Australian (ASX) Stock Market Forum

Lithium

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supply response .... it's going to be more of the same, with a continual rollout keeping a lid on prices
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Chile’s government said that strong interest from private firms in lithium deals meant it could exceed its goal of three to four new projects in development by the end of 2026.

The 88 lithium development proposals received by the government came from 54 individual companies and groups, according to a presentation by the Mining Minister Aurora Williams on Tuesday.

Almost 60 are domiciled in Chile, while the others include 11 from Canadian, four from Australia, three from the US and two from China. The names of those vying for contracts weren’t disclosed...
 
Agree, hard to see how all these lithium resource companies are going to get capital to develop. 90% won't. Lithium is NOT a rare element.

Noticed last night that ALB was sold off heavily and downgraded by a few brokers.
PLS below $3 and 21% shorted. However PLS is still profitable and holding >$1B cash.
 
peter2 said:
Albermarle has had to fly in specialist workers from China to fix the problems with its lithium production. They will also train the Aussie workers from scratch for chemical processing.

The lithium hydroxide plants of Albemarle and Tianqi/IGO have failed to meet expectations.
Click to expand...
more of the same ...
..
.

Albemarle slashes 300 Australian jobs, shrinks giant lithium facility​


Albemarle, the world’s largest lithium producer, will shut half of its giant West Australian lithium processing facility, and stop construction to expand it, due to a sustained slump in the price of the key battery metal.
The New York-listed lithium giant will slash 300 jobs as part of its aggressive move to immediately stop constructing the third production unit at the Kemerton facility, south of Perth, and place the second unit into care and maintenance.

.. it would instead focus on ramping up unit 1 within the lithium hydroxide processing facility, which up to this point has failed to reach nameplate capacity.
’...
A spokesman for Albemarle in Australia insisted the US giant’s decision was due to market conditions and the commercial reality that lithium prices will stay lower for longer.
“This has nothing to do with state and federal government policies,” "Unit 1 would benefit from the critical minerals production tax incentive when it came into effect.
“It will also assist the company’s decision-making later in the decade when, subject to sustained price improvement, we look to resume operations at Train 2.”
 
Truly a boom and bust commodity.

In retrospect, Lithium was the canary in the coal mine for China's mining appetite. Iron ore has followed now that there is a construction slump. Both symptomatic of receding global trade and part of a global shift away from China. Is it sustainable? I don't think so...

So the question is when does the boom follow?
 
DrBourse said:
The Boom has been turning to Bust since ..
Click to expand...
Lithium prices are in meltdown mode in China at the moment, and I gotta say, that’s not a clickbait exaggeration. The benchmark November 2024 contract for lithium carbonate on China’s GFEX exchange lost another 4.6% today in a procession that would have been even worse if not for a tiny bounce (to be fair on some decent volume) into the close. That’s a new contract low, it’s also a record low for any benchmark GFEX lithium carbonate contract since they started trading just over a year ago.

tures_november-24_intraday_chart_14_August_2024_MI.png

The benchmark November 2024 contract for lithium carbonate on China’s GFEX exchange​

Elsewhere, spodumene prices were down another 2.5% as per the SMM Spodumene Concentrate Index, and the Platts Australian price is down 10% in the last two trading sessions.
 
The writing with lithium has been on the walls for a long time, you only have to see that there's a large oversupply when mining companies worldwide start going into care of maintenance. There was way too much projected speculation with EV sales coming out of the Covid period when most people were cashed up.
 
Yup, lithium's been a bubble waiting to burst. Miners going into care and maintenance mode is a clear sign of oversupply. And let's be real, those rosy EV sales projections post-Covid were always a bit too optimistic.
 
Posted this in the EV thread, but very relevant here.

“There’s no lithium companies making money. We’re just battening down for the downturn … we feel like we’re dragging our feet along the bottom at the moment. So we’re just going to make sure that we throw everything off the deck, as we’ve done many times,” Mr Ellison said.​



Mining billionaire Chris Ellison bemoans ‘shittiest time’ to be boss​


Mineral Resources boss Chris Ellison said it is the “shittiest time” to run a business exposed to a prolonged downturn in lithium prices, claiming that no one in the industry was making money.

The mining billionaire laid partial blame at the feet of “lazy, first world” car makers in Europe and the US, content to profit from producing internal combustion models instead of trying to compete with rivals in China churning out electric vehicles.

Mr Ellison said MinRes would cut spending on its three lithium mines in Western Australia to a minimum in 2024-25, but would not shut them down.

The company will not pay a final dividend for the first time since 2013 as it looks to preserve cash amid the lithium rout and market unease about the viability of high-cost iron ore operations. MinRes produces lithium and iron ore and runs a mining services business.

“There’s no lithium companies making money. We’re just battening down for the downturn … we feel like we’re dragging our feet along the bottom at the moment. So we’re just going to make sure that we throw everything off the deck, as we’ve done many times,” Mr Ellison said.

“I’ve been through all of the downturns. It’s not a fun time,” he said.

“This is the s---tiest time to be the managing director of the company. You’ve got to really cut the costs out of everything you’re doing. You look at every single person.”

MinRes is shutting down high-cost iron ore operations in the Yilgarn region of WA and has said it will try to find other jobs for about 1000 workers affected by the closure.

More jobs will go as MinRes completes construction of its $3 billion Onslow Iron project, which started shipping iron ore in May, and the company is in the process of sacking about 140 workers at its head office in Perth.

MinRes will defer expansion projects and focus on cost reduction and cash preservation in 2024-25 after ending June 30 with net debt of almost $4.4 billion, up from $1.9 billion last year.

Barrenjoey analyst Glyn Lawcock said the next six months would be tough for MinRes, with the market trying to work out if it had enough liquidity to get through to a point where Onslow Iron started to make money.


“The business is still burning cash and debt levels are still increasing, so he (Mr Ellison) needs to bunker down, and then, hopefully, into the New Year the business can turn free cash flow positive,” Mr Lawcock said.

The company remains wedded to lifting production at Onslow Iron to 35 million tonnes a year in 2024-25. It is confident that the operation will be cash flow positive and boost its mining services and infrastructure division.

The MinRes share price fell 8 per cent to a near three-year low of $40.61 on Thursday. The stock has fallen 42 per cent this year.

MinRes has about $2.8 billion in liquidity factoring in funds from the sale of a stake in the Onslow Iron haul road, $900 million in cash and an undrawn loan of $800 million.

Mr Ellison said the company was concerned about the health and wellbeing of its people and now employed nine psychologists.

‘Hold them captive’​


He said he did not like employees leaving the company’s head office for coffee let alone working from home, which is banned at MinRes.

“I want to hold them captive all day long. I don’t want them to walk down the road for a cup of coffee. We kind of figured out a few years ago how much that costs, wandering out around lunchtime,” he said.

MinRes provides freshly cooked meals at its head office and is moving to introduce budget-priced day care.

The company reported its full-year result after the market closed on Wednesday. Underlying net profit was down 79 per cent to $158 million. It flagged capital expenditure of $1.9 billion in 2024-25, above consensus expectations of $1.6 billion, despite the balance sheet pressures and prevailing market conditions.

Almost $800 million is set aside for more work on Onslow Iron. That figure includes work on completing the haul road linking previously stranded iron ore reserves in the west Pilbara to port.

Mr Ellison said the $1.3 billion sale of a 49 per cent stake in the haul road to Morgan Stanley Infrastructure Partners was “bulletproof” and not subject to any conditions around volumes, performance or the iron ore price.


MinRes shelved plans to boost production at Onslow Iron from 35 million tonnes to 50 million tonnes at an estimated cost of $1.3 billion.

However, Mr Ellison remained optimistic the iron ore price would remain around or slightly below $US100 a tonne despite BHP and others warning of slowing demand in China. He conceded he never expected lithium to slide below $US1000 a tonne.
Click to expand...
 
the ASX lithium sector..... Today's 10-15% gains almost across the board in that sector might feel like a miracle to many a long suffering Aussie lithium investor.

The reason? A major Chinese battery manufacturer (CATL) has decided to suspend operations at two of its mainland lepidolite mines....
 
Lithium Prices

“It does indicate that at these current prices, people aren’t going to be able to sustainably operate. We’ve all sort of known that for some time, and we’ve been waiting for supply to start coming out of the market”
- Joshua Thurlow, CEO Lithium, Mineral Resources Ltd​
Click to expand...
but the trouble with that ⬆️ is the oversupply will be waiting to emerge from mothballs.

give it a decade?
 
TimeISmoney said:
You need to see a massive spike in EV sales which I don't think you're going to see in a long time, EVs are just a pain in the back side for most at this point in time.
Click to expand...
the other metric is the shrinking purchasing power of the lower middle-class consumer ( they will tend to keep the current banger longer ) , and maybe look at EVs when the only alternative is bus/train/jogging to work ( home delivery and online shopping will take the drive out of ' granny's shopping carts ' another low end market shrinking
 
TimeISmoney said:
You need to see a massive spike in EV sales which I don't think you're going to see in a long time, EVs are just a pain in the back side for most at this point in time.
Click to expand...

We recently upgraded to a Tesla Model Y and will never go back to an ICE.

It's surprising how many people are curious about it. Neighbors we've barely spoken to have asked about how it works, and at school pick-up, we get questions all the time.

Many are interested but hesitant, which is understandable with the amount of BS you hear from saying they are a "pain in the backside". Once people talk to actual owners, they realise that while there are some minor very rare inconveniences for some people, EVs are a way better option for most.

Slowly then all at once.

Time to go buy some more PLS
 
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