In its quarterly report, the company also said sales were up 41 percent, to 3,019 tonnes, with sales revenue reaching US$32 million.
Lithium producer Orocobre (ASX:ORE,TSX:ORL) increased its lithium carbonate output by 65 percent quarter-on-quarter, reaching the second-best quarter of production at its Olaroz facility in Jujuy, Argentina.
In its quarterly report released on Thursday (January 17), the company also said sales were up 41 percent to 3,019 tonnes. However, quarterly sales revenue was U$32 million — down 20 percent on the previous corresponding period.
As previously expected, prices averaged US$10,587 per tonne on a free on board basis.
“While 2018 marked another year of healthy growth for the lithium market averaging 20 percent growth year on year, concerns grew during the December quarter as to the impact of China’s economic and market conditions,” the company said in a statement.
That said, Orocobre views current conditions as a short-term correction following three to four years of high growth that resulted in market prices reaching levels two to three times (or more) greater than the historical average.
“Orocobre maintains long-term demand forecasts in line with the consensus of incumbent producers in the range of 18 to 20 percent CAGR between 2018 and 2025,” the company added.
During the December quarter, Orocobre signed three agreements with its joint venture partner Toyota Tsusho Corporation (TSE:8015). The companies have also given approval to the final investment decision for the US$295-million stage two expansion at Olaroz.
The expansion will increase lithium carbonate production capacity by approximately 25,000 tonnes per year, bringing total Olaroz output capacity to approximately 42,500 tonnes per year. Part of the technical grade lithium production expected will be used as feedstock for the proposed Naraha lithium hydroxide plant to be built in Japan.
Commissioning of Stage 2 at Olaroz and the Naraha lithium hydroxide plant are estimated to occur during the second half of 2020.
According to Eight Capital analysts, there were no surprises in Orocobre’s quarterly report.
“We believe production rates rose nicely and lower quarterly sales prices were already anticipated by the market,” they said in a note to clients.
“We anticipate this slight momentum [in stock price] to continue as the market warms to cost control measures, production nears phase I capacity, battery grade exposure rises, phase II construction begins, and concerted effort is being made to sign longer contracts with end users,” they added.
On Thursday, shares of Orocobre remained neutral, trading at AU$3.25 in Sydney.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.