Is this ASX sector gearing up for a year of M&A activity?

Plenty of eyes will be watching ASX lithium producers in 2022. Here’s why.
The post Is this ASX sector gearing up for a year of M&A activity? appeared first on The Motley Fool Australia. –

ASX lithium shares might be in for a roaring 2022, with experts predicting the sector could be a major merger and acquisition target.

Reports of the lithium market’s outlook might have buoyed sentiment in the resource’s producers today.

The Pilbara Minerals Ltd (ASX: PLS) share price is currently surging 5%. Meanwhile, that of Rio Tinto Limited (ASX: RIO) and Mineral Resources Limited (ASX: MIN) are up 0.2% and 1.6% respectively.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 0.99% at the time of writing.

Let’s take a look at what the experts are expecting from the ASX lithium sector and the shares that call it home, in 2022.

What might be in store for ASX lithium shares in 2022?

According to recent reporting by The Australian, 2022 could bring movement for the lithium space. Particularly, as Chinese companies are predicted to be vying for control over mines.

Companies based in China are reportedly turning their attention to international lithium resources to continue supplying the nation’s battery industry.

Additionally, the publication claims Canaccord Genuity analyst Timothy Hoff told clients that large miners are “finally taking notice of what is happening in the lithium market”.

The statement follows last week’s news that ASX giant Rio Tinto is undergoing the $1.15 billion acquisition of an Argentinian lithium project. The purchase is expected to go ahead in the first half of 2022.

Meanwhile, the company is continuing to face challenges at its $3.3 billion Jadar project.

The Australian also quoted Barrenjoey mining analyst Glynn Lawcock. Lawcock reportedly believes Rio Tinto might be on the lookout for more lithium assets in the near future.

It comes only weeks after S&P Global Platts quoted a spokesperson from China-based, Tianqi Lithium Corp as saying:

Due to its strategic significance, lithium resources will [become] more difficult to obtain and control. Therefore, lithium resources will become a key factor restricting the development of the industry in the medium- and long-term.

It also reported that many lithium producers are pushing to expand their production to keep up with burgeoning demand. Interestingly, Mineral Resources and Pilbara Minerals are doing just that.

The former is planning to restart its 40%-owned MARBL joint venture in 2022. At the same time, the latter is aiming to restart its Ngungaju plant.

Last week, my Foolish colleague James Mickleboro reported that Macquarie Group Ltd (ASX: MQG) analysts are predicting lithium prices will continue to strengthen in 2022. Additionally, they predict prices will stay high over the coming 4 years.

It likely goes without saying that all eyes will be on the ASX lithium sector in the new year. Particularly, as many of its participants already enjoyed a generally fruitful 2021.

The post Is this ASX sector gearing up for a year of M&A activity? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group 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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