The miserable June quarter, half-year, or full year for local and global lithium players will end this week with major reports from Australia and China.
Eyes will also be on the world’s biggest company in this space, Albemarle, whose shares soared last year, rising nearly 14%, including a jump of over 4% on Friday, for no apparent reason.
Perhaps investors were encouraged by a solid June quarter and half-year report from its main rival, SQM of Chile, which reported losses and significant revenue declines but no major write-downs, impairments, or spending cuts.
Full-year reports are due this week from Australian companies Pilbara Minerals (today), IGO and Mineral Resources on Thursday, along with Wesfarmers, which holds a half share in Covalent Lithium with SQM of Chile, which last week reported a substantial second-quarter loss.
IGO has an indirect share in the Greenbushes mine in WA, along with Chinese group Tianqi, which is also due to report late in the week.
Mineral Resources has reportedly been cutting back on staff and exploration deals to try and rightsize itself (the drop in iron ore prices hasn’t helped either) to manage the financial impact of the lithium slump.
Analysts are watching for any news on impairments and write-downs, similar to what IGO did with its extensive nickel business.
Pilbara’s major Chinese customer, Ganfeng, is also due to report this week (August 28) and, along with Tianqi, is expected to try and ride out the slump.
However, the results the industry is watching most closely are from Wesfarmers and whether it will impair the value of Covalent, the Mount Holland Mine, or the hydroxide refinery still under construction at Kwinana. SQM last week didn’t reveal any impairments, so Wesfarmers will probably follow suit.
The most interesting of all lithium-related results this week will be the June quarter figures from BYD, the world’s biggest EV maker—both battery-powered and plug-in hybrids. It’s due to report Wednesday via the Hong Kong Stock Exchange.
Chile's SQM, the world’s second-largest lithium producer, reported a bigger-than-expected 63.2% slide in its quarterly profit last week due to lower prices, which it expects will continue for the rest of the year.
SQM posted record-high quarterly sales volumes of lithium in the three months to June, but its results were dragged down by a significant drop in the metal's prices. CEO Ricardo Ramos said that trend will continue.
"We see this pricing trend continuing in the second half of this year, with current lithium price indices in China nearly 20% lower than the average lithium price indices in the second quarter of 2024,” Ramos said.
He added that some lithium producers might reduce their output since the low prices make projects economically unviable.
SQM stated it will continue with its expansion plans, although it is re-evaluating specific markets and initiatives that may be "less attractive in the near term under these conditions.”
For the six months to June, SQM reported total revenues of $US2.378 billion compared to $US4.316 billion for the first six months of 2023.
This resulted in a net loss for the six months of $US655.9 million, compared to a net income of $US1.330 billion for the same period last year.
