Key Points
- Tianqi Lithium (Tianqi Liye 天齐锂业) reported a net loss of ¥5.701 billion RMB ($790 million USD) in the first three quarters of 2024, a 170.40% year-on-year decrease.
- Revenue for the same period was ¥10.065 billion RMB ($1.39 billion USD), down 69.87% year-on-year.
- The losses are attributed to sharp drops in lithium prices, decreased investment income, and pricing mismatches between subsidiaries.
- Despite losses, Tianqi Lithium’s sales volume of lithium compounds and derivatives grew by 67.71% from January to September 2024.
- Ganfeng Lithium (Ganfen Liye 赣锋锂业), another major player, also reported losses of ¥640 million RMB ($89 million USD).
- Chinese lithium carbonate prices have fallen to ¥72,100-75,300 RMB ($10,000-$10,500 USD) per ton.
- Stock prices for both Tianqi Lithium and Ganfeng Lithium have dropped 70-80% from their peaks.
- Long-term outlook remains positive due to expected growth in electric vehicle and renewable energy sectors.
The lithium market is experiencing significant turbulence, with major players like Tianqi Lithium (Tianqi Liye 天齐锂业) reporting substantial losses.
This article delves into the current state of the lithium industry, analyzing the factors behind these losses and exploring the future prospects of this crucial element in the green energy revolution.
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Tianqi Lithium’s Financial Woes
Tianqi Lithium, a leading Chinese lithium resource company, has recently disclosed its financial performance for 2024 Q3, revealing a stark picture of the challenges facing the industry.
Key Financial Highlights
| Metric | Value | Year-on-Year Change |
|---|---|---|
| Revenue (First 3 Quarters 2024) | ¥10.065 billion RMB ($1.39 billion USD) | -69.87% |
| Net Profit | -¥5.701 billion RMB (-$790 million USD) | -170.40% |
| Operating Cash Flow | ¥4.192 billion RMB ($580 million USD) | -79.09% |
| Basic Earnings per Share | -¥3.48 RMB per share (-$0.48 USD) | -170.59% |
Q3 Performance Breakdown
The third quarter of 2024 was particularly challenging for Tianqi Lithium:
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| Metric | Value | Year-on-Year Change |
|---|---|---|
| Revenue | ¥3.646 billion RMB ($500 million USD) | -57.48% |
| Net Profit | -¥496 million RMB (-$69 million USD) | -130.11% |
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Factors Contributing to the Loss
Tianqi Lithium attributes these significant losses to several key factors:
- Sharp drop in average sales price of lithium products
- Decreased income from investment in Sociedad Química y Minera (SQM)
- Temporary losses due to pricing mismatches between its chemical-grade lithium concentrate subsidiary, Talison Lithium Pty Ltd (Talison 泰利森), and lithium chemical product sales
Lithium Market Volatility
The overall market price of chemical-grade lithium concentrate has experienced a downward trend in the first three quarters of 2024. However, this decline has also led to decreased costs for lithium supplies purchased from Talison, providing some relief for Tianqi Lithium.
Despite the challenging market conditions, Tianqi Lithium has reported growth in both production and sales of lithium compounds and derivatives:
| Period | Sales Volume Growth |
|---|---|
| January to September 2024 | 67.71% increase |
| Q3 2024 (compared to Q2) | 24.69% growth |
Expansion Amid Uncertainty
Even in the face of declining lithium prices, Tianqi Lithium continues to invest in expansion projects:
- Winfield subsidiary increasing investment in Talison’s third-phase chemical-grade lithium concentrate expansion project in Greenbush, Australia
- Initial budget: AUD 516 million ($330 million USD, ¥2.588 billion RMB)
- Revised total investment: AUD 881.3 million ($570 million USD, ¥4.127 billion RMB)
- Expected completion: Q4 2025
- As of September 2024, AUD 611 million ($400 million USD) has been invested in the project, with significant progress in dry process construction and ongoing steel structural installations in the wet process.
Industry-Wide Challenges
Tianqi Lithium is not alone in facing financial difficulties. Jiangxi Ganfeng Lithium Group Co., Ltd. (Ganfeng Lithium, Ganfen Liye 赣锋锂业), another major Chinese lithium producer, has also reported significant losses:
| Metric | Value | Year-on-Year Change |
|---|---|---|
| Operating Income (First 3 Quarters 2024) | ¥13.925 billion RMB ($1.93 billion USD) | -45.78% |
| Net Loss | ¥640 million RMB (-$89 million USD) | N/A |
Lithium Price Trends
The Chinese lithium carbonate market has seen a significant decline in prices:
- Battery-grade lithium carbonate: ¥72,100 RMB to ¥75,300 RMB ($10,000–$10,500 USD) per ton
- Battery-grade lithium hydroxide: ¥64,600 RMB to ¥69,300 RMB ($9,000–$9,500 USD) per ton
Future Outlook
Despite the current challenges, both Tianqi Lithium and Ganfeng Lithium remain optimistic about the long-term demand for lithium. Key factors driving this optimism include:
- Cyclical nature of the market
- Growth prospects tied to new technologies
- Advancements in battery technologies, particularly metallic lithium anodes
- Expanding energy storage market
Stock Performance
The market capitalization of both Tianqi Lithium and Ganfeng Lithium has declined significantly over the past two years:
| Company | Current Stock Price | Drop from Peak |
|---|---|---|
| Tianqi Lithium | ¥35.95 RMB per share ($5.00 USD) | 70% drop from July 2022 peak of ¥148.57 RMB per share |
| Ganfeng Lithium | ¥33.98 RMB per share ($4.70 USD) | 80% drop from September 2021 high |
While the current market conditions present significant challenges for lithium producers, the long-term outlook for the industry remains positive. As the world continues to shift towards renewable energy and electric vehicles, the demand for lithium is expected to grow, potentially leading to a recovery in the market.
FAQs
What caused Tianqi Lithium’s significant loss in 2024?
Tianqi Lithium’s loss was primarily due to a sharp drop in lithium product prices, decreased income from investments, and temporary losses from pricing mismatches between its subsidiaries.
Is the entire lithium industry facing similar challenges?
Yes, other major players like Ganfeng Lithium are also reporting significant losses, indicating industry-wide challenges due to market volatility and declining lithium prices.
Are lithium companies still investing in expansion despite the current market conditions?
Yes, companies like Tianqi Lithium are continuing to invest in expansion projects, demonstrating confidence in the long-term prospects of the lithium market.
What factors are expected to drive future demand for lithium?
Future lithium demand is expected to be driven by advancements in battery technologies, the growing energy storage market, and the continued shift towards electric vehicles and renewable energy.
How have stock prices of major lithium companies been affected?
Stock prices of major lithium companies like Tianqi Lithium and Ganfeng Lithium have seen significant declines, with drops of 70-80% from their peak values in recent years.
References & Further Reading
- Lithium Woes Leave Top China Producers With Year-to-Date Losses
- Tianqi Lithium suffered a huge loss of 5.7 billion yuan in the first three quarters
- Tianqi Litihum
- Sociedad Química y Minera (SQM)
- Talison Lithium Pty Ltd (Talison 泰利森)
- Jiangxi Ganfeng Lithium Group Co., Ltd. (Ganfeng Lithium, Ganfen Liye 赣锋锂业)
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