The Lithium Survivors: Who Made It Through the Worst Downcycle in a Decade
Spodumene crashed 87% from US$5,000 to US$672 per tonne. Three ASX lithium companies were fully exposed. Their fates diverged based on one factor: where they sat on the cost curve.
Spodumene (the hard-rock lithium mineral used to produce battery-grade lithium) crashed from above US$5,000/t in early 2023 to US$672/t by mid-2025, a collapse of roughly 87% in under 24 months. Three ASX-listed companies were fully exposed: Pilbara Minerals (PLS), IGO Limited (IGO), and Mineral Resources (MIN). All three survived. But the manner in which they survived reveals something the market consistently misprices in commodity downturns: cost curve position (where a producer sits on the industry ranking of production costs, from cheapest to most expensive) is a better predictor of survival than diversification, downstream integration, or balance sheet size.
The Scorecard
| Metric | PLS | IGO | MIN |
|---|---|---|---|
| Rating | SELL | SELL | SELL |
| Price | A$4.18 | A$7.90 | A$51.25 |
| Fair Value | A$0.77 | A$1.78 | A$37.68 |
| Gap | -82% | -77% | -27% |
| Quality Score | 5.75/10 | 4.8/10 | 7.9/10 |
| Key Li Asset | Pilgangoora (100%) | Greenbushes (24.99% indirect) | Wodgina (50%), Mt Marion (50%) |
| Li FOB Cost (cost to produce and deliver to port, A$/dmt) | A$563 | A$380 (Greenbushes, 100% basis) | A$726 (Wodgina), A$805 (Mt Marion) |
| H1 FY26 EBITDA (operating profit before depreciation) | 41% margin | 36% (Nova only) | 38% (group) |
| Net Cash / (Debt) | A$494M net cash | A$278M net cash | (A$4.9B) net debt |
All three are overvalued relative to our analysis, but the degree of overvaluation and the risks embedded in each point to fundamentally different lessons about how commodity companies navigate extreme downturns.
Read the full PLS analysis | Read the full IGO analysis | Read the full MIN analysis
Pilbara Minerals: Low Cost, Full Control
PLS went into the downcycle as the world's largest independent hard-rock lithium producer and came out still producing, still EBITDA-positive, and sitting on A$494M in net cash. The reason is straightforward: at a FOB cost of A$563/t, Pilgangoora sits 35-40% below the industry marginal cost of approximately A$800-900/t. When spodumene hit its trough, PLS reported a negative NPAT in FY25 (primarily depreciation), but the mine itself never stopped generating cash. With prices recovering to US$965/t (still 52% below the 2023 peak), H1 FY26 delivered a 41% EBITDA margin on A$624M revenue, with EBITDA of A$253M in a single half, 2.6 times the entire FY25 full-year figure. That kind of operating leverage only exists when you are a low-cost producer: each dollar of price recovery flows almost directly to the bottom line.
Our fair value of A$0.77 reflects a mid-cycle spodumene assumption of US$850-900/t, well below the US$1,200/t-plus the market appears to be pricing at A$4.18. The 82% gap is almost entirely a disagreement about where lithium prices settle over the next decade, not about the quality of the asset. PLS is the cleanest expression of a lithium recovery trade: if spodumene recovers to US$1,200/t-plus, fair value could approach A$1.50-2.00. If prices revert to US$700-800/t, fair value is closer to A$0.25.
IGO: Why Buying at the Peak Failed
In 2021, IGO paid A$1.9B for a 49% stake in TLEA near spodumene's all-time high, gaining indirect exposure to Greenbushes (the lowest-cost spodumene mine globally at A$380/t FOB, with a 61% EBITDA margin even through the trough) and the Kwinana lithium hydroxide refinery. The refinery never reached commercial production at acceptable costs, and IGO has since taken over A$1.1B in total write-downs, including A$605M on Kwinana alone. The vertical integration thesis (own the mine and the refinery, capture the entire value chain) collapsed because the timing was wrong and the downstream asset did not work.
The deeper problem is structural. IGO holds a 24.99% indirect economic interest in Greenbushes but cannot force dividends, direct capital allocation, or unilaterally monetise the asset. TLEA, controlled by Tianqi (51%), has not paid a dividend since FY24. Meanwhile, IGO's only operated mine (Nova, nickel-copper-cobalt) reaches end-of-life in late 2026. After that, IGO becomes a passive vehicle with no operated mines, no revenue, and corporate costs of A$30-50M per year, waiting for external parties to unlock the value trapped inside a JV it does not control. Cost curve position protected Greenbushes. It did not protect IGO's shareholders from capital allocation decisions made at the peak of the cycle.
Mineral Resources: Mining Services as the Cash Floor
MIN went into the downcycle with the most leverage (net debt peaked at A$5.4B), the most operational complexity, and the most governance risk (ASIC investigation, class action, CEO succession). On paper, it was the most vulnerable. But Mining Services, which provides contracted pit-to-ship services generating fee-based revenue that does not depend on commodity prices, delivered A$488M in EBITDA in 1H26 on record volumes and prevented any liquidity stress.
Lithium was, for a period, almost irrelevant to MIN's survival. Combined lithium EBITDA in 1H25 was approximately A$19M, effectively zero in the context of a A$10B enterprise. The recovery to A$170M in 1H26 is meaningful again (14% of group EBITDA), but MIN's 1H26 record result (group EBITDA of A$1.17B) was driven by iron ore and Mining Services, not lithium. Our fair value of A$37.68 reflects a consolidated DCF with terminal margin mean reversion to 28%, versus the 32% the market appears to be pricing. MIN is the least dependent on lithium recovery because the business was designed so that lithium is a bonus, not a requirement.
What Would Change Our View
Our SELL ratings on all three assume mid-cycle spodumene of US$850-900/t and no structural shift in the supply-demand balance. The key scenarios that would move our fair values materially higher: (1) sustained spodumene above US$1,200/t for 12-plus months, supported by verified supply discipline and accelerating EV or battery storage adoption, which would lift PLS fair value to A$1.50-2.00 and IGO to A$3.00-plus; (2) for IGO specifically, a change in TLEA governance that unlocks trapped value and narrows the gap between asset quality and shareholder returns; (3) for MIN, if lithium recovers while Mining Services continues growing, the combined earnings base could support a higher terminal margin, pushing fair value toward A$47-50. Conversely, if spodumene settles at US$700-750/t mid-cycle, PLS fair value falls to A$0.25 and IGO faces potential equity dilution.
Bottom Line
The lithium downcycle punished all three companies, but the damage was not proportional to commodity exposure. It was proportional to cost position, capital allocation timing, and structural control over cash flows. PLS (low cost, unlevered, full ownership) weathered the storm and is recovering with the commodity. IGO (great underlying asset, wrong price, wrong structure) is trapped waiting for external parties to unlock value. MIN (lithium was a sideshow; Mining Services and iron ore carried the business) barely noticed.
Cost curve position is the margin of safety in commodity investing. If spodumene recovers to US$1,200/t-plus, all three re-rate. If it settles at US$800-900/t mid-cycle, only the lowest-cost producers (Greenbushes at A$380/t, Pilgangoora at A$563/t) generate adequate returns, and of those two, only PLS offers direct shareholder access without JV governance complications. At current prices, none of the three offers a margin of safety on our analysis.
Analysis generated by the Alpha Insights AI research pipeline. All fair values are point estimates subject to model uncertainty. This is not financial advice. Do your own research before making investment decisions.