Lithium heavyweights seek price stability
Two of Australia’s biggest lithium producers, Liontown Resources (ASX: LTR) and Pilbara Minerals (ASX: PLS), have reported positive FY25 results despite volatile lithium prices.
EV sales growing by 26% and BESS sales growing 51% in CY24 compared to CY23, according to PLS. Despite this, the lithium market has seen a significant price drop as the industry faces challenges from oversupply. In presentations given at the Diggers & Dealers Forum earlier this week, representatives from both companies expressed their concern regarding price volatility and oversupply.
PLS chief executive Dale Henderson says the lithium market is volatile, fast moving and occasionally irrational.
“Despite this, one thing remains clear — demand is not going away,” he said.
“Lithium pricing remains well below breaking even for most of the global supply base, even with the recent uptick.
“It’s not sustainable and the impact is being felt through production cuts, delayed expansions and capital is retreating from the sector, despite growing demand.”
Liontown managing director Tony Ottaviano was in agreeance with Mr Henderson.
“You cannot have a price like lithium on Friday go up $60/t, on Monday drop $60/t or in the last three months drop 30%,” he said.
“How do you respond? It’s very difficult to turn a ship in such a rapid time.”
Though the market is currently facing complex challenges, forward-looking projections indicate continued growth in the industry’s future. According to Fortune Business Insights, the global lithium market was valued at $34.45b (US$22.36b) in 2023 and is expected to grow to $85.55b (USD$55.52b) by 2032.
Despite the current position of the lithium market, Liontown reported revenue of $300m for FY25 with a cash balance of $156m. Production at its Kathleen Valley underground lithium project over the first 11 months of operations reached 321,000t with plant availability exceeding 89%.
“[Liontown is] well positioned for the recovery in lithium prices,” Mr Ottavino said.
Though lithium prices hit record lows in 2023 to now, PLS delivered record production in FY25 and reported $1b in cash flow backed by an additional $1b revolving credit facility.
During FY25, PLS also expanded its reach globally, acquiring the Kina lithium project in Brazil.
PLS also entered a joint venture with POSCO, located in South Korea, to create downstream lithium hydroxide production, offering margin expansion and geographic diversification outside China.