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CXO is on the brink of bankruptcy, it's only a few cents.
CXO is on the brink of bankruptcy, it's only a few cents.
more of the same ...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.
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.The Boom has been turning to Bust since ..
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.
Chinese manipulation is not cost- freeIt's not a new dawn for the lithium bulls. Plenty more mines need to shut and will shut before the price can rise.
They reckon 2 major lithium mines are temporarily closing , there saying it’s the lower grade . Fingers crossed this will help Aussie producers out .Chinese manipulation is not cost- free
but the trouble with thatLithium 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
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 shrinkingYou 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.
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.
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