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Australian Lithium Miners Supported by Higher Spodumene Prices in Quarterly Results
Oct. 31, 2022 01:40PM PST
ASX-listed lithium miners have published their latest quarterly results, and they show that higher lithium prices are likely to remain.
Lithium prices are on the rise again as carmakers continue trying to secure long-term supply of the battery metal.
Demand from the electric vehicle industry is expected to be strong in the last quarter of the year, particularly in China, where experts are forecasting robust sales. With lithium in tight supply, prices remain at historic highs, creating a positive environment as Australian lithium miners report their results for the third quarter of the calendar year.
Perth-based Pilbara Minerals’ (ASX:PLS,OTC Pink:PILBF) production for the period was 147,105 dry metric tonnes (dmt) of spodumene concentrate — a 16 percent increase from the previous three month period. During the September quarter, the company's Ngungaju plant reached nameplate capacity of 180,000 to 200,000 dmt per year.
“In response to increasing customer demand and strong lithium raw materials pricing, the company has continued to adjust production by lowering its targeted product grade to optimise product yield, thereby maximising sales volumes to take advantage of current market pricing conditions,” the company said in a statement.
Pilbara, 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 Pilbara are up 38.35 percent year-to-date, closing at AU$5.09 on October 31.
For its part, leading Australian lithium and iron ore miner Mineral Resources (ASX:MIN,OTC Pink:MALRF) saw Mount Marion’s production reach lower levels compared to the previous quarter. This was because of continued mining of lower-grade transitional ore, as well as plant shutdowns, which the company said were due to an output capacity expansion to 900,000 tonnes per year.
“Mt Marion remains on track to achieve financial year 2023 guidance for spodumene concentrate shipped — set at 300 to 330,000 dmt,” the company, which owns a 51 percent share in the asset, said.
Aside from Mount Marion, the company holds interests in Wodgina in partnership with Albemarle (NYSE:ALB), another top producer of lithium. The companies decided to restart Wodgina last year as a result of soaring global demand for the commodity. Over the quarter, 26,000 dmt of spodumene concentrate were shipped from Wodgina.
After publishing its quarterly results, Mineral Resources’ share price was up almost 9 percent, closing at AU$73.13 on October 31. The stock is up 22.1 percent year-to-date.
During the September quarter, Argentina-focused Allkem (ASX:AKE,OTC Pink:OROCF) posted revenue of approximately US$298 million, along with a gross operating cash margin of around US$244 million.
In Western Australia, the company owns the Mount Cattlin mine, which produced 17,606 dmt of spodumene and shipped 21,215 dmt. In late August, labour and equipment shortages in Western Australia prompted the company to revise its production forecast for the 2023 financial year to 140,000 to 150,000 tonnes of spodumene concentrate.
“Customer demand in the spodumene market remains robust and spodumene concentrate pricing in the December quarter is expected to be in line with the September quarter,” the company said in a press release.
In Argentina, Allkem operates the Salar de Olaroz, whose production rose 17 percent compared to the previous corresponding period, reaching 3,289 tonnes of lithium carbonate; of that amount, 43 percent was battery-grade material. The company is also developing the Sal de Vida lithium brine, where it said construction of the first two strings of ponds is now 65 percent complete.
Additionally, in partnership with Toyota Tsusho (TSE:8015), Allkem is building a 10,000 tonne per year lithium hydroxide plant in Naraha, Japan. The company also owns the James Bay lithium pegmatite project in Canada.
On October 31, shares of Allkem were changing hands for AU$14.44, up over 25 percent year-to-date.
Although its main focus is nickel, Independence Group (ASX:IGO) has been involved in lithium since it bought a stake in Tianqi Lithium’s (SZSE:002466) Australian assets. The companies, in joint venture, now control the majority of the biggest lithium mine in the world — Greenbushes, located in Western Australia.
At Greenbushes, production rose 7 percent from this year's June quarter to reach record levels, with output of 361,227 tonnes of spodumene concentrate. By 2025, Greenbushes is expected to add around 800,000 tonnes per year to its output capacity.
“Stronger production and higher spodumene prices drove outstanding earnings within the Tianqi Lithium Energy Australia joint venture and led to IGO receiving its second quarterly dividend of $106 million,” Acting CEO Matt Dusci said.
Ramp-up at the Kwinana refinery, where first production of battery-grade lithium hydroxide happened during the June quarter, continued. During the period, the company also reported the sudden passing of Managing Director and CEO Peter Bradford.
IGO has seen its share price increase 28.6 percent year-to-date, and was trading at AU$15.29 on the last day of October.
All stocks data was accurate as of October 31, 2022.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
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