News: LTR Australian lithium output cuts seen on price slump

	  Lithium downturn seen shorter term than structural nickel 

glut

	  Miners have cash cushion due to 2022 price surge 

	  Customer pushback might cause production curtailments 

Australian lithium producers may be set to track the nickel industry in project curtailments and delays this reporting season, analysts say, given slower than expected electric vehicle (EV) sales, but the jolt is expected to be less severe.

Both sectors are contending with a sharp drop in raw materials prices because of the EV slowdown, but lithium is expected to snap back faster because its oversupply is seen as short term.

Nickel miners have come under pressure because of a surge in Indonesian supply that has hammered prices and triggered a spate of writedowns, reflecting a shift in market structure that could last as long as three years, according to First Quantum FM.TO .

"If you have a prolonged period of depressed pricing then there is the potential to see additional capacity curtailments and or delays, or deferrals of new projects and capacity," said analyst Reg Spencer of Canaccord in Sydney.

"(But) the energy transition has not gone away, it’s just a period of slower demand growth," he added.

Core Lithium (CXO) on Jan. 5 announced job cuts and suspended mining at its Finiss operations in the Northern Territory while Liontown Resources (LTR) had to return to market to restructure its debt on Monday which sent its shares tumbling more than a quarter.

After a six-fold surge in prices from late 2021, lithium miners like Pilbara Minerals (PLS) have built up a cash cushion that offers protection as prices reverse course, said Glyn Lawcock of Barrenjoey. Pilbara reports on Wednesday.

But even cash rich miners may seek to cut production of lithium ore spodumene if their customers want less, he added, since chemicals makers are facing a glut of existing inventories for a product with only a six-month shelf life.

"We're looking to see whether there's any signs of customers saying, well, we don't need as much spodumene right now because we're just not ready to convert it," he said.

The world's largest low-cost lithium mine, Greenbushes in Western Australia, has mothballed production before and IGO Ltd (IGO) in September flagged cuts could be on the table.

The joint venture between China's Tianqi Lithium 002466.SZ , IGO and Albemarle ALB.N produced 1.49 million tonnes of spodumene in the 2022-2023 financial year.

Tianqi and IGO also own the Kwinana Lithium Hydroxide Refinery which has been running well below capacity.

Mining services billionaire Chris Ellison's Mineral Resources (MIN) operates three lithium mines. It reports on Thursday.

Mt Marion, which it half owns with Ganfeng Lithium 002460.SZ has capacity of 600,000 tonnes of spodumene.

It has a half share in the Wodgina mine with Albemarle, which has capacity for up to 750,000 tonnes of spodumene and its recently acquired Bald Hill which can produce 150,000 tonnes.

IGO (IGO) , which has flagged a further writedown at its Cosmos nickel project, will be closely watched for lithium developments and its plan to develop a battery chemicals plant near Perth when it reports under new CEO Ivan Vella on Jan. 31.