Monsters of Rock: These figures confirm lithium and critical minerals now power Australia's mid-tier mining sector

Australia’s biggest 50 miners outside BHP, Rio, FMG, South32 and Newcrest now worth $150 billion, PwC says
Critical minerals companies and lithium miners now dominate the mid-cap space on the ASX amid EV boom
ASX resources sector wins big after US CPI result overnight

The 50 biggest Aussie miners outside of the blue chips are now dominated by critical minerals companies, with lithium’s dramatic rise to the world’s hottest commodity dramatically altering the nature of the ASX resources sector.

Spot lithium chemical and spodumene concentrate prices have risen fourfold in 2022, lifting to ~US$80,000/t and ~US$8000/t respectively.

That has come off the back of a surge in electric vehicle sales, which continue to rise exponentially despite a slowdown in both the Chinese and western economies.

According to new figures from Pricewaterhouse Coopers, the market cap of its Mid-Tier 50 rose 17% to $124 billion as of June 2022, with critical minerals miners spiking 32% to $70.3b.

But even that number has become outdated, with further runs in lithium prices seeing their value climb an additional 34% to $89.4b as of September, and the total value of the MT50 to $150b, almost five times the value of the index in 2013.

The figures were revealed in the 17th annual Aussie Mine report, in which PwC suggested global demand for metals linked to the energy transition could outstrip supply by the middle of this decade, just three years from now.

“This is a once-in-a-generation opportunity, but the clock is ticking,” PwC Australia national mining leader Debbie Smith said.

“With commodity forecasters predicting demand for some minerals will outstrip supply by 2025, Australia is at risk of missing out on the full value potential that energy transition presents.”

But wait, there’s more

Gold companies were the next largest component of the list, accounting for $27.1b, with iron ore making up $4.4b and coal $18.9b.

Only a recent, short-lived, bull run for traditional commodities like copper, nickel and gold has seen companies too big for the MT50 like Newcrest Mining (ASX:NCM) and South32 (ASX:S32) regain their supremacy over lithium miner Pilbara Minerals (ASX:PLS), which at a market cap of $16b is worth almost $10b more than it was on June 30.

Investment in the sector, which helped tip a record $1.7b of income taxes not counting $2b of tax liabilities from previously loss-making coal miners, is also increasing to try meet the demands of decarbonisation.

PwC said deal value in the MT50 rose 18% in 2022, with deal volume up 180%, 64% of that from critical minerals companies.

“We will need to see customers embrace exploration and project risks if we want to close the looming supply gaps. There’s intense competition for advanced projects – and there’s simply not enough of them. Early stage projects present more opportunities,” Aussie Mine report lead partnet Marc Upcroft said.

“An increase in customers making direct investments in early stage projects will really help close the supply gaps ahead. This is critically important as early-stage project funding is the hardest to raise.”

While Australia currently supplies around half of the world’s lithium raw materials, Upcroft joined other experts like CRU Group’s Alex Tonks in calling for the lithium sector to move downstream and ditch our historic ‘dig and ship’ mentality.

“To fully reap the rewards, Australian miners must ditch the historic ‘dig and ship’ mentality and move further down the supply chain,” Upcroft said.

“We are starting to think differently about how we can own more of the supply chain and work collaboratively to create low-emission, critical mineral dependent products with a value that outweighs the sum of its parts.”

PwC thinks Australia could supply 20% of battery lithium hydroxide by the end of the decade.

Lithium miners and battery recyclers contributed over half of the nine new entrants into the MT50, with Core Lithium (ASX:CXO), Sayona Mining (ASX:SYA), Neometals (ASX:NMT), Leo Lithium (ASX:LLL), and Lake Resources (ASX:LKE) all moving in along with gold miner Red 5 (ASX:RED), copper producer 29Metals (ASX:29M), cobalt producer Jervois (ASX:JRV) and uranium developer Boss Energy (ASX:BOE).

Coal exporter Stanmore (ASX:SMR) also returned to the list after coal prices surged to record highs and it added 10Mtpa of production with the purchase of the Kestrel and South Walker Creek coal mines from BHP (ASX:BHP).

MT50 new entrants share prices today:

Materials stocks accelerate gains

Materials stocks, largely comprised of the big ASX200 miners, added a massive 3.73% as the local market went wild, posting a 2.79% gain.

It came after Wall Street went nuts overnight in celebration of the lowest US CPI Print in 10 months.

Fortescue Metals Group (ASX:FMG) and South32 were up more than 5%.

Graphite battery play Novonix (ASX:NVX) surged over 9%, while a number of gold plays surged, with Aeris Resources (ASX:AIS) closing more than 17% higher.