Here’s another take on lithium from the Benchmark Minerals Conference in Perth today part authored by AFR attendee, Brad Thompson.
Apparently CATL has not confirmed the rumours of a Jianxi shutdown .., which - if it is really in place - UBS thinks may create a 23% upside to lithium prices.
The move by a big Chinese lithium force to shut down its operations to survive the commodity price collapse is a strong indicator that the market for the battery metal has finally bottomed out, Mineral Resources has declared.
Lithium stocks jumped sharply on Wednesday based on unconfirmed reports that China’s CATL had decided to suspend its lithium lepidolite operations in Jiangxi. Lepidolite is a source of lithium ore typical in China’s geology, which is more energy-intensive and expensive to mine than the hard rock of Western Australia. Benchmark Mineral Intelligence lithium consultant Cameron Perks and Mineral Resources lithium boss Joshua Thurlow at the conference. Brad Thompson
MinRes lithium boss Joshua Thurlow, speaking in Perth on Wednesday, said the move by CATL was significant to the global markets and a sign that pricing might recover.
Shares of MinRes surged 16 per cent to $35.12, narrowing its loss this year to 50 per cent.
“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,” he said.
Benchmark Mineral Intelligence lithium analyst Cameron Perks said lithium players – including those in China – could lose money only for so long.
The collapse in lithium prices has led to Arcadium Lithium mothballing its Mt Cattlin lithium mine in WA, Core Lithium ceasing mining near Darwin, and New York-listed Albemarle shelving investment in downstream processing south of Perth.
On the ASX, Pilbara Minerals added 13 per cent to $2.67 and the Gina Rinehart-backed Liontown Resources was up 13 per cent at 69¢.
Both are pure-play lithium producers, and among the top five most shorted stocks on the ASX; MinRes sits just outside the top 10.
Mr Thurlow said all lithium companies had been watching the price fall over the past 18 months, and wondering how long it would take to hit the bottom.
He told the Benchmark Mineral Intelligence conference that the CATL operations represented a sizable chunk of global supply: “It has a big implication not just here in Australia, but in the global lithium market, if you’re pulling that level of production out of the market,” he said.
For MinRes, “it’s vital to improve where we’re at from a cost perspective”.
Cost-cutting measures
MinRes announced cost-cutting measures late on Tuesday that will affect hundreds of workers across its biggest lithium mines in WA.
The company estimates that it has found about $180 million in capital expenditure savings and $120 million in operational cost savings across 2024-25, including through roster changes and job losses.
Workers at its Wodgina and Mt Marion mines will go from two weeks on, two weeks off rosters to two weeks on, one week off. Workers who decline the new roster will be offered redundancies.
The cost cuts come after MinRes’ billionaire boss, Chris Ellison, warned in August that no one was making money at current lithium prices. He briefed analysts during a private teleconference on Wednesday.
CATL representatives at the Benchmark conference declined to confirm the speculated production cuts at Jiangxi.
Dr Perks concurred that CATL had closed or at least significantly slowed production from Jiangxi.
“It is still a rumour, but one which has been repeated by multiple sources, primarily by equity analysts in and outside of China,” he said. “It would make sense, however, as costs are relatively high and there’s only so long you can lose money, even in China.”
(20min delay)