Lithium Priced at Over $20,000 Per Ton Signals Market Optimism

Arcadium Lithium PLC announced impressive first-quarter earnings, revealing an average realized pricing of over $20,000 per metric ton for its global lithium carbonate and hydroxide sales.

CEO Paul Graves noted this exceeded seaborne lithium prices for the period, indicating positive market trends. Platts assessed the lithium carbonate CIF North Asia price at $14,600/t on May 7, the highest level since January 11.

The company remains optimistic, with Graves highlighting encouraging signs in the lithium market and strong underlying demand fundamentals. He specifically noted that:

“Prices have increased from the cycle bottom and appear to have stabilized at levels that are notably higher than what we saw in the last downturn.”

Lithium Lift-Off: Arcadium’s Record-Breaking 1st Qtr

Arcadium’s performance is particularly noteworthy given its recent formation from the merger of Livent Corp. and Allkem Ltd. in January. However, it saw a decline in sales volumes due to production cuts at the Mt Cattline mine in Western Australia.

Still, the company reported a net income of almost $20 million on sales of over $261 million in the first quarter, compared to $115 million income on sales of $253 million in the same period last year.

Arcadium is poised for significant expansion, with plans to complete new capacity constructions and expansions by 2025 and 2026. This effort aims to achieve a total production capacity of 170,000 metric tons annually across its global operations by 2026.

Arcadium Lithium global operations

The expansions will increase nameplate production capability by around 95,000 metric tons per year on a lithium carbonate equivalent basis. This includes additions in Argentina, with 25,000 metric tons across the Fénix and Sal de Vida projects, and in Canada, with 70,000 metric tons across the Nemaska and James Bay projects.

Recent milestones include commissioning a 10,000-metric-ton carbonate expansion at Fénix and a 25,000-metric-ton carbonate expansion at Salar de Olaroz in Argentina.

Additionally, expansions are underway for hydroxide production. The company has a 5,000-metric-ton expansion at the Bessemer City plant in the US and a 15,000-metric-ton unit at the Zhejiang plant in China undergoing qualification.

CEO Paul Graves expressed confidence in the company’s growth trajectory, emphasizing their strategic investments in attractive assets across market cycles.

Arcadium’s enthusiasm for lithium, which experts project more expansion in this electric metal’s production, is mirrored broadly in the industry. Statista report estimates the global lithium supply will rise to over 2 million metric tons by 2030.

RELEVANT: Global Lithium Reserves and Resources Surge 52% in Q1 2024

Resolving Rifts, Reviving Production

In Australia, mining company Leo Lithium has finalized the sale of its remaining stake in the Goulamina lithium property in Mali to China’s Ganfeng Lithium Group, resolving a prolonged dispute with the local government and paving the way for the project to resume production this year.

This agreement marks the second instance in May of an Australian miner resolving disputes with African governments. It resolved AVZ Minerals’ imminent delisting due to a property ownership dispute with the Democratic Republic of the Congo.

Under the deal, Ganfeng will acquire Leo Lithium’s 40% stake in the Goulamina project for US$342.7 million, pending approval from Leo Lithium shareholders and Chinese regulators. This equates to 43 Australian cents per Leo Lithium share. The company’s shares were suspended at 51 Australian cents in September 2023 amid the dispute.

Additionally, Leo Lithium reached a US$60 million settlement with Mali’s junta government. This gives away its offtake right but securing a 1.5% gross revenue fee over 20 years from Ganfeng.

With the Goulamina project set to begin spodumene concentrate production in the 3rd quarter, Leo Lithium emphasizes adherence to Mali’s new mining code. This increases potential government project interest to 30%.

Optimism Amidst Market Challenges

While acknowledging shareholder concerns, industry analysts see the deal as the best outcome amid challenging sovereign and security risks.

For instance, they suggest that despite current caution, the allure of potential returns may eventually prompt investors to reconsider African investments, especially if assets are priced attractively relative to cash flow.

They also underscore the value for Leo Lithium shareholders and Ganfeng’s strategic investment in securing a substantial resource base for future industry growth. More remarkably, they remain optimistic about Australia’s position in lithium asset development, expecting renewed interest as lithium prices recover in the coming quarters and years ahead.

As Arcadium Lithium celebrates unprecedented earnings and Leo Lithium resolves disputes, the lithium market shows signs of robust growth. Analysts remain optimistic, foreseeing a positive trajectory for both lithium companies amidst evolving market conditions.

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