Australia's Mineral Resources cuts FY 2024-25 spodumene guidance by at least 50%

Mineral Resources has become the latest Australian producer to lower its production expectations, as it at least halved its annual guidance for spodumene concentrate for financial year ending June 30, 2025, the miner said Nov. 13.

The company now expects SC6 volumes to reach 60,000 dmt, or about 50%-58.6% lower from the guidance of 120,000-145,000 dmt SC6 equivalent estimated in August.

SC6 refers to a high-purity lithium ore with about 6% lithium content, used as a raw material for the production of lithium-ion batteries for electric vehicles.

The lower guidance follows Mineral Resources' decision to mothball its Bald Hill lithium mine in the Goldfields region.

"Following a strategic review and in light of a prolonged period of low spodumene concentrate prices, Bald Hill will be safely transitioned into care and maintenance from this week," Mineral Resources said.

Spodumene concentrate with 6% lithium oxide content had fallen by $7,410/mt, or 90.4%, as of Nov. 12, 2024, from an all-time high of $8,200/mt FOB Australia on Nov. 18, 2022.

Mining and mobile maintenance operations will cease on Nov. 13, with the spodumene concentrate plant set to temporarily halt operations by early December. Consequently, Mineral Resources anticipates the final shipment of Bald Hill spodumene concentrate to be sold that month.

For the July-September quarter, Bald Hill sold 43,000 dmt of SC6.

Mineral Resources' December deadline coincides with Pilbara Minerals' plan to place its Ngungaju plant into care and maintenance from Dec. 1.

As a result of the mothballing action, Pilbara Minerals also cut its FY 2024-25 guidance to 700,000-740,000 dmt on Oct. 30, from 800,000-840,000 dmt previously estimated on July 30.

Should global lithium prices improve "to a level that incentivizes a restart of Bald Hill, a ramp-up back to full operation is anticipated to take approximately four to six weeks," Mineral Resources said.

Bald Hill is one of three lithium mines that Mineral Resources operates. The other two, Mt Marion and Wodgina, have their annual guidance unchanged at 150,000-170,000 dmt and 210,000-230,000 dmt, respectively.

The lower guidance for the Bald Hill mines follows a similar announcement by Liontown Resources on Nov. 11, which lowered the annual production forecasts for its Kathleen Valley lithium project to 2.8 million mt/year by the end of FY 2026-27, from about 3 million mt/year by the January-March quarter of 2025.

"When market conditions change, companies need to quickly adapt to meet the market. Through the business optimization work done by our team, the revised mine plan and guidance demonstrates our responsiveness to the low-price environment," said Tony Ottaviano, Liontown's managing director and CEO.

Market sentiments

Following recent upstream curtailments and improved market sentiments, the Guangzhou Futures Exchange saw a significant increase in lithium carbonate prices. Prices for the January 2025 lithium carbonate settled at Yuan 81,300/mt ($11,254/mt), in turn lifting spot spodumene concentrate prices.

Platts, part of S&P Global Commodity Insights, assessed spodumene concentrate with 6% lithium oxide content at $790/mt FOB Australia Nov. 12, up $15/mt day on day. The 0.1% spodumene concentrate differential, reflecting the value of each 0.1% of lithium oxide for spodumene grade within a 5.5%-6% range FOB Australia, was assessed at $13.17/mt.

Also, Platts assessed spodumene concentrate with 5.5% lithium oxide content at $761/mt CIF China on Nov. 12, up $14/mt day on day and week on week.