Lithium boom continues to fuel Chinese majors
Published: Thursday, 15 December 2016
Tianqi Lithium and Ganfeng Lithium both saw turnovers more than double in the first nine months of 2016.
Both Tianqi Lithium Industries Inc. and Jianxi Ganfeng
Lithium Co. Ltd continue to benefit from strong lithium
prices, their Q3 2016 results show.
Tianqi reported a turnover of Chinese renminbi (Rmb)
2.77bn ($410m) for the nine months ended September 2016, a
year-on-year (y-o-y) increase of 112%. Ganfeng’s
turnover over the same period increased 133% to Rmb
Net profits for the two Chinese lithium producers –
both of which are now firmly considered among the five major
producers of lithium globally – also rose y-o-y for
the same period – 18-fold in the case of Tianqi and
almost five-fold in the case of Ganfeng, to Rmb 1.2bn and Rmb
Ganfeng noted its gross profit margin had contracted
slightly to 39% on the back of the drop in lithium spot
prices in China during Q3.
It said the spot price of lithium carbonate had fallen
from an average of between Rmb 160,000/tonne and Rmb
170,000/tonne at the beginning of the quarter to around Rmb
140,000/tonne by the end.
One China-based market participant recently suggested to
IM that if the Chinese government publishes a new electric
vehicle (EV) policy in Q4, following a recent clampdown on
so-called 'subsidy cheating’, EV sales may pick
up significantly, dragging the lithium carbonate price upward
Spodumene shipments from Ganfeng’s part-owned
Mt Marion project in Western Australia are due to begin this
month. Ganfeng will receive all of the site’s
offtake. The mine has a slated capacity of 200,000 tpa 6%
lithium concentrate and 200,000 tpa 4% lithium
Tianqi expects its annual net profit to be in the range of
Rmb 1.56-1.69bn, an increase of between 5.3-5.8 times on its
2015 figure. Ganfeng predicts its full year profit will be
Rmb 626-688m, up 4-4.5 times y-o-y.