Lithium boom continues to fuel Chinese majors

By Albert Li
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 2.02bn.

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 486m respectively.

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 once more.

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 concentrate.

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.