The International Energy Agency recently released a report revealing some staggering statistics about electric cars. In 2023, sales hit a whopping 14 million units globally, making up 18% of all car sales for the year. That's a massive jump from just five years prior when electric cars were a mere 2% of total sales.
So, what are the key minerals driving this EV frenzy?
Rare earths, lithium, cobalt and nickel are among the crucial components and with the continued growth of the EV market, many Australian mining companies are poised to cash in.
A few stand-out stocks
1 Lynas Rare Earths Ltd
As the largest producer of rare earths outside of China, Lynas is in prime position to supply materials to EV manufacturers worldwide.
With the share price hovering around a historical fair value level of $6, there's enormous upside potential if the share price begins to climb, presenting a huge opportunity for those who can time it right.
2. BHP (ASX:BHP) Group and South 32 Ltd
While these two companies are not solely rare earth miners, they produce many minerals needed in EV production, like nickel, cobalt, and lithium.
Now, while BHP’s share price has been languishing sideways over the last couple of years, it is trading at a level of previous support of $42, meaning there is potential for the price to rise from these levels.
In contrast, S32’s share price experienced fantastic gains in April, having the strongest one-month performance since February 2022. This could potentially signify the beginning of the next long-term bull run.
3. Pilbara Minerals and Mineral Resources
These are notable companies to watch, given their respective roles in lithium and cobalt mining. Their share prices are now starting to track higher after falling around 40%, which historically signals the end of a down move for each stock.
Dale Gillham is the chief analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au