Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
China’s two biggest lithium producers remained in the red nine months into the year as the battery-metal downturn continues to squeeze the industry.
Tianqi Lithium Corp. and Ganfeng Lithium Group Co. both reported results Wednesday that highlight the challenges of producing the metal amid slumping prices and a supply glut. Tianqi’s loss for the nine months loss widened to 5.7 billion yuan ($800 million), while Ganfeng’s was at 640 million yuan after turning a narrow profit for the third quarter.
Global lithium prices have plunged from two years ago due to a flood of new supply and softening growth in demand from the electric-vehicle sector. In China, the material is 88% cheaper than its peak in late 2022.
Tianqi said its output and sales volumes climbed in the third quarter as it ramped up new plants, though that was offset by a “substantial decline” in prices from a year earlier. Its net loss for the third quarter was 496 million yuan, compared with profit of 1.65 billion yuan a year earlier.
Ganfeng’s quarterly net income of 120 million yuan — down 25% — was its first profit in four quarters. But the result was helped by a non-recurring gain of 311 million yuan from changes in the value of financial assets.
The drawn-out slump in lithium has already forced an array of stalled projects, scrapped deals and production cuts across the world as producers seek to weather the downturn and protect under-pressure margins.
Australian miner Pilbara Minerals Ltd. on Wednesday said it would temporarily put a plant in care and maintenance from December to reduce costs. That followed a move three months ago by Albemarle Corp. in Australia, when it shut half of its processing capacity and put its expansion plans there on hold.
Ganfeng remains optimistic on lithium demand for the medium to long term, executives told investors last week in an online briefing. The company sees global supply growth at a relatively low level next year given current pricing.
(By Annie Lee)
Read More: China lithium price poised for further decline in 2024 – analysts
Comments