WR1 General Discussion, page-32951

Could this be the reason for the uptick in share prices.
2 reports ,14 Sept and yesterday 24 Sept. of another Lepidolite mine closer.






Report on the Recent Developments in the Lithium Market: Impact of Ningde and Jiangxi's Lepidolite Projects


Xuan-Ce Wang
Xuan-Ce Wang

Deep Learning, Decision-Making System Developer, Investment, Exploration in New Energy Transition Metals (Li, Cu, Ni) and Precious Metals, and Geoscience

Published Sep 14, 2024
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1. Background and Recent Developments
The lithium market has experienced sudden fluctuations recently, primarily driven by news of potential production halts at the Ningde and Jiangxi Jianxiawo projects. Reports suggest that the project will undergo an indefinite suspension, fueling a surge in the futures market and sparking a rebound in stock prices. Currently, based on communication with local experts in Yichun, it is confirmed that Ningde's Jianxiawo mine will begin halting production next week, although the duration remains uncertain. While the smelting plant might not entirely cease operations, production cuts are expected. Ningde’s smelting capacity is estimated at approximately 5,000 to 6,000 tons of lithium carbonate equivalent (LCE) per month, a significant amount when compared to the current monthly global LCE production of about 50,000 tons. Concerns in the market revolve around a potential significant supply reduction due to these production halts.
2. Supply and Inventory Situation
In examining Ningde and Yichun's production, it appears that smelting operations will not fully cease, and any production reductions will likely be cautiously controlled. This decision is driven by Ningde's strategy of digesting its accumulated ore inventory from previous periods. Ningde has not sourced ore from Yichun's 414 mine in recent months, although it had relied heavily on it in the past. The company accumulated an estimated 8 million tons of raw ore last year, with an additional 4-5 million tons this year, totaling over 10 million tons of ore inventory. Given that lepidolite yields approximately one ton of lithium carbonate per 300 tons of raw ore, Ningde’s current inventory translates into roughly 30,000 tons of LCE.
Despite producing 5,000 to 6,000 tons of LCE per month, Ningde’s future production is likely to decline as ore stocks deplete. The company's mines currently produce around 1 million tons of raw ore monthly, yielding approximately 3,000 tons of LCE, thus creating a supply-demand mismatch once inventory is exhausted.
3. Cost and Market Pressures
The timing of this production halt is notable, coinciding with both the Mid-Autumn Festival and the upcoming National Day holiday. Additionally, the recent rapid decline in lithium prices, approaching 70,000 yuan per ton, has placed significant cost pressure on Ningde, where production cash costs are estimated at 80,000 yuan per ton. Ningde's decision to halt production, therefore, comes as no surprise, given its potential losses at current prices. Yichun’s high-cost capacities have been under prolonged financial strain, and the holidays offer a strategic opportunity for Ningde to halt operations and observe post-holiday price and supply-demand trends before resuming production.
4. Market Outlook and Production Scenarios