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Lithium pricescontinue to slide

by PeterKer

Moreevidence of softening lithium prices hasemerged, with the operators of Western Australia's Mount Marion mine revealingthey will be paid 13 per cent less for their product in the final three monthsof 2018 than in the previous quarter.

While prices remain strong by historical standards, the $US930 per tonneprice agreed for Mt Marion's spodumene concentrate in the final three months of2018 was well below the $US1070 per tonne price achieved in the three months toSeptember 30.

It was also weaker than the $US961 per tonne agreed for the sameproduct, which contains 6 per cent lithium, in the three months to June 30.

Industry sources said the prices paid for Mt Marion's spodumeneconcentrate were likely to be better than most other Australian spodumeneconcentrate exporters were getting, given that Mt Marion's major customer,Chinese company Ganfeng, is also a 43.1 per cent shareholder in the companythat operates the mine.

Chris Ellison's Mineral Resources also owns 43.1 per cent of Mt Marion,while Neometals owns 13.8 per cent.

Disclosure of the price paid for Mt Marion's product confirms that steepfalls in prices for lithium carbonate in China during 2018 have flowed throughto the prices paid for spodumene concentrate, which is produced by all ofAustralia's seven lithium mines.Strong demand

Galaxy Resources stopped reporting realised prices for its spodumeneconcentrate in its quarterly reports this year, but confirmed in October thatits "cash margin per tonne of concentrate sold" in the three monthsto September 30 was lower than the two previous quarters.

The softer prices also come after oneof the world's biggest lithium producers, Chilean company SQM, predicted inAugust that prices for lithium would slide by up to 10 per cent in the finalsix months of 2018.

Upon making that prediction, SQM saiddemand would remain strong but would be overwhelmed by boomingsupply of lithium from Australia.

Macquarie forecasts that spodumene with 6 per cent lithium will average$US893 per tonne in fiscal 2019 but fall to $US677 per tonne in fiscal 2020,and other analysts expect spodumene to fetch about $US700 per tonne in 2019.

Price transparency in the spodumene concentrate market should improve in2019, given that three ASX-listed companies have started exporting the productin the past six months.

But with several of those companies selling 100 per cent of theirproduction on long-term contracts, there is unlikely to be a clear daily marketor "spot" price for the battery mineral any time soon.

KidmanResources and SQM may bring Australia's next lithium mine into production at MtHolland, so long as the company issuccessful in an appeal process in WA that is questioning its title over theproject.

Kidman chairman John Pizzey was quizzed by shareholders on Thursday overthe matter, which under a worst-case scenario could see the company loseownership of the asset which triggered a 29-fold increase in the value ofKidman shares in the two years to May 2018.

Crucial crossroads

The stock has since lost 45 per cent of its value on uncertainty overits tenure at Mt Holland.

"The company, before I arrived, had very strong legal advice thatdefending this case was almost a certainty to put it bluntly, and that thewarden would find in our favour," said Mr Pizzey.

"There was an enormous amount of confidence within the corporationand that was valid, that confidence.

"That did not occur, the warden voted against us."

Mr Pizzey conceded that clarification of tenure at Mt Holland was acrucial crossroads for Kidman.

"There is no doubt that it is a very important issue for thecompany, because if the minister decides against us, which he could, that setsoff another train of events," he said.

"We have had very good advice, we are optimistic."

Kidman shares closed 5.5 per cent lower on Thursday, Mineral Resourcesshares closed 2 per cent lower but Neometals shares closed 2.17 per centhigher.