Conflicting market signals continue to cloud the outlook for battery metals, particularly lithium, with Rio Tinto, one of the world’s largest miners, pushing ahead with a $6.7 billion acquisition while a leading of Chinese producers are struggling to sell lithium.
Sluggish electric vehicle (EV) demand, especially in Europe and the U.S., hits battery metals hard
There is a glut of lithium stocks. Photographer: Carla Gottgens/Bloomberg
Rio Tinto’s proposed merger with Arcadium Lithium won support this week from Arcadium shareholders, who voted 98% in favor of acquiring its business.
Approval from government regulators in five countries, including China and Australia, is now required to complete the merger, which would put Rio Tinto into a major league of lithium producers.
Rio Tinto Chief Executive Jakob Stausholm said he was not concerned about the current low price of lithium because it is the metal of the future.
Lithium hydroxide, a commonly traded form of the material, has fallen to less than $800 per ton since peaking at more than $8,000 per ton two years ago.
The fall forced most Australian lithium mines to close or suspend operations, with the main survivor being Western Australia’s Greenbushes mine, which mines the world’s highest-grade lithium ore.
But even the best varieties haven’t insulated Greenbushes’ owners from the lithium mine collapse, which has seen investment shrink and output shrink.
No dividend
In the latest sign of market pressure, Australian company IGO and Chinese company Tianqi warned that sales at their joint venture lithium hydroxide processing plant were very slow and that they did not expect to pay dividends next year.
IGO and Tianqi Lithium jointly own Tianqi Lithium Energy Australia (TLEA), which operates a metals refinery in Kwinana, near Perth, Western Australia.
The first quarter of work at the plant was recently shut down for maintenance and debottlenecking, and the benefits of the work are expected to be felt in the first quarter of next year, but the work may be delayed due to tough lithium market conditions.
In a statement to the ASX, IGO said TLEA had experienced inventory backlog at Kwinana and expected this to continue in the short term.
Processed lithium. Photographer: Carla Gottgens/Bloomberg
“Based on current market conditions, continued capacity growth at Lithium Hydroxide Plant No. 1 and declining product sales, IGO does not expect TLEA to be able to pay dividends to shareholders in fiscal 2025,” the company said.
“The IGO is unable to provide guidance on when it expects dividend payments to recommence, but notes that the Greenbushes mine will continue to generate stable cash flow despite current market conditions.”
IGO shares have fallen 46% this year and were last trading at A$4.82.
