AUSTRALIA: Lithium price plunges, but miners are confident – AGC Communication

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While some Australian lithium miners consider scaling back operations in the face of falling prices, others are pushing ahead with expansions or bringing new capacity online in an effort to position themselves for an eventual recovery.

Australia has emerged as the world’s biggest supplier of the metal, a key ingredient in electric vehicle batteries, but its sector has been hit by a market downturn, with a supply glut pushing spodumene concentrate prices down more than 80% from 2022 highs to below $1,000 a tonne, it said. Nikkei.

The company Down Under is betting that weathering this storm will put it in a better position when prices recover, which they should do later this decade. But faced with compressed margins and competition from integrated Chinese producers, targeted government support may soon be needed.

Pilbara Minerals, owner of the Pilgangoora mine in Western Australia, is using its strong balance sheet built during the boom to push ahead with expansions to reduce unit costs.

Meanwhile, the world’s largest hard-rock lithium mine, Greenbushes, a joint venture between China’s Tianqi, Albemarle and Australia’s IGO, has returned to full production.

And Kathleen Valley, operated by Liontown, announced its first spodumene concentrate production last month. Liontown is backed by Australia’s richest person, mining magnate Gina Rinehart. In June, it received a $250 million investment and a 10-year offtake agreement from South Korea’s LG Energy Solution, helping it move toward a planned annual production capacity of 3 million tonnes by 2025.

The company, which also has offtake agreements with Tesla and Ford, sold its increased tonnes to Sinomine. According to Liontown, battery demand remained strong in China, although has weakened in the United States and Europe.

But pressure to cut production continues to grow.

Mineral Resources, which operates the Bald Hill, Mt Marion and Wodgina mines, said in June it would keep a new spodumene concentrate production line on ice until it saw a “sustained” recovery.

Arcadium, the world’s third-largest producer, said last week it would consider mothballing its Mount Cattlin mine in Western Australia if prices didn’t improve. It also suspended spending on an expansion in Canada and revised the timing of lithium carbonate products in Argentina.

The update followed another round of cost cuts by US lithium giant Albemarle, which said it would scale back operations at its lithium processing plant in Australia due to the prolonged downturn in prices.

Australia accounted for 45% of global lithium mining in 2023, according to a government report in June, which predicted that share would fall to 39% by 2026 as new sources come online in Zimbabwe, Argentina and elsewhere.

Meanwhile, Chinese producers have responded to soaring prices in 2022 by ramping up domestic mining of lepidolite, a lithium-containing mineral that is more expensive to process, and increasing production from mines in Africa.

Citibank said in a recent report that it expects lithium prices to remain lower for longer. Players outside China have begun to reduce investment or production and Chinese producers are expected to follow suit but the largest players in China have had the advantage of being integrated with battery makers.

Lucia Giannini

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