Australian Lithium Producers Post Half-year Results as Prices Soar

Lithium prices have been on the rise for the past year, hitting all-time highs in 2021.

Continued strength is expected with demand set to outstrip supply in the foreseeable future, and ASX-listed lithium producers are seeing revenue increases on the back of this strong market.

In 2022, prices for spodumene are forecast to rise to an average US$1,185 per tonne, up from around US$720 in 2021, while lithium hydroxide is expected to rise from US$7,300 per tonne in 2020 to US$18,940 in 2023, according to a December report from the Office of the Chief Economist.

“Contract prices can be expected to rise in the wake of the spot prices, which should boost production at operations using long-term contracts,” the organisation states in the document.

As a result of the increase in spodumene prices, Australia is forecast to see its export revenue from lithium rise from AU$1.1 billion in 2020/2021 to AU$3.3 billion in 2021/2022.

In late February, most Australian lithium miners reported their half-year results, with all sharing optimistic outlooks on the market as the year continues to unfold.

Perth-based Pilbara Minerals (ASX:PLS,OTC Pink:PILBF) posted its first half-year profit of AU$114 million on the back of a strong lithium market, with shipments of spodumene concentrate reaching 170,228 dry metric tonnes, compared with 114,239 dry metric tonnes a year ago.

“The result reflects continued improvement in lithium market conditions over the period, which has continued its strong momentum into the current half,” the company said in a statement.

Pilbara Minerals, which owns the lithium-tantalum Pilgangoora operation, has partnerships with Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460), General Lithium, Great Wall Motor Company (OTC Pink:GWLLF,HKEX:2333), POSCO (NYSE:PKX), CATL (SZSE:300750) and Yibin Tianyi.

Shares of the Western Australian miner are up more than 170 percent year-on-year, but have declined by over 20 percent since the beginning of 2022.

Similarly, leading Australian lithium and iron ore miner Mineral Resources (ASX:MIN,OTC Pink:MALRF) has seen its share price fall more than 22 percent year-to-date. The company’s current lithium projects include Mount Marion, in joint venture with Ganfeng, and Wodgina, in partnership with another top producer — Albemarle (NYSE:ALB).

Mineral Resources posted a half-year loss, which it attributes to the steep fall in iron ore prices. In terms of its lithium assets, Mount Marion revenue was 207 percent higher than the previous corresponding period, hitting AU$67 million in earnings, reflecting a rebound in the lithium market, the company said.

Meanwhile, Wodgina is expected to see its first spodumene production in the third quarter of 2022; Mineral Resources is also looking to potentially increase its ownership in the mine to 50 percent from 40 percent.

Another ASX-listed lithium miner, Allkem (ASX:AKE,OTC Pink:OROCF), born from the merger of Orocobre and Galaxy Resources last year, delivered US$192.3 million in revenue for the first half of the year, including US$114.9 million from Mount Cattlin and US$65.6 million from Olaroz.

Shares of Allkem jumped about 10 percent after releasing these results, which came on the back of improved product prices, and are up 113 percent year-on-year. That said, shares are down over 13 percent year-to-date.

Allkem operates the Salar de Olaroz in Argentina and, in partnership with Toyota Tsusho (TSE:8015), is building a 10,000 tonne per year lithium hydroxide plant in Naraha, Japan. It also owns the Sal de Vida lithium brine and potash project in Argentina, with first production expected next year. Aside from that, the company has the Mount Cattlin mine in Western Australia, which is currently producing spodumene and tantalum concentrate, as well as the James Bay lithium pegmatite project in Canada.

Although its main focus is on nickel, Independence Group (ASX:IGO) joined the lithium party last year after it bought a stake in Tianqi Lithium’s (SZSE:002466) Australian assets. Through a joint venture the companies now control the majority of the biggest lithium mine in the world, Greenbushes.

Shares of Independence have not been hit as hard so far this year, down only 1.98 percent year-to-date, but are up over 70 percent year-on-year. The company’s revenue from continuing operations, which include its Nova nickel mine, increased 21 percent year-on-year to AU$378 million.

In 2021, many lithium companies saw impressive share price gains — and that was not only true in Australia, but also for lithium stocks on Canadian and US exchanges. So far, 2022 has seen volatility dominate, with uncertainty increasing in global markets due to inflation and following the recent Russian invasion of Ukraine.

All data was accurate as of March 1, 2022.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.