The falling profitability of battery mineral corporations has led to many scaling again their operations, together with the world’s largest lithium producer, Albemarle, which mentioned this month that it could reduce jobs and maintain off on increasing a refinery in Western Australia to optimise money circulation.
In the meantime, Wyloo Metals, owned by Fortescue chair Andrew Forrest, additionally introduced this month that it could stop nickel mining within the WA district of Kambalda. BHP Nickel West adopted by shutting down a portion of its processing operations close by.
In December, UBS analyst Levi Spry mentioned that he had lowered his lithium fairness valuations by between 8 per cent and 19 per cent, downgrading Pilbara Minerals to a promote ranking and retaining a promote ranking on Mineral Assets.
“We flag dangers that lithium costs grind decrease within the brief time period within the face of weakening demand sentiment and strong provide,” he mentioned, noting elevated provide from China.
Mineral Assets boss Chris Ellison mentioned final week that he anticipated lithium costs to proceed falling into 2024, however he insisted the corporate’s three lithium mines in WA remained worthwhile.
Nonetheless, some trade gamers are calling for presidency motion to assist them stay aggressive.
Following a roundtable on Thursday, Affiliation of Mining and Exploration Corporations performing chief government Neil van Drunen mentioned federal Assets Minister Madeleine King and Western Australia’s state Mines Minister, David Michael, had demonstrated a willingness to seek out options to help nickel and lithium corporations.
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Van Drunen advisable the introduction of a manufacturing tax credit score, which he mentioned would supply a ten per cent tax credit score for downstream supplies producers and scale back the associated fee drawback confronted by Australian tasks in contrast with these within the US.
Whereas demand for electrical automobiles has elevated, accounting for 7.2 per cent of all automobiles offered in Australia final 12 months, double the proportion in 2022, Brown mentioned destructive commentary in regards to the demand for electrical automobiles world wide, and the altering economics of battery minerals corporations, had weighed on main trade gamers’ share costs.
“It’s taken the sector from being an absolute darling of a sector in each respect, to at least one no person actually needs to find out about in the intervening time,” he mentioned. “Bluntly, the brief sellers have accomplished terribly effectively in a brief time period.”
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