Lithium prices to surge on China battery drive

Lithium prices to surge on China battery drive

MELBOURNE - Lithium prices are set to surge again in the June half due to a jump in China's production of electric vehicle batteries and project delays due to COVID, Australian lithium miner Allkem said on Tuesday.

Allkem, with mines in Argentina and Australia, predicted that lithium carbonate prices would increase by about 80% in the six months to June from the December half year to around $20 a tonne at its export point.

As automakers around the world started investing billions of dollars to transition to cleaner modes of transportation because of a global push to cut carbon emissions, the price of lithium soared last year, due to supply constraints.

The outlook sent Allkem's shares up as much as 5.4% to a record high of $11.97.

The top 10 lithium producer, which was formed late last year from the merger of Orocobre and Galaxy Resources, is eager to bring new projects on line.

Chief Executive Martin Perez de Solay told analysts after a quarterly operations report that moving production as quickly as possible is the name of the game.

In December alone, China's production of lithium-ion batteries rose 40% from the previous quarter, and more than doubled from the same quarter a year ago, driving lithium carbonate prices to record highs, Allkem's chief sales officer Christian Cortes said.

Allkem executives played down analysts' concerns that lithium prices could drop when carmakers outside China are constrained by broader supply issues.

Cortes said that it's a very tight supply market and that we're seeing a very rapid increase in pricing.

Allkem's operations and development activity is impacted by a surge in Omicron-related COVID 19 cases.

The first production at its Sal De Vida mine in Argentina has been delayed by nearly a year to the second half of 2023 because government staff involved in issuing permits for the project were hit by the Pandemic, Perez de Solay said.

The company's Mount Cattlin mine produced 52,225 dry metric tons dmt of spodumene concentrate in the quarter, bringing the total annual production to 230,065 dmt, exceeding its previous guidance by 4.5%.

The output of the flagship Olaroz mine for the quarter fell 2% to 3,644 tons from last year.