Arcadium is reassessing its Mount Cattlin operations in Western Australia given excessive prices and falling costs of uncooked materials spodumene, CEO Paul Graves stated on Wednesday because the miner introduced a spherical of price cuts to its international enterprise.
That comes per week after high lithium producer Albemarle introduced job cuts at its lithium hydroxide plant within the state, the place it paused an enlargement as a part of a “complete evaluation” of its international price and working construction.
Reflecting compressed margins for producers, spot costs for spodumene in high shopper China are hovering round $940 a metric ton, the bottom in virtually three years.
Goldman Sachs expects spodumene costs to common $800 over the following 12 months.
Australia which provides rather less than half of the world’s lithium, and is increased price than South American brine producers, is more likely to bear the brunt of the following spherical of manufacturing cuts, analysts stated.
In locations like China and Africa, excessive price provide has already closed, apart from built-in mines owned by chemical or battery producers which were in a position to flip earnings elsewhere of their enterprise.
That leaves Australia the place mines should not absolutely built-in, which suggests their house owners are extra uncovered to a downturn in costs, stated analyst Glyn Lawcock of funding financial institution Barrenjoey.
“If we don’t get any extra bulletins, no extra closures, and the ramp ups which might be underway proceed, then it does really feel like there’s most likely a number of quarters of robust footy for the lithium area,” he stated.
Provide continues to be rising in some quarters from single asset firms that don’t have any selection however to proceed constructing and since it’s their solely supply of money stream, he added.
That will apply to Australia’s Liontown Sources which has simply began manufacturing at its 500,000 tons per 12 months Kathleen Valley undertaking whereas Pilbara Minerals has additionally simply accomplished an enlargement.
Excessive price mines in Australia embrace Mt Marion, Wodgina and Bald Hill, owned by diversified miner Mineral Sources, which declined to remark.
MinRes shipped just below 500,000 dry metric tons of the uncooked materials within the monetary 12 months led to June. Mount Cattlin shipped round 205,000 tons within the 2023 monetary 12 months.
Mineral Sources stated in its quarterly report final month that it might proceed to “intently watch the market”, because it flagged a delay to a deliberate enlargement at its Wodgina mine.
“The present market will not be as robust as we had thought. Costs have been impacted by softer EV demand from US and Europe,” investor relations supervisor Chris Chong stated on a name to analysts.
(By Melanie Burton; Modifying by Sonali Paul)