Aracadium’s Q3 profit drops 82% on tumbling lithium prices
The company posted third-quarter net income of $16.1 million, compared to $87.4 million in the year-ago quarter.
China is likely to lift exports of battery chemicals such as lithium hydroxide this year as domestic producers expand output and try to profit from higher overseas prices amid rising global demand for electric vehicle batteries, the chief executive of lithium miner Pilbara Minerals said on Friday.
The increasing exports from China, which is mainly considered a buying of battery materials because of its large concentration of battery manufacturers, highlights an oversupply of some lithium products in the country currently.
Prices for high purity lithium hydroxide outside of China have held up better than those in the domestic market which have been depressed by heavy production of lower quality lithium carbonate from brine lakes, said Ken Brinsden, Chief Executive of Pilbara said on the company’s second-quarter earnings call.
Higher global prices for better quality material were likely to attract sales from Ganfeng Lithium and China’s General Lithium Corp, which were expanding production, he said.
“The export market out of China for battery ready products especially from spodumene is going to be a bigger dynamic during the course of 2019 and onwards,” Brinsden said. Spodumene is an industry name for lithium concentrate.
Pilbara Minerals began shipments of spodumene during the second quarter ending in December. The company counts among its customers Ganfeng, who is also a shareholder in Pilbara.
Australia is the world’s largest supplier of lithium from hard rock sources.
Chinese producers such as Ganfeng and General Lithium have new plants that have been commissioning since the third quarter of last year and are starting to hit their stride, both in terms of underlying production and quality, with an expectation their material will be qualified for export, he said.
Ganfeng did not immediately respond to an official request for comment.
However, a source at Genfeng, who asked to remain unidentified, said that the company’s current capacity is around 70,000 to 80,000 tonnes of lithium carbonate equivalent (LCE), adding that it would rise to over 100,000 tonnes by the middle of next year.
Capacity at General Lithium is expected to grow to around 80,000 tonnes of LCE per year by 2021 from 22,000 tonnes at present, according to a statement on Dec. 11 from lithium company Birimian Ltd announcing an offtake agreement. Nobody at General Lithium was immediately available for comment on their expansion plans.
Brinsden also noted that the South Korean lithium market was growing at an “exponential rate.” Pilbara in January signed a preliminary deal with Posco for a 30-percent stake in a proposed battery chemicals plant in South Korea.
Pilbara reported production of 47,859 dry metric tonnes of spodumene in the December quarter on Friday.
(By Melanie Burton and Tom Daly; Editing by Christian Schmollinger)
